World Bank and IMF Aids: Do they always work?

If we think rationally, there are good and bad sides of almost everything and these institutions are no exceptions. Regarding the intentions behind establishment of the IMF and the World Bank, along with the ever-present criticism, it is really difficult to strictly choose any one side. However, after weighing both sides, I feel that they deny the receiving nations the freedom and flexibility of utilizing aids, and overpower the local policies with the ones of their interests, which itself questions the purpose of these institutions.

We can take example of Singapore which was given only a small amount of aid from the World Bank but it achieved huge economic growth (Bryan T. Johnson, 1996). The main reason behind it was the emphasis on the freedom of productive services of the economy rather than the World Bank aid. If Singapore had not focused on making its economy more liberal and kept on relying on loans it would have been never been able to achieve the success it is enjoying right now.

Similarly, the economies that are receiving aid from the World Bank have not been able to uplift their standards significantly. There even cases where instead of growing, the economies shrunk after aid projects (Bryan T. Johnson, 1996). The aid receiving countries generally have no substantial influence on how the projects will be run. The projects are approved by the executive panel and enforced in the way they think is right. Just to ensure that the aid is utilized well, they hinder the countries from controlling the activities going on in their economy. 

Moreover, the projects directly fund the issues like health and education, than promoting economic reforms which can have more impact on ensuring economic independence and sustainability. The situation is thus analogous to the saying, “If you give a man a fish, he will eat that day. If you teach him to fish, he will eat for his lifetime”. In such a condition, we can generalize that the economies are not able to achieve long-term development when they heavily rely on such agencies for assistance. They have no other choice than letting the projects work and expect that good things will come. They never become economically independent.

Reference:

Johnson, B. T. (May 16, 1996), The World Bank and Economic Growth: 50 Years of Failure, Accessed: November 28, 2012, Retrieved from: http://www.heritage.org/research/reports/1996/05/bg1082nbsp-the-world-bank-and-economic-growth

 © Dixit Bhatta 2013