Who needs the World Bank?
The Global Development Finance report, released on Tuesday, shows that net private capital flows to developing countries reached a record $647 billion in 2006 – a 17 percent increase from the year before. The study notes, however, that only about 8 percent of that capital flowed to the poorest 51 countries.
The Wall Street Journal (subscription required) views the report as a demise of the bank:
[in the report] the bank itself describes how record private-capital flows into the developing world are advancing economic growth. The trend clearly is diminishing the need for organizations like the bank.
The most disconcerting news for World Bank fans are the sections on private credit markets. Developing countries are borrowing from markets instead of from multilateral institutions.
[…]. On current track, the private sector over time will reduce the bank's role to irrelevance.
Is there more to the bank than just lending? Here are some ideas.
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It is rediculous to speculate that the role of the international institutions would diminish. Here is an example why even corruptions cant diminish the efforts of the internaitonal organisations like the Bank:
In the year 1991 world bank lent about Rs 100 Crores to the Government of Tamil Nadu one of the state governments in India for the drinking water programme of a city called Coimbatore .
Features of the project:
1. 5 Kilometre tunnel
2. 40 Km pipeline crossing 80 villages
3. Water treatment plant in a village
4. Duration of the project 5 years.
5. Rs. 100 cores Budget
When I first visited the project site, I a well being dug in the midst of a dry dam. Which looked very naïve.
Problems faced by the project:
1. Leakages in the pipes in 40 kilometre length.
2. Delay by 2 years
3. Cost over run due to inflation.
Visible benefits:
1. 80 drought prone villages enroute has now got better water supply - because of leakages.
2. Employment to the villagers during the course of the project.
3. Emergence of a new township because of the treatment plant in a village.
4. Appreciation in the land value as the dry agricultural land has been converted to the wet irrigated land due to the leakages in the pipes.
5. Water supply to the city which was receiving potable drinking water once eight days to alternate days.
There might have been corruption but there was visible benefit. I was living in one of those villages. The shopkeepers due to the growth in traffic to the area grew phenomenally. Those who were driving in bicycles now own cars. Many have created their own small enterprises.
The benefits over a period of time are not comparable with the corruption or other challenges.
Such kind of projects. Could have never been feasible just by the local government officials.
Every one seems to need some re-assurance from some one outside. This is provided by the international organisations like the World Bank.
Posted by: Dr P James Daniel Paul | Jun 5, 2007 1:13:03 AM
The report shows how the private sector is increasingly taking over from the World Bank. The answer for the Bank is to be liberated from the political interference of the likes of Hilary Benn and be run as a commercial entity.
Posted by: Alex Singleton | Jun 13, 2007 5:05:14 PM