The World's Bank and the Bank's world

Global Governance

Volumn 13, Issue 4, 2007, Pages 493-512

  Weaver, Catherine ^a  

^a UNIVERSITY OF KANSAS   (United States)

Author keywords

Nongovernmental organizations; Organizational culture; Organizational theory; Principal agent; World Bank

Indexed keywords

EID: 37349048277     PISSN: 10752846     EISSN: None     Source Type: Journal    
DOI: 10.1163/19426720-01304005     Document Type: Review

References (57)

1. See, for example, Jonathan R. Pincus and Jeffrey A. Winters, eds., Reinventing the World Bank (Ithaca: Cornell University Press, 2002);
2. Morten Bøås and Desmond McNeill, eds., Global Institutions and Development: Framing the World? (London: Routledge, 2004);
3. Michael Goldman, Imperial Nature: The World Bank and Struggles for Social Justice in the Age of Globalization (New Haven: Yale University Press, 2005);
4. and David Ellerman, Helping People Help Themselves: From the World Bank to an Alternative Philosophy of Development Assistance (Ann Arbor: University of Michigan Press, 2006).
5. Michael Barnett and Martha Finnemore, Rules for the World: International Organizations in Global Politics (Ithaca: Cornell University Press, 2004).
6. The analytical assumptions and tools offered in the model can also be extended to explain patterns of bureaucratic behavior and change as a function of internal principal-agent relationships, such as between the president of the World Bank and his staff. See Daniel Nielson, Michael J. Tierney, and Catherine Weaver, "Bridging the Rationalist-Constructivist Divide: Reengineering the Culture of the World Bank," Journal of International Relations and Development 9, no. 2 (June 2006). Notably, the PA model does not ask where the interests of Northern construction contractors and Southern citizens (project-affected groups) fit into the PA model. PA models focus almost exclusively on principals (here: member states) who possess formal delegation power over the Bank. NGOs fit in here primarily as third-party fire alarm mechanisms, monitoring and revealing deviant agent behavior that helps principals to effectively reduce information asymmetries and better employ control mechanisms to direct agent (IO) behavior. I agree that private corporations and Southern citizens (project-affected groups) do have influence, particularly over specific Bank projects. But their mechanisms of influence are quite different from those of principals and deserve much richer empirical investigation and analysis than space allows here. For the sake of analytical parsimony and showing the relationship between PA and sociological models, I have left out these variables.
7. Joseph Jupille, James Caporaso, and Jeffrey Checkel, "Integrating Institutions: Rationalism, Constructivism, and the Study of the European Union," Comparative Political Studies 36, no. 1 (2003): 7-40.
8. One exception is Interpol, which actively sought to limit its mandates and authority at critical points in its institutional history. Liv Coleman and Michael N. Barnett, "Designing Police: Interpol and the Study of Change in International Organizations," International Studies Quarterly 49, no. 4 (2005): 593-619.
9. See Barnett and Finnemore, Rules for the World, ch. 2. They expand on the conditions for IO autonomy and influence, adding the IO's legitimacy via its rational-legal authority.
10. Matthew McCubbins and Thomas Schwartz, "Congressional Oversight Overlooked: Police Patrols vs. Fire Alarms," in M. McCubbins and T. Sullivan, eds., Congress: Structure and Process (Cambridge: Cambridge University Press, 1987), pp. 426-440.
11. Barnett and Finnemore, Rules for the World, p. 36. The problem of principal preference heterogeneity leads to another problem: mission creep. When principals disagree, as is often the case, particularly between the Part I (donor) and Part II (borrow-ing) states, the Bank often receives conflicting or very complex marching orders and can result in goal incongruence. This leads to what Tamar Gutner calls the problem of "antinomic delegation," a situation in which "principals [delegate] tasks that do not easily conform to the institution's mission and internal incentive systems, or are simply very complex and difficult to carry out." Gutner argues that this, in turn, can contribute to a problem of mission creep, defined as the "mushrooming of new institutional goals without a corresponding reduction in old goals."
12. See Tamar Gutner, "Explaining the Gaps Between Mandate and Performance: Agency Theory and World Bank Environmental Reform," Global Environmental Politics 5, no. 2 (2005): 10-37.
13. In the International Development Association, principal member states are divided into two groups: Part I are the "donor" states that replenish the IDA funds every three years, and Part II are the "borrower" states.
14. McCubbins and Schwartz, "Congressional Oversight Overlooked."
15. Margaret Keck and Kathryn Sikkink, Activists Beyond Borders: Advocacy Networks in International Politics (Ithaca: Cornell University Press, 1998).
16. See also Erica Gould, "Money Talks: Supplementary Financiers and International Monetary Fund Conditionality," International Organization 57, no. 3 (2003): 551-586.
17. The literature on organizational culture is too vast to cover in this article. For a good overview of the perspective adopted here, see Edgar Schein, Organizational Culture and Leadership (San Francisco: Jossey-Bass, 1992).
18. Anthony Bebbington, Scott Guggenheim, Elizabeth Olson, and Michael Woolcock, "Exploring Social Capital Debates at the World Bank," Journal of Development Studies 40, no. 5 (2004): 33-64;
19. Bøås and McNeill, Global Institutions and Development.
20. See also discussions of "norm or policy entrepreneurship" within bureaucratic cultures - for example, Nuket Kardam, "Development Approaches and the Role of Policy Advocacy: The Case of the World Bank," World Development 21, no. 11 (1993): 1773-1786.
21. World Bank, Annual Report 2005 (Washington, DC: World Bank, 2005).
22. The US contribution to the IDA in the thirteenth replenishment round in 2002 (IDA 13) equaled 20.12 percent of all contributions. However, in IDA 14 (ratified 30 June 2005), the US contribution dropped to 13.78 percent.
23. Jonathan Sanford, "Multilateral Development Banks: Current Authorization Requests," Congressional Research Service Report for Congress, 3 May 2005, pp. 3-4.
24. US General Accounting Office, "Multilateral Development Banks: U.S. Firms' Market Share," US General Accounting Office, Report No. GGD-95-222, 1995.
25. At the same time, the proliferation of trust funds from multiple member states may also ironically grant more autonomy to Bank staff, who can proactively seek out these funds to pursue research or pilot projects outside the Bank's normal budget.
26. In the end, donors agreed that grants would constitute 18-21 percent of all IDA 13 aid. Sanford, "Multilateral Development Banks," p. 3.
27. Sanford points out that the European donors have demonstrated an interest in attaining greater influence over the IDA by increasing their relative shares of the IDA contributions and votes, thus balancing the US influence derived from its financial leverage. He notes that the Europeans pushed very hard during the IDA 14 negotiations to increase the overall size of the replenishment, contributing more themselves even as US donations declined. He suggests that this may mean "that the European countries (EU members control over 31% of the vote in the World Bank) may wish to exercise a larger leadership role than before in the MDBs" (Sanford, "Multilateral Development Banks," p. 4). If the European states should decide to act collectively, as they do in the WTO ministerial rounds, it could introduce a whole new dynamic to Bank board politics that challenges traditional understandings of US dominance over the Bank.
28. Graham Hancock, Lords of Poverty: The Power, Prestige, and Corruption of the International Aid Business (New York: Atlantic Monthly Press, 1989), p. 5.
29. Bruce Rich, Mortgaging the Earth (Boston: Beacon Press, 1984), p. 185.
30. World Bank, Annual Report 2005.
31. Johannes F. Linn, "The Role of the World Bank Lending in Middle Income Countries," comments presented at the Operations Evaluation Department (OED) conference "Effectiveness of Policies and Reforms," Washington, DC, 4 October 2004. In 1994, the private sector accounted for 72.5 percent of new foreign resource flows to all developing countries, while the World Bank accounted for only 3.3 percent. US General Accounting Office, "World Bank: US Interests Supported, but Oversight Needed to Help Insure Improved Performance," US GAO/NSIAD-96-212, September 1996.
32. Contributions from donor states currently amount to $18 billion of the $33 billion that will be made available to IDA borrowers between FY 2006 and FY 2009 (IDA 14). The remaining funds come from internal Bank sources, including repayment on past IDA loans and transfers from the IBRD net income. See http://web.worldbank.org/WBSITE/EXTERNAL/EXTABOUTUS/IDA/0.,contentMDK: 20189587~menuP K:413944~pagePK:83988~piPK:84004~theSitePK:73154.00.html (accessed 19 March 2006).
33. According to the World Bank's 2006 Medium-Term Strategy and Finance Paper (p. 12), actual and projected net flows for FY 2002-FY 2009 will remain negative until FY 2007 (estimated to be -$1,717 million). In FY 2008, the net flows are expected to return to a positive balance of $756 million. I thank one anonymous reviewer for pointing me to these data.
34. These include the private capital markets, other development aid agencies, and epistemic communities of scholars in the international development regime. However, for the sake of brevity I focus here on the role of NGOs.
35. The Bank Information Center (BIC) keeps track of the primary NGO campaigns and their impact on changing Bank policies and practices. See Bank Information Center, "How Project Campaigns Influence Policy Changes at the World Bank," Bank Information Center Report, 11 December 2001, available at www.bicusa.org. For a critical assessment of the growing NGO influence over the Bank, see Sebastian Mallaby, The World's Banker: A Story of Failed States, Financial Crises, and the Wealth and Poverty of Nations (New York: Penguin Press, 2004).
36. Foreign Operations, Export Financing and Related Programs Appropriation Bill of the 109th US House of Representatives, Report 109-152, signed into law 24 June 2005.
37. Susan Park, "Norm Diffusion Within International Organizations: A Case Study of the World Bank," Journal of International Relations and Development 8 (2005): 111-141.
38. Daniel Nielson and Michael J. Tierney, "Theory, Data, and Hypothesis Testing: World Bank Environmental Reform Redux," International Organization 59, no. 3 (2005): 785-800.
39. Others, however, strongly dispute that environmental mainstreaming has been successful in the Bank, and even suggest that environmental safeguards and lending have been declining in recent years. See, for example, Gutner's response to Nielson and Tierney: Tamar Gutner, "World Bank Environmental Reform: Revisiting Lessons from Agency Theory," International Organization 59, no. 3 (2005): 773-783.
40. World Bank Staff Association, "The Bank Group Is Always Navigating in Political Waters," World Bank Staff Association Newsletter, October 2001, pp. 1-4.
41. Gutner, "World Bank Environmental Reform."
42. Devesh Kapur, "From Shareholders to Stakeholders: The Changing Autonomy of Governance of the World Bank," in Pincus and Winters, Reinventing the World Bank.
43. A 1994 US GAO report revealed that in 1988-1989, 90 percent of the Young Professionals Program recruits were economists. Increasingly criticized for this bias in selectivity, the Bank opened its recruitment process so that by 1994 the number of entering young professionals with economics degrees fell to 63 percent. See "Multilateral Development: Status of World Bank Reforms," US GAO/NSIAD-94-190BR, June 1994. A recent interview with a young professional (a political scientist) confirmed this trend (interview with Bank official, April 2005). In a study conducted in 1991, Stern found that of the 586 staff surveyed in the research and policy department, 46 percent had undergraduate degrees and 55 percent had graduate degrees exclusively in economics or finance. Stern estimated that the ratio of professional economists on the Bank's staff put the ratio of economists to noneconomists at ten to one. Nicholas Stern with Francisco Ferreira, "The World Bank as 'Intellectual Actor,'" in D. Kapur, J. P. Lewis, and R. Webb, eds., The World Bank: Its First Half Century (Washington, DC: Brookings Institution, 1997).
44. See also Michelle Miller-Adams, The World Bank: New Agendas in a Changing World (New York: Routledge Studies in Development Economics, 1999), p. 30.
45. See Nielson, Tierney, and Weaver, "Bridging the Rationalist- Constructivist Divide," on staffing trends during the Strategic Compact reform period.
46. Susan George and Fabrizio Sabelli, Faith and Credit: The World Bank's Secular Empire (Boulder: Westview, 1994), p. 193. See also Bebbington et al., "Exploring Social Capital Debates."
47. Conversations with Jean-Jacques Dethier, Budapest, Hungary, April 2005, and Washington, DC, July 2005. See also Robin Broad, "Research, Knowledge, and 'Paradigm Maintenance': The Political Economy of Research Within the World Bank's Development Economics Vice-Presidency," Review of International Political Economy 13, no. 3 (2006): 387-419;
48. and Vijayendra Rao's and Michael Woolcock's article in this issue, "The Disciplinary Monopoly in Development Research at the World Bank." The evaluation report referred to here is "An Evaluation of World Bank Research, 1998-2005," cochaired by prominent economists Abhijit Banerjee, Angus Deaton, Nora Lustig, and Ken Rogoff. This report is available on the World Bank's external website.
49. Kardam, "Development Approaches," p. 1773; Bebbington et al., "Exploring Social Capital Debates."
50. Moises Naim, "The World Bank: Its Role, Governance, and Organizational Culture," Bretton Woods: Looking to the Future (Washington, DC: Bretton Woods Commission, 1994), p. C-283.
51. Robert Wade, "Japan, the World Bank, and the Art of Paradigm Maintenance: The East Asian Miracle in Political Perspective," New Left Review, 1, no. 217 (May-June 1996): 3-36;
52. Wade, "Showdown at the World Bank," New Left Review, 7 (Jan.-Feb. 2001): 124-137;
53. and Wade, "US Hegemony and the World Bank: The Fight Over People and Ideas," Review of International Political Economy 9, no.1 (2002): 215-243.
54. Leaked memo from the Middle East and North Africa (MENA) department, 1996. On file with author.
55. The cases in point are the dismissals of chief economist Joseph Stiglitz, William Easterly, and Ashraf Ghani. See Wade, "The Fight Over People and Ideas."
56. David Ellerman, "Mixing Truth and Power: Implications for a Knowledge Organization," World Bank Staff Association Newsletter, Nov.-Dec. 2001, p. 3.
57. Wade, "Japan, the World Bank, and the Art of Paradigm Maintenance," p. 35.