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World Bank of the Future: Victim, Villain or Global Credit Union?

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Abstract:

Street protesters in Prague in September 2000 are not the only ones complaining about the World Bank. Conservative critics are pointing the finger too. On the left, champions of social justice argue that World Bank loan conditions hurt the poor. On the right, conservatives claim lending practices crowd out private investment. Critics from all sides compound public confusion about globalization and the impact on people of global financial institutions.

Nancy Birdsall dissects the critics' positions and proposes World Bank reforms rarely put on the table: end "cookie-cutter pricing" or the outdated tradition of a single interest rate and loan term no matter what; give countries like China and Brazil more voting power; and don't give up on much-maligned conditionality but fix and enforce it. Birdsall notes that governance of international financial institutions will never be perfectly representative nor accountable, in part because of failures of democracy in borrowing countries. But, conceiving of the World Bank as a club, she argues for balanced reform not shutdown.