World Bank in International Public Policy Management - Essay Example

Role of World Bank In International Public Policy Management In 21st Century Section Number: Introduction World Bank has always confronted various challenges performing all of the expected and implemented norms towards it. It has faced all the impossible challenges as saving the institution from a curious alliance of conservative and radical activists that threaten its viability and effectiveness. It is no doubt the best tool for managing globalization but there is also the danger of declining of this tool when it is needed the most - in present times. The study deals with all such policies of World Bank, their implementation, its role in global economic reforms and the emerging challenges and the consequent evolving roles to handle the tough situations. The fundamental role of the Bank has undergone various conflicting opinions. Some of the shareholding countries borrow from it while others may provide fund. It is a financial intermediary working for the advancement of the national interest of the countries. The project brings forth the role of World Bank towards the international public policy management in the present scenario. It includes conflict prevention and changing international environment, fighting poverty, the health and food provisions for the poor countries, monitoring various socio-economic conditions, helping for improving global trading, project structuring and its monitoring and much more. Part I- Policies and Instruments World Bank has various international public policies and instruments which are used for the betterment of various countries especially in the conflict affected countries. It works at different levels according to the different phases of conflicts, analyzing them and implementing those into strategies and programs. One of the special measures taken is for poverty reduction and other for the Low-Income Countries Under Stress (LICUS). For the implementation of these policies and instruments the Bank has started for the Watching Brief where normal Bank assistance will not be possible; e.g. Haiti, Somalia, Sudan. It would allow the Bank to maintain minimum level of engagement, to monitor evolving socioeconomic conditions as well as the prospects to change. This would allow the Bank to re-engage with additional activities whenever needed or asked by the countries. (AEA, 2004)1 Another policy adopted by World Bank is the Transitional Support Strategy (TSS). It is a short to medium term Bank assistance strategy for the countries that do not have Country Assistance Strategy (CAS) or the ones that are not still ready for CAS e.g.: Afghanistan, Sierra Leone, Timor-Leste while in transition from conflict. The main objective of this policy is peace and recovery along with the needed assistance. With the stages of Watching Brief and TSS the World Bank would be able to assist even under full fledged CAS. These three levels of engagement are set out in OP/BP 2.30 and provide enough flexibility to the Bank for its involvement and assistance. CPR unit has also developed a Conflict Analysis Framework (CAF) to help Bank analyze more systematically while preparing policies, strategies and programs (CPR 2002e).2 World Bank also takes initiatives in project design and its implementation in developing countries. For Example in the recent project assessment for Sri Lanka the lack of sensitivity to any conflict may also constrain World Bank's interventions (World Bank 2003b)3. World Bank and IMF are the world's largest public lenders and help avoiding Great Depression-like economic disasters. But this help comes with strings attached in the form of policy perceptions as "structural adjustment policies". It means across the country privatization of public utilities and publicly owned industries. It focuses resources on growing export crops for industrial countries than supporting family farms for local communities. This has led to serious problems of inequality and environmental destruction in Latin America, Africa and Asia. (WBIMF, 2007) 4 In 21st Century some of the people too think that the World Bank along with IMF imposes such policies in their countries undemocratically. To oppose such policies, leading to growing wealth inequalities, about 20,000 people were also gathered in Washington DC in April last year and similar protests were also taken in other countries as Czech Republic, Prague etc (WBIMF, 2007). Right from the beginning people have imagined the World Bank to be a financial intermediary. Some take it to be as an instrument for the advancement of the national interests of various countries; as evangelical agent who is in charge of the changing behavior of the government or; as a mechanism to transfer financial resources from richer to poorer countries. On a whole it is expected to support a liberal (or market-based) economic system, as expected in the promotion of the liberal trade and investment regimes. (M.N. Carnegie, April 1994)5 Part II- Role of the World Bank in Global Economic Reforms World Bank plays a great role in economic reforms globally. It is the foremost expectation of people and all the countries from the Bank. It lends money to the governments and various government agencies for development projects. Now it has been more than 20 years that Bank has continually imposed the so called stringent conditions as "Structural Adjustment Programs" hence forcing the countries to adopt reforms as deregulation of capital markets, privatization of state companies and downsizing of public programs for social welfare. (GPF, 2008)6 Although Bank persists upon the belief that "fighting poverty" is its main policy but many critics that such policies are rather rising poverty. Privatization or water supplies, fees for public schools and hospitals and privatization of public pensions are the most controversial Bank reforms under SAP. (GPF, 2008) Conflict Analysis Framework (CAF) has been formed for analyzing the various links between the conflict and the development. It has been built on Bank's research on the economic causes of conflict and has been developed as a part of Bank's social analysis method. It would ensure that the Bank activities do no harm in regulating any of the policies helping in poverty reduction processes, country assistance strategies and re-engagement strategies in LICUS countries (AEA, 2004). But as pointed by Lund, most researchers and conflict analysis frameworks do not assess a society's capacity to deal with emerging tensions and cleavages, and which may not determine whether it can sustain challenges to the status quo without erupting into widespread violence. (LUND 2003. AEA, 2004) World Bank now even helps poor countries grow ensuring macroeconomic stability and limit adverse spillovers to the rest of the world. This indirectly benefits the whole world reducing poverty and economic instability which otherwise could result in conflict and terrorism, politically difficult immigration and environmental degradation. World Bank has also contributed through loans and through economic advice. (Raghuram G. Rajan, 2008) 7 Earlier private capital flow was limited and then the World Bank helped in bridging the gap between poor country's desired investment and domestic savings. But now due to emergence of privatization the private capital now searches the world for viable projects. And if the private financers do not support the project it may mean that the project is unviable, the risk bearing capacity of private sector is limited, the project is to costly and needs government support. But the question arises that should the World Bank still finance in such situation The World Bank should better rely upon the government repayment than the foreign private sector. It should co-invest with private finance. Now the International Finance Corporation, an arm of World Bank Group has already taken equity positions to follow such a model. (Raghuram G. Rajan, 2008) For the upliftment of the economic issues globally, the World Bank also gives some of the policy advice to the poor countries on development strategies, project conceptualization, evaluation and implementation. It is obvious that if the Bank accepts its share of the risk in a project its quality gets enhanced and evaluation and monitoring is also done in a better way. But the economists as William Easterly have little useful to say on workable strategies for growth. (William Easterly, 2001)8. But others as Raghuram G. Rajan and Arvind Subramanian (2007)9 argue that aid has been ineffective. Edward Glaeser et al. suggest that the most recent explanatory variable for underdevelopment, the quality of a country's political institutions, seems to have has little impact on growth (Edward Glaeser 2004)10. So, the strategies implemented are in still in debate. Part III- Emerging Challenges and Evolving Roles As discussed above the World Bank has faced and is facing various challenges and difficulties before and in 21st century. Various scholars and studies have too contributed their views and suggestions for solving these. They've suggested a few roles that should be conducted by the Bank when needed. The Bank has always sought and adapted more complex international challenges. It also has the traces of evolution as to how its adapting instruments and approaches integrate better the sensitivity to violent conflict into projects, programs and strategies. Taking into account the post-conflict agenda, Bank has now turned its attention towards prevention. The operational policy of 2001 of Development Cooperation and Conflict is not just defined to post conflict countries. The new policy recognizes that the Bank must extend beyond post conflict reconstruction to a more proactive role in conflict affected and vulnerable countries. It means Bank's assistance to minimize potential causes (AEA, 2004). The major challenges in front of the World Bank in 21st century are those of economic growth, poverty reduction and equity in a particular sector or sub-sector. There is a strong interrelationship between these three areas. There is debate over the positive relationship between population growth and development. It is asserted as a huge challenge that the population growth has a negative impact on income growth because it overwhelms, at least in the short run, scarce natural resources as well as reproducible resources created by individuals, such as infrastructure and capital. (Bloom and Canning 2006)11. But contradictory to the point is the fact that, when in 1960s and 1970s, bilateral donors and multilateral development agencies, including the World Bank, started to invest in family planning programs to control population growth, the economic development in poor countries dropped down instead of rising which was intended. Now the development is given much closer attention and population plays a very important part in it, as emphasized by recent economic researchers. (Birdsall, Kelley, and Sinding, 2001)12. According to Mallaby (2004)13 since World Bank is more effective than UNESCO and WHO, therefore, it has an important role to play in influencing the policies related to education and health particularly HIV/AIDS. And World Bank is now taking steps towards youth awareness. As the morality and morbidity among youth is low and the awareness of the consequences of decisions for health and of ways to avoid ill health is low especially among girls; the World Bank has now decided to provide them with adequate knowledge to adopt safe behaviors. (World Bank 2007b)14 These evidences are enough to prove that the agencies as World Bank ought to address inequities in the area of reproductive health, including family planning services. It has also been lending for population and reproductive health issues since early 1970s. And the Bank loans are increasingly used for broader health/social sector programs that have ICPD components. (TRWB 2007)15 The major challenge faced by World Bank in present times is that many of the conservatives charge it to be obsolete and that its commercial lending may actually harm developing counties. (Bulow and Rugoff) They are of the view that the cheaper credit may fascinate these countries to borrow more and consequently leading to financial crises. They instead have an attractive built-in adjuster: financially strong countries get no subsidy of any size, while weaker countries -the ones that deserve a subsidy-do. (Bulow and Rugoff) So, there are various such challenges in present times which World Bank is tackling and still needs to improve upon. Conclusion On the above mentioned study based on various scholars and factual evidences it can be said that the World Bank has lots to do than intended. Being a guide is not sufficient as seen to the monetary power it has. It should make it a point to delve deep into various problems internationally and should help together with the governments and other agencies to solve the ever emerging problems in the world. The changing international circumstances have made it clear that the role of World Bank is much wider than though of. It is not limited to financial aid but also should make subsequent developments for health, education as well as economic stability. Bibliography Site Resources. An Evolving Agenda. 2004. December 8, 2008. Carnegie Endowment. World Bank: Its Role, Governance and Organizational Culture. Carnegie .Moiss Nam. April 1994. December 6, 2008 Global policy Forum. 2008. December 8, 2008. Foreign Affairs. Saving the World Bank. Mallaby. S. May/Jun 2005. December 6, 2008. Site Resources. POPULATION ISSUES IN THE 21ST CENTURY THE ROLE OF THE WORLD BANK. April 2007. December 6, 2008. AEA Web. The Future of the IMF and the World Bank.Rajan Raghuram G. 2008. December 8, 2008. Global Exchange. The World Bank and International Monetary Fund. October 28, 2007. December 8, 2008 Read More