Edited by John Linarelli
Chapter 5: Multilateral development banks and the International Monetary Fund
The multilateral development banks (MDBs), primarily the World Bank, and the International Monetary Fund (IMF), are the most powerful institutions through which governments of wealthy countries, particularly the United States, influence policies and programs of the governments of low- and middle-income countries. While these international financial institutions (IFIs1) have been instrumental in sustaining and expanding a liberal international economic order, their effects on the well-being of the world’s peoples and on the quality of their governance have been decidedly mixed. Insofar as well-off peoples “have a duty to assist other peoples living under unfavourable conditions,”2 the IFIs have fallen far short of fulfilling it, and often their effects have been harmful. Despite transferring large sums of money intended to promote development, and notwithstanding their rhetoric of service to the poor, their programs have often particularly harmed more vulnerable people. The unsatisfactory performance of the IFIs is due, I argue, to three interacting sets of factors. First, as well as promoting their formal, developmental goals, they have been used to promote the interests of their wealthy shareholder governments, and often the way these interests have been conceived has ended up causing harms. Second, accountability within the IFIs has been weak. They have promoted their own organizational interests without adequate learning from experience or representation of the interests of the vulnerable. Third, their unsatisfactory performance is due to weaknesses in their primary disciplinary or ideological frameworks, development and mainstream economics as they have evolved over the last 70 years.
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