Edited by Rebecca Surender and Robert Walker
Chapter 3: The role of the World Bank and the International Monetary Fund inpoverty reduction: limits of policy change
International development institutions now constitute an increasingly influential and global dimension of the social policy agenda in developing countries. The United Nations Development Programme (UNDP) is certainly the best-known amongst the international organizations that assist developing countries tackling social and political problems. Yet more economically oriented institutions such as the United Nations Conference on Trade and Development (UNCTAD) or the World Trade Organization (WTO) also shape social policies in developing countries by recommending economic policies regarding trade, for instance. Despite ideological and institutional differences, as well as different areas of competence, these organizations’ collective influence on the social policies of countries in the South is ubiquitous, including on the amount of public expenditure, the choice of programmes and implementing mechanisms, and the very direction and nature of policy aspirations. Their main influence stems from the production of knowledge in the form of policy papers and analyses as well as policy advice, whereby they affect the global discourse on development. It is therefore imperative to know how specific development agencies view development and define it as a policy problem, since their perspectives shape the policies they frame and recommend to developing countries. The World Bank and the International Monetary Fund (IMF) – two international financial institutions (IFIs) created by the Bretton Woods Conference of 1944 – are viewed as the most powerful international aid agencies of modern times. Their loans not only represent the greatest share of all official development aid, but they also serve to ensure the creditworthiness of developing countries and thus have a significant impact on international capital flows.
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