The World Bank and the Analysis of the International Debt Crisis (original) (raw)
Debt and International Organizations
Oxford Research Encyclopedia of International Studies, 2021
International financial organizations that lend to developing countries are the subject of controversy. Their functions, structures and effectiveness have generated important debates across disciplines, analysts and positions on the ideological-political spectrum. What interests and logic motivate the international financial institutions' (IFIs) loans? Following an international political economy perspective and mainly based on the literature produced in the early 21st century, we analyze the role played by three variables: the geopolitical and financial interests of powerful global actors, institutional and bureaucratic logic, and the borrower's interest and domestic policy. These three variables interact and influence the financial decisions made by the International Monetary Fund (IMF), the World Bank, and the major regional development banks (the Inter-American Development Bank [IADB], Asian Development Bank [AsDB], and African Development Bank [AfDB]). On the other hand, what are the main economic and political effects in the recipient countries? The IMF's credit tackles balance-of-payments crises mainly through adjusting domestic output and consumption, which usually has negative social costs. Development bank lending has diverse effects. Although it tends to boost growth and strengthen domestic accountability, it does not always guarantee the attainment of development goals. In this sense, the literature has found negative impacts on labor rights and forestry, while improvements in health and education cannot always be sustained in the long run.
While the question of how effectively the IFIs have performed their international economic, financial, social, environmental and developmental responsibilities in their work with these debtor countries has been extensively analyzed and debated, their compliance with their applicable international legal obligations has been less examined. The IFIs' responsibility in this regard, is based on their mandates, as defined in their Articles of Agreements, and general principles of customary international law. Their customary international legal obligations include upholding such principles as pacta sunt servanda and rebus sic stantibus and respecting the sovereignty of their member states. The thesis of this paper is that, when measured against these legal standards, the IFIs record in dealing with sovereign debtors in difficulty during 1982-2007 is mixed. They made effective use of the principles of pacta sunt servanda and rebus sic stantibus to influence the course of the negotiation...
The Political Economy of International Debt and Third World Development
African Social Science Review, 2000
This article examines the causes and implications ofthe international debt crisis. It begins by first defining the debt crisis and offers some basic explanations for the crisis. The analysis examines the costs ofthe debt crisis and develops some basic explanations for the crisis. It explores the same conditions in both the North and South countries. Also, the article addresses the role of international finanCial institutions, and pays some close attention to the problems ofinternationalfinancial establishments in the 1980s. Finally, it reviews some general solutions to the debt crisis and provides some tentative suggestions for future considerations.
The Developing Country Debt Crisis
1988
This paper raises several cautionary notes regarding high-condition-ality lending by the International Monetary Fund and the World Bank in the context of international debt crisis. It is argued that the role for high-conditionality lending is more restricted than generally believed, because enforcement of conditionality is rather weak. Moreover, the incentives for a country to abide by conditionality terms are also likely to be reduced by a large overhang of external indebtedness. Given the limited ability to enforce conditionality agreements, nodesty and realism should be a cornerstone of each program. The experience with conditionality suggests two major lessons for the design of high-condition-ality lending. First, debt forgiveness rather than mere debt rescheduling may increase a debtor country's compliance with conditionality, and thereby increase the actual stream of repayments by the indebted countries. Second, given the complexity of the needed adjustments, and the diff...
The World Bank in the Post-Structural Adjustment Era
Handbook of Global Economic Governance: Players, Power and Paradigms, 2014
Originally created as part of a global financial architecture aimed at reducing the likelihood of global economic crisis and now situated as the preeminent institution in the broad international development community, the World Bank has witnessed tremendous transformation of its mission, structure and operations over its 65-year existence. In this chapter, we focus on the World Bank as a lender of international development funds. We first briefly describe some of the major transformations that the Bank underwent through the mid-1990s in order to set up an extended discussion of the incorporation of the 'governance and anticorruption' (GAC) agenda into the World Bank's lending operations. We show how the GAC agenda emerged as the product of crises of legitimacy and effectiveness linked to the failures of structural adjustment lending during the 1980s and early 1990s. We argue that the GAC agenda remains ill defined almost 20 years after its emergence, for three fundamental reasons: (1) the challenges of creating better governing institutions in the developing world; (2) the disbursement culture that drives bureaucratic decisions within the Bank; and (3) the question of to which constituencies the Bank should be responsive.
Public Debt in Developing Countries: Has the Market-Based Model Worked?
SSRN Electronic Journal, 2005
Over the past 25 years, significant levels of public debt and external finance are more likely to have enhanced macroeconomic vulnerability than economic growth in developing countries. This conclusion applies not just to countries with a history of high inflation and past default, but also to those in East Asia, with a long tradition of prudent macroeconomic policies and rapid growth. We examine why with the help of a conceptual framework drawn from the growth, capital flows and crisis literature for developing countries with access to the international capital markets ('market access countries' or MACs). We find that, while the chances of another generalized debt crisis have receded since the turbulence of the late 1990s, sovereign debt is indeed constraining growth in MACs, especially those with debt sustainability problems. Several prominent MACs have sought to address the debt and external finance problem by generating large primary fiscal surpluses, switching to flexible exchange rates and reforming fiscal and financial institutions. Such country-led initiatives completely dominate attempts to overhaul the international financial architecture or launch new lending instruments, which have so far met with little success. While the initial results of the countries' initiatives have been encouraging, serious questions remain about the viability of the model of market-based external development finance. Beyond crisis resolution, which has received attention in the form of the proposed sovereign debt restructuring mechanism, the international financial institutions may need to ramp up their role as providers of stable long-run development finance to MACs instead of exiting from them. The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the view of the World Bank, its Executive Directors, or the countries they represent. Policy Research Working Papers are available online at .
International Economic Institutions: Different Tasks And Risks of Repercussions at the Global Level
International Journal of Professional Business Review
Purpose: International economic institutions occupy a great position at the level of global economies by providing great financial support to member countries. These institutions also seek to study their position at the international level and the extent of their capabilities to confront the crises that afflict developed and developing countries, as they have contributed to addressing the crises faced by the countries of the world. Since its inception and the repercussions and potential risks that threaten its economic stability. The study aims to achieve several goals, most notably studying the concept of international economic institutions and their implications for international economies, knowing the tasks of the International Monetary Fund and the World Bank regarding loan policies, and clarifying the implications and risks of loans provided by the Fund and the World Bank on the reality of global economies. Theoretical framework: To approve the hypothesis of the study and ach...
The debt crisis: a re-appraisal
2005
The 1980s' debt crisis is a landmark in developing economies' growth and stabilization. According to the most quoted empirical articles, external shocks and vicissitudes gave rise to crisis just because of delays in stabilization policies, engendered by internal conflicts and institutional immaturity. I review some of these papers, and find out some problems -in the measurement of shocks and foreign indebtedness, namely -whose corrections lead to opposite results: external shocks and foreign indebtedness explain that crisis regardless of domestic policies. At the same time, the strong correlation of income distribution to terms of trade changes and foreign indebtedness suggest that inequality may have contributed differently to that crisis: either through an economic channel, or through a political channel based on delays in reforms.
Debt crises, political change and the state in the developing world
2006
Dealing with increasing foreign debt has become a key part of government strategy across the developing world, particularly in wake of the payment crises that have shaken south-east Asia, Latin America, Turkey and Russia over the past decade. This working paper seeks to analyze how the political systems in these countries have adapted to the grave problems created by unpayable debt, examining in the process the structure of modern global finance, the history of the state in the developing world, and the demands placed upon governments by sudden rises in poverty and general economic turmoil. Focusing on case-studies of Argentina, Indonesia and Zambia, the paper unpicks the dynamics of these crises, suggesting that certain states have managed to strengthen their freedom of action and authority by recasting their relations with the public at home and with foreign lenders.