The internet phenomenon of Web 2.0 (http://en.wikipedia.org/wiki/Web_2.0) – the name given to the wave of internet businesses and websites such as YouTube (www.youtube.com), Facebook and MySpace transforming the way people interact with the ‘Net – has also given birth to two new development-themed social networking websites.
This powerful tool to bring people together is galvanizing the resources of entrepreneurs and those who want to help the poor like never before. The sites are becoming a new weapon in the fight to eradicate poverty.
Social networking websites use various tools and applications (or ‘apps’ for short) to enhance the ability of users to connect and get things done. By bringing together a community of like-minded people, they are able to shorten the time it takes to organize and kick-start events. Web 2.0 can be used to build communities and social and business networks. By being able to store vast quantities of information online, it becomes faster to work and reduces the painful delays brought on by slow connections.
All these new tools are making it easier and easier for entrepreneurs to work from home, in internet centres, or anywhere there is a wireless connection – and it is slashing the costs of managing a business. All the applications are online so there is no need to be hidebound by one operating system or hardware capability.
Two newly launched social networking sites are targetting the poverty-eradication community.
One is named after the Bottom of the Pyramid (BOP) concept as conceived by C.K. Prahalad. The BOP is the 4 billion people at the base of the global economic pyramid. As Prahalad sees it, they represent a vast market of unmet needs for entrepreneurs to tackle.
New social networking website BOP Source hopes to make the money meet the market. Started by Jenara Nerenberg, BOP Source wants to put social networking tools into the hands of the world’s poor. It is a place to post business ideas and collaborate with others to make them happen. It is also a tool to educate businesses about the BOP and what the poor need done. And it hopes to help NGOs broaden their relationships with their constituencies and companies.
While marketers can learn about the needs of the BOP, individuals can directly express their needs on the website and seek out the right people to solve problems.
Another social networking website is Business Fights Poverty. Already at 1,000 members, it is a multimedia offering, with podcasts, videos, interviews and discussions about the role of business in addressing development goals.
Published: November 2008
Resources
BOP Source is a platform for companies and individuals at the BOP to directly communicate, ultimately fostering close working relationships, and for NGOs and companies to dialogue and form mutually valuable public-private partnerships that serve the BOP. Website: http://bopsource.ning.com/
Business Fights Poverty: Business Fights Poverty is the free-to-join, fast-growing, international network for professionals passionate about fighting world poverty through good business. Website: http://businessfightspoverty.ning.com/
Afriville is a Web 2.0 service and an African Caribbean social network. Afriville is a community website along the lines of the famous MySpace. Users are free to message and post profiles. The difference is that the user is able to choose how closed or open the networks are. The site features a state of the art music management system which allows African and Caribbean artists to get straight in touch with their fans.
Both Yahoo! And Google offer extensive free online tools for entrepreneurs and businesses that integrate seamlessly with their email services.
Kabissa: Space for Change in Africa: An online African web community promoting and supporting the transition to Web 2.0 services in Africa. Offers lots of opportunities to meet people throughout Africa and learn more.
Global Voices: An initiative from the Reuters news agency to aggregate the global conversation online from countries outside the US and Western Europe.
Information, Knowledge and Communication: Web 2.0 in Development Cooperation Bonn, Germany, 27-28 November 2008, Gustav Heinemann Haus. Website: http://www.eadi.org/index.php?id=994
3rd IEEE/ACM International Conference on Information and Communication Technologies and Development (ICTD2009). Website:http://www.ictd2009.org
Development Challenges, South-South Solutions was launched as an e-newsletter in 2006 by UNDP’s South-South Cooperation Unit (now the United Nations Office for South-South Cooperation) based in New York, USA. It led on profiling the rise of the global South as an economic powerhouse and was one of the first regular publications to champion the global South’s innovators, entrepreneurs, and pioneers. It tracked the key trends that are now so profoundly reshaping how development is seen and done. This includes the rapid take-up of mobile phones and information technology in the global South (as profiled in the first issue of magazine Southern Innovator), the move to becoming a majority urban world, a growing global innovator culture, and the plethora of solutions being developed in the global South to tackle its problems and improve living conditions and boost human development. The success of the e-newsletter led to the launch of the magazine Southern Innovator.
Southern Innovator’s online archive portal was launched in New York City, U.S.A. (home to the UN’s headquarters) in 2011 (southerninnovator.org).
Background: This is the original text from the brochure UNDP in Mongolia: The Guide first published in 1997. It, for the first time, provided a rolling update on what the United Nations was doing in Mongolia, offering key contacts and data to help advance human development in the country. It introduced transparency to the UN’s work in the country and made it easier to hold programme and project staff to account.
Mongolia – Population
With an area of more than 1.5 million square kilometres and a population of 2.38 million as of October 1997, Mongolia has a population density of only 1.5 people per square kilometre, one of the lowest in the world. The country has a relatively low growth rate of 1.6 per cent (1995), down from 2.5 per cent in 1989. At this rate, Mongolia’s population will reach 2.5 million by the year 2000.
Despite the popular image of Mongolians as nomadic herders, it is an increasingly urbanized country – 51.9 per cent of the population is urban, 48.1 per cent rural. More than one quarter of Mongolians live in the capital city, Ulaanbaatar. The other major urban centres are Darhan (pop. 90,000) and Erdenet (pop. 65,000 ).
The country is divided into 21 aimags (provinces), plus the autonomous capital region. The aimags are:
In the centre: Tuv, Uvurhangai, Arhangai
In the north: Bulgan, Selenge, Hovsgul, Zavhan, Darhan-Uul, Orhon
In the east: Hentii, Dornod, Suhbaatar
In the west: Hovd, Uvs, Bayan-Olgii, Gov-Altai
In the south: Dundgov, Dornogov, Omnogov, Bayanhongor, Gobisumber
The People:
About 86 per cent of the country’s population are Kalkh Mongols. Another 7 per cent are Turkic in origin, mostly Kazakhs living in the western aimags of Bayan-Olgii and Hovd. The rest belong to a wide variety of ethnic groups, including the Buryat, Dariganga, Bayad, Zakchin and Uriankhai. Mongolia’s smallest ethnic group is the Tsaatan, about 200 of whom live as reindeer herders in the far north of the country.
During the communist period, Mongolia was home to tens of thousands of Russians. Few remain.
More than 4 million Mongols live outside Mongolia, in Russia and the Chinese province of Inner Mongolia.
Human Development:
– Mongolia’s per capita GDP is U.S. $359 (1995). But this fails to take into account the cashless subsistence and barter economy widespread in rural areas.
– Poverty, though widespread, is difficult to tabulate. 1996 government figures put the poverty rate at 19.2 per cent – 19.8 per cent for rural areas, 18.7 for urban areas. But State Statistical Office figures for October 1997 indicate 36.8 per cent of urban residents and 27.5 per cent of rural Mongolians live below the poverty line.
– Omnogov, Gobisumber, Hovsgol, Ovorhangai and Bayanhongor are the aimags with the highest poverty rates.
– The average monthly household income in September 1997 was 58,516.7 tugrugs (U.S. $73). Average expenditure was 58,124.8 tugrugs. In 1995, 48 per cent of household expenditure went on food. In poor households, the figure was 64 per cent.
Social Data:
Life expectancy: 63.8 years (1995)
Infant mortality rate: 40 per 1000
Under five mortality rate: 56.4 per 1000
Maternal mortality rate: 185.2 per 100,000 (1995)
One-year-old immunization rate: tuberculosis 94.4 per cent, measles 85.2 per cent (1995)
Access to safe drinking water: rural 89.9 per cent, urban 46.1 per cent (1995)
Access to sanitation: 74 per cent (1995)
Adult literacy rate:
men 97.5 per cent,
women 96.3 per cent
Primary school net enrollment: 93.4 per cent
Secondary school net enrollment: 56.9 per cent
Physicians: 26 per 10,000
Hospital beds: 9.9 per 1000
Daily calorie intake: 2278.2
Data 1996 unless otherwise indicated. Sources: State Statistical Office, Human Development Report Mongolia 1997
Mongolia – Economy
An Economy in Transition:
After 70 years of centrally planned economy, Mongolia is embracing free-market principles with a vengeance. Economic liberalization began under the Mongolian People’s Revolutionary Party government in the early 1990s. The Democratic Coalition government, elected in June 1996, has vowed sweeping economic changes, including privatization of state assets, liberalization of trade and promotion of foreign investment.
The foreign investment law now encourages foreign investment in the form of share purchases, joint ventures and wholly foreign-owned concerns. Mining companies are given significant tax holidays. In May, 1997 parliament abolished customs duties expect on alcohol, tobacco and oil products.
All of this has been a shock to Mongolia and Mongolians. The country’s GDP shrank by a third in the early 1990s, though it has slowly recovered since. Inflation topped 300 per cent in 1993, but was brought down to below 50 per cent by 1997. The tugrug fell from 40 to U.S. $1 in 1991 to 800 to the dollar in 1997. Unemployment officially stands at 6.5 per cent – unofficial estimates are much higher.
The government’s ambitious privatization scheme has stalled; manufacturing and exports are down; imports are up. Adding to the problems is the fact that world prices for Mongolia’s major export items – copper and cashmere – have fallen.
The state retains at least 50 per cent ownership of the nation’s flagship enterprises, including the national airline, MIAT, the Gobi cashmere company and the power stations.
Mongolia has a resource-based economy, exporting mostly raw materials and importing mostly processed goods. The top exports are mineral products, textiles, base minerals, hides, skins and furs and animals and animal products. The major imports include petroleum products, industrial equipment and consumer goods.
Mongolia’s major trading partners are its two neighbours, China and Russia, though Korea and Japan are becoming more important – and the number-one export destination is Switzerland.
Sidebar: The rural economy
Half of Mongolia’s population is rural, and herding remains the backbone of the Mongolian economy. Agriculture accounts for 30 per cent of the nation’s GDP. The number of herding households grew during the economic turmoil of the early 1990s, and now stands at more than 170,000; there are 30 million head of livestock in Mongolia. Herders produce meat, skins and furs; more and more herders are investing in cashmere goats, a substantial money-earner.
Cultivation of crops, on the other hand, is limited. Before 1990, Mongolia was self-sufficient in cereals and even exported to the Soviet Union. But the sector suffered badly in the early 1990s. The 1997 harvest was 239,000 tonnes, 56 per cent of 1991-95 levels and only 40 per cent of pre-1990 harvests. Mongolia must now import 40 per cent of its cereal needs, a factor that contributes to a vulnerable food-security situation. Cultivation of vegetables is up, but remains minor – only 31,000 tonnes in 1997.
Sidebar: Rich in resources
Mongolia is resource-rich. This vast territory contains 15 per cent of the world’s supply of fluorspar and significant deposits of copper, molybdenum, iron, phosphates, tin, nickel, zinc, tungsten and gold, as well as at least 100 billion tonnes of coal.
Copper is the nation’s number one export.
Minerals account for more than a third of Mongolia’s GDP and earn half of its hard currency. Gold production is increasing.
Mongolia also contains significant reserves of oil, which could transform the economy. But infrastructure and transportation limitations mean that commercial extraction is limited. The completion of a pipeline to China could change all this.
Economic Data:
Exchange rate: $1 = Tg 808 (Nov 1997)
GDP: Tg 185.5 billion (1996)
GDP per capita: Tg 228,605 (1996)
Inflation: 325 per cent (1992), 53 per cent (1996)
State budget expenditure: Tg 203.6 billion (Jan-Oct 1997)
State budget revenue: Tg 176 billion (Jan-Oct 1997)
Seven decades of communist rule in Mongolia began to crumble in 1990, when the collapse of the old Eastern Bloc brought the first pro-democracy demonstrations. The ruling Mongolian People’s Revolutionary Party, which had already initiated a Mongolian version of glasnost, permitted the nation’s first multiparty elections in July, 1990.
Superior organization helped the MPRP win both the 1990 and 1992 elections (taking 71 of 76 parliamentary seats in the latter), but reform picked up speed. In 1992, the country adopted a new Constitution that enshrined human rights, private ownership and a state structure based on separation of power between legislative and judicial branches.
In the June 1996 election, major opposition groups united to form the Democratic Coalition, made up of the National Democratic Party, the Social Democratic Party, the Believers’ Party and the Green Party. Somewhat to its own surprise, the Coalition won a healthy 50 of 76 seats in the State Ikh Hural, or parliament. The composition of the Hural is now: National Democrats 35, Social Democrats 15, MPRP 25, Mongolian Traditional United Party 1.
In addition to their economic reforms, the Democrats have carried out radical restructuring of government, slashing the number of Ministries from 14 to 9.
The government has a healthy majority, but tensions sometimes emerge between the coalition partners. Mongolia’s transition to democracy has been remarkably peaceful, and the young democracy is robust – there are now more than 20 political parties in the country.
But economic hardship has caused resentments. In the 1997 Presidential election, voters elected N. Bagabandi, the candidate of the MPRP. In the fall of 1997, the government had to face demonstrations from students and pensioners and an opposition campaign that led to a confidence vote in parliament — a vote the government easily survived.
Political structure:
Mongolia has a parliamentary system of government, with a 76-seat legislature called the State Ikh Hural. The President, directly elected for a four-year term, is second in authority to the legislature, but he appoints judges and has the power of veto (which can be overturned by a 2/3 vote in parliament).
Chronology:
1911 collapse of Manchu Qing Dynasty; Mongolia declares its independence
1919 China invades Mongolia
1921 with Soviet help, Mongolia gains final independence from China
1924 Mongolian People’s Republic declared
1990 pro-democracy protests; Constitution amended; first multiparty elections
1992 second multiparty elections; new Constitution adopted
1996 Democratic Coalition elected as Mongolia’s first non-communist government, headed by Prime Minister Enkhsaikhan
1997 N. Bagabandi from the MPRP elected President
Voter turnout:
1996 elections: 92.2 per cent
1996 local Hural: 64.0 per cent
1997 presidential: 85.1 per cent
Mongolia – Society and Culture
Mongolia has a unique and durable traditional culture, centred around the herding lifestyle. Herders remain semi-nomadic, moving their animals with the seasons as they have for centuries
Many urban Mongolians retain strong links to the land, both literal and sentimental, and the country’s performing and visual arts often celebrate the landscape and the animals — especially horses — that are central to Mongolian life. Mongolia has several distinctive musical instruments and styles, including the morin khuur (horsehead fiddle), the long song (urtyn duu) and the throat-singing style known as khoomi.
After seven decades of communism, Mongolians are once again celebrating their traditional culture, and embracing the image and legacy of the most famous Mongolian of all time – Chinggis Khan, who in the 13th century initiated the Mongol Empire, the greatest land empire the world has ever known. He gives his name to everything from a brand of vodka to a luxury hotel, and centres for academic Chinggis research have been set up.
In sports, Mongolians favour the “three manly sports” — wrestling, archery and horse racing — that form the core of the annual festival known as Naadam. Mongolian wrestlers have won a number of medals at international competitions and are even entering the field of Japanese Sumo.
The 1990s have seen a flowering of freedom of expression. Mongolia has an extraordinary 525 newspapers and a wide range of magazines, while the first private radio and television stations have been established.
Religion:
Mongolians have been Buddhists since the 16th century, when the Mongolian king, Altan Khan, was converted by Tibetan lamas. In the pre-revolutionary period, Mongolia was ruled by a series of Living Buddhas, or Jebtzun Damba. The eighth, and last, Jebtzun Damba was removed after the communist takeover.
Traditionally, monasteries were centres both of learning and of power. It’s estimated Mongolia had 100,000 monks, or lamas, in 1921 — one third of the male population. In the 1930s, this power became the focus of a ruthless series of purges that reached a climax in 1937. Most of the country’s monasteries were destroyed, and as many as 17,000 monks were killed.
Today, Mongolia is once again embracing its Buddhist heritage. Monasteries are being restored, and are once again crowded with worshippers. The Dalai Lama is an enormously popular figure and has visited the country several times.
For many Mongolians, Buddhism is flavoured with traces of Shamanism, an even more ancient spirituality.
Mongolia also has a significant Muslim community — about 6 per cent of the population. These are mostly ethnic Kazakhs living in the far west of the country. The opening-up of the country has led to an influx of Christian missionaries, and this remains a source of some tension and debate.
A Young Country:
Mongolia is a remarkably young country — more than 60 per cent of the population is below the age of 30, and 40 per cent of Mongolians are younger than 16. This young generation, with its embrace of Western styles and ideas, is changing the complexion of the country. Western pop music and North American sports like basketball have a huge following among Mongolia’s youth. So, too, do homegrown artists like the pop groups Nikiton and Spike and the singer Saraa.
Social Data:
Television sets: 6.2 per 100 (1995)
Newspapers: 2 per 100 (1995)
Number of telephones: 82,800
Marriage: 10.9 per 1000 over 18
Divorce: 0.7 per 1000 over 18
Number of pensioners: 287,200
Crimes reported: 20,454 (Jan-Oct 97)
As percentage of same period in 1996: 114.4 per cent
Data 1996 unless indicated. Sources: State Statistical Office, Human Development Report Mongolia 1997
In the arid Gobi Desert spanning the two Asian nations of China and Mongolia is a bold attempt to make wine and reduce poverty. The environment is harsh, with temperatures swinging from sub-zero winter cold to sweltering summer heat. The desert is also home to high winds and notorious dust storms that plague China’s capital Beijing every year.
China’s wine industry is booming as people have embraced the drink’s perceived health-giving qualities and are using it to celebrate new-found wealth as the economy has flourished. Current wine consumption in China is half a litre per person per year, low compared to the French average of 55 litres a year. But this is growing quickly.
One innovative winery is using this wine boom to tackle poverty and increase local wealth.
Chateau Hansen (hansenwine.com) in Inner Mongolia has been operating since the 1980s, but recent expansion and modernization have significantly increased its earning power and the number of people it employs. Located in an area with high levels of poverty, it has developed a successful wine business in the desert by tapping the plentiful water supplies from the Yellow River. The area is now considered one of the best for growing wine grapes in China.
Located near Wuhai city (http://en.wikipedia.org/wiki/Wuhai), 670 kilometres west of Beijing, Chateau Hansen has 250 hectares of Merlot, Cabernet Sauvignon and Cabernet Gernischt grapevines.
The vines are buried under the sand to protect them from the harsh weather in the winter.
“The lowest temperature gets down to is below -20 degrees C (Celsius), but in summer, it can reach 38 or 40 degrees C (102 or 104 F),” Li Aixin, Chateau Hansen’s head of viticulture, told MSNBC. “Here the four seasons are good for the growth of the grapes, but in the winter we need to bury them in the earth” to keep them from freezing. Hansen has been ambitious in its approach. It has a European-style chateau, hotel and even a French wine expert, Bruno Paumard, on site to help with the wine making. The chateau’s cellar now stores 1,000 barrels of wine.
Paumard arrived in China in 2005. He has thrown himself into Chinese culture and tasted and tested the country’s wines. Hansen has produced 400,000 bottles of wine, mostly sold in China, where red wine drinking has become a big part of the culture of celebration.
Hansen sells the majority of its wine to government organizations and regional enterprises. It has seen its profits double to 100 million yuan (US $18 million) in 2011 and hopes sales will double again in 2012.
“Eighty per cent of the market in China is really the local governments who encourage the enterprises in their cities to consume red wine, of a certain brand, at their banquets in the place of Chinese ‘baijiu’ for their incessant and never-ending toasts,” said Paumard, referring to China’s home-grown rice wine. “So it’s actually a market that’s totally unique.”
Hansen’s Cotes du Fleuve Jaune du Desert de Gobi has become one of the biggest award-winning wines in China. It received a bronze medal from the International Wine Challenge of Blaye, near Bordeaux, France.
China now stands as the world’s fifth-largest consumer of wine (International Wine and Spirit Research study) (http://www.iwsr.co.uk/). The market in China is forecast to grow by 54 per cent from 2011 to 2015, adding up to a billion bottles.
In this busy marketplace, Hansen prides itself on being organic. It also has the goal of turning the arid desert into green vineyards using irrigation from the Yellow River and groundwater. It wants to create employment and raise living standards in the region and is fitting into a national strategy to raise living standards for poor regions.
There is a training programme for the around 400 workers employed by the winery. No pesticides are used and only sheep dung is used as a fertilizer provided by 3,000 sheep on site. Trees also play a role in providing humus (http://en.wikipedia.org/wiki/Humus) for the vines. There is also accommodation in a nearby village for the employees.
There are 250 hectares of vineyards and the grapes are harvested by hand. Expansion began in 2001 when the chateau and winery were built. It is strategically located just 500 metres from an airport and the chateau has a luxury hotel. Around 20,000 people visit a year, according to Hansen’s website, bringing in further income for the winery. The winery also uses Mongolian culture and cuisine as a selling point to attract tourists.
The chief executive of Hansen is Han Jianping, who made his first fortune in real estate development.
Han believes that “the momentum of growth in the wine industry is huge.”
“With a great foundation of more than 1 billion people as we have in China, and (the industry) growing at 20 or 30 per cent a year, there is a huge potential for more growth,” he said.
Republished in 2021 in cnwinenews.com.
Resources
1) China Wine Online: An information service that also produces the China Wine Business magazine and runs the China Wine Study Tour. Website: http://www.winechina.com/en/index.asp
In January 1949, US President Harry Truman set forth a challenge for the remainder of the 20th Century: the wealthy nations must aid the poorer ones to become wealthier and more democratic: in short, to become like the United States (Starke 2001: 143). The means of accomplishing this was to be international development, and its tool, foreign aid.
Decades later, this dream was being described as a nightmare. One of the most articulate proponents of the aid-is-waste thesis is Graham Hancock. His Lords of Poverty comes down unequivocally on the side of failure. Hancock argues that aid “is a waste of time and money, that its results are fundamentally bad, and that – far from being increased – it should be stopped forthwith before more damage is done (Hancock 1996: 189).”
Hancock originally wrote those words in 1989. Subsequently, a decade has past where international development organizations have attempted to prove the success of development in a wider context of the collapse of the Soviet Union, a crippling economic crisis in Asia and the former Soviet Union, and dizzying changes in information technologies. In addressing the proposition that “by the end of the 20th century, ‘development’ had failed”, it is important to clarify the underlying intentions of interntional development and whi the true actors are, and the interaction of politics and economy.
This paper will focus on one actor, the World Bank, which has seen itself as the principal international development organization for the past 55 years. I argue that the World Bank has been very successful at building a dependence on development institutions, itself in particular, but has failed at development as it has defined it: the elimination of poverty. The four main power structures underpinning the world economy described by Susan Strange – security, production, financial, and knowledge (Strange 2000: 43-119) – are each addressed by the World Bank’s programmes to varying degrees of success. It is the World Bank’s interaction with these power structures that have been a source of both stability and instability in the past 55 years.
I have chosen the World Bank because, as Hancock notes, it is
The pace-setter of Development Incorporated … the fact is that all official aid agencies, whether bilateral or multilateral, co-operate very closely with it, imitate its policies and its sectoral priorities and, to a large extent, share what might be called its ‘philosophy of development’. (Hancock 1996: 57)
I conclude that international development is now entering a new phase spurred on by the economic crisis affecting many developing nations after 1997, and not facing its destruction, in spite of rowdy protests around the world. The Asian Crisis provoked an increase in development spending, while simultaneously significantly raising awareness of international development institutions. At the beginning of the 21st century, the rise of the non-governmental organization as a key actor in development is strongly pronounced.
The fact that NGOs and private consulting companies are becoming the principal delivery mechanisms for development projects demonstrates a global lack of faith in government-run agencies and a belief in neo-liberal assertions that the private sector can do a better job.
1. Development: pernicious or persistent?
The word development needs to be pulled apart. Its endurance as a concept comes down to its ability to mean many things to many people. It is a loaded word, which upon closer inspection, becomes befuddingly vague and as slippery as an oil-soaked eel.
Development as defined by President Truman at the start of the development period of the 20th century meant “nothing less than freeing a people from want, war, and tyranny, a definition it is hard to improve on even today (Starke 2000: 153).”
Dictionary definitions of development take in ideas of growth, progress and evolution. As Hancock noted in Lords of Poverty, “underdevelped” countries “must in some sense be stunted and backward; ‘developed countries’, by contrast, are fully grown and advanced (Hancock 1996: 41).” Hancock bristles at the moralistic notion that particular countries may need to develop; in this he would probably have clashed with Marx, as Fieldhouse notes: “much as he hated capitalism, Marx saw it as a necessary agency for creating what we now call development in India and, by inference, most parts of the Third World (Fieldhouse 1999: 44).”
A refinement of this definition is one offered by the World Bank’s president in the 1980s, Barber Conable. Development offers measures “to promote economic growth” and “combat poverty”; those are the “fundamental tasks of world development” with the World Bank being the “world’s principal development agency” (Hancock 1996: 41).
More recently, in answer to heated criticism from donor nations and powerful NGO lobbies, the World Bank has adopted a more urgent tone on poverty. “Poverty reduction is the most urgent task facing our world today. The World Bank’s mission is to reduce poverty and improve living standards through sustainable growth and investment in people (World Bank 2000).”
Assessing development according to the World Bank’s definition of development, with its focus on eliminating poverty, it is very hard to say this has been a success, as I show further on.
2. Failure thesis: why the World Bank is a flawed poverty-fighter
The notion that development has failed has its critics on both the left and the right. On the right, development is seen as state welfare, bailing out countries that need to get their own houses in order. On the left, development has been seen, variously as a tool of the wealthy states to control the poorer states, a means to prop up corrupt but friendly elites, environmentally destructive, and a subsidy system for multinationals. Marxists have straddled the contradictions of criticising the effects of development while also chastising the wealthy West for not doing enough for the developing nations.
Since 1990 World Bank cumulative lending has totalled US $162,789.3 million (World Bank Annual Report 2000). Since its inception, global aid has risen from US $1.8 billion a year in the 1950s, to US $6 billion in the 1960s, to US $60 billion in the 1980s, to where it currently stands at US $129.2 billion (World Development Indicators Database). The Bank disburses US $25 billion a year (World Bank). Vast amounts of money is flowing back to the West in the form of payments on debts nearly totalling US $3 trillion (Starke 2000: 153).
In fact, the World Bank through its lending wings, the International Bank for Reconstruction and Development (IBRD) and the International Development Agency (IDA), embodies an inherant contradiction: it has shown itself to be unable to decouple its mandate to recover funds from what might be the wiser strategy. As the Bank puts it, “while the country must “own” its vision and program, the Bank must “own” and be accountable to shareholders for its diagnosis and the program it supports (World Bank).”
Over the development epoch, loans were accepted by countries that have shown themselves to be incapable of repayment, leading to the debt crisis today. While this crippling debt has been accumulated, the world has come no closer to eradicating poverty.
A brief look at the figures shows the scale of the challenge. Development policies have not been able to come to grips with escalating population rates in developing nations. During the period of development, the population of the regions with the lowest rates of development have risen rapidly. As Strange notes:
World population doubled between 1950 and 1984, rising rapidly from 2.5 billion to over 4.5 billion and topping 5 billion by the end of the decade… Numbers have increased most dramatically in the three ‘developing’ regions of Latin America, South Asia and Africa … (Strange 2000: 82)
Aid on the macro scale is also unequally divided, with the 10 countries that two-thirds of the world’s poor live in receiving less than a third of overseas development aid (Raffer and Singer 1996). And when it arrives in a country very little of it gets into the hands of the poor. Some generously claim that 20 per cent of aid reaches the poor (Raffer and Singer 1996), while Hancock maintains even less wends its way to the poorest.
According to the United Nations Development Programme, more than 1.3 billion people live on just US $1 a day; and 2.8 billion live on US $2 a day – nearly half the world’s population (UNDP). This number has remained unchanged since 1990 (Starke 2000: 4). In fact, in sub-Saharan Africa, South Asia and the former communist countries, “the number living in poverty is substantially higher than the figures recorded a decade ago (Starke 2000: 4).” The most noted trend is the diffusion of poverty and its more pronounced ability to sit side-by-side with an economic boom in developing – and developed – countries, fuelled by increased investment, especially in the areas of information technology and telecommunications.
The World Bank has set the target date of 2015 to cut extreme poverty by half. It remains highly dubious as to how the World Bank has any better idea of how to do this than it did in the first 55 years of development theory and practice. Theories have been misguided in the past, as Fieldhouse reminds us:
Central to all post-1950 attitudes to Third World development was the belief that the primary need was capital investment. The defining feature of underdevelopment was thought to be lack of sufficient capital to pay the cost of overcoming the perceived ‘structural’ obstacles to development. A short shopping list of what were then believed to be the necessary measures would include the following: first, the improvement of infrastructure – communications, power and water supplies, urban facilities and hospitals; secondly, education to raise the general level of literacy and to generate skilled workers at all levels, from the highest posts in government and industry, which was believed to be the basis of western affluence and must therefore become that of the Third World. (Fieldhouse 1999: 226)
It has been a period noted by a belief that development could be accelerated, and that the conditions necessary for development were understood and all that was necessary was capital and will.
In fact international development, when it has intended to eliminate poverty, has been unable to detatch itself from what can only be called the whirlpool effect, or the core-periphery debate: a tendency for wealth and power to be dragged into the centre, like a whirlpool: to wealthier nations, wealthy elites, capital cities. While aid is ostensibly about countering this trend, it fails miserably at doing it. The continent that requires the most aid, Africa, receives the least – in the 1990s the World Bank lent Africa a total of US $1,872.8 million (World Bank). It lent Latin America and the Caribbean US $51,520.8 million (World Bank). If, as Truman said, development is about helping those suffering from want, war and famine, then Africa is being ill served.
Looking at the evidence, it shows that aid follows the same pattern as private investment, seeking out success stories, rather than the poor, who by definition are society’s losers. It is an established fact that most trade flows and foreign direct investment is between the wealthy countries (Hirst and Thompson 2000: 2). The percentage of world trade captured by the developing countries has dropped from 50 per cent in the 19th century to 22 per cent (Hoogvelt 1997: 14). It is this tendency that builds into international development a peripherising effect that leaves billions on the outside of development and wealth acquisition – and draws the criticism that development has failed at its principal aim, as the World Bank puts it, to reduce poverty.
3. Security/production
Strange has noted where power lies in the modern world. Those who can influence or determine the structures of power will wield enormous influence over economic and political relations. The World Bank is an institution that has had a profound effect on the power structures of the world economy, with positive and negative consequences.
Security is the “provision of security by some human beings for others (Strange 2000: 45).” Strange focuses on the state as the primary provider of this security in the current international political system. She also broadens this definition to include “security from slow death by starvation, and security from disease, from disablement, or from all sorts of other hazards – from bankruptcy to unemployment (Strange 2000: 47).” And she attributes most conflict to disagreements over authority.
One of the biggest challenges now facing developing states is that of authority over their affairs. It is a two-pronged challenge, from outside and from within, as much of development aid now targets NGOs and civil society.
It is arguable that the World Bank’s greatest contribution to a state is its advice on governance, legislation and anti-corruption. While the World Bank is not tasked with a specific security mandate, it does play a significant role in supporting the viability of nation states, and offers up an off-the-shelf range of authoritative institutions that nation states are advised to take up. Through Structural Adjustment Loans (SAL) and their equivalents, countries are persuaded to adopt these measures or face losing the lifeline of funds.
These policies also dovetail with global concerns for security and stability, in terms of the absence of conflict and also in terms of predictability. Other governments will feel more comfortable dealing with philosophies and institutions that ring of familiarity. But how susccessful has the World Bank been?
Evidence has shown that the SAL loans and their package of reforms were destabilizing and inherently contradictory. As Hoogvelt illuminates:
they sought to denationalize the economies themselves by imposing various forms of deregulation, liberalisation and privatisation, indeed the dismantling of the public sector … At the ideological level it made the bailiffs walk a tightrope between, on the one hand re-affirming the notions of national sovereignty and national economy, while at the same time, and on the other hand, confining development economics and any hint of Keynesian notions of national economic management to the dustbins of history. They had to uphold the state and destroy it at the same time! (Hoogvelt 1997: 167)
The results have actually jeopardised security within Africa, and according to Robert Kaplan, the chaos on that continent will wreck havoc outside Africa as well (Kaplan 1994). Security is probably the World Bank’s greatest failure in the four global power structures. Hoogvelt concludes that its legacy in Africa is particularly disturbing:
In many African countries, the imposition of the neo-liberal orthodoxy, including privatisation of the public sector, the emasculation of the state apparatus and the insistence on electoral reform, has directly contributed to the descent into anarchy and civil wars. (Hoogvelt 1997: 175)
Production as Strange states it, is “the sum of all arrangements determining what is produced, by whom and for whom, by what method and on what terms (Strange 2000: 64).” Production is a bright spot for the World Bank, in that conventional economic statistics have shown a growth in production (even after the 1997 Asian crisis), fuelled by increasing investments in telecommunications, information technologies and greater investment in public utilities (Hirst and Thompson). The World Bank has also an extensive history funding infrastructure projects critical to the functioning of a modern economy, including roads, dams, airports, and ports. There is an extensive literature on the corruption and inefficiency of many of these projects, but at a minimum infrastructure was built.
The World Bank has been “able to profoundly affect the organisation of production and trade in the periphery to the benefit of the core world capitalist system (Hoogvelt 1997: 166).”
During the World Bank’s tenure, foreign direct investment has gradually increased for these states, but because of an intensification of trade between the wealthy nations, the global distribution of GNP has,
changed little over the 1970s and 1980s, and indeed became more unequal rather than less after the 1970s. What all this shows goes against the sentiment that benefits will ‘trickle down’ to the less well-off nations and regions as investment and trade are allowed to follow strictly market signals. (Hirst and Thompson 1999: 71)
At a minimum, links have been built and could be the basis of a re-alignment of the world economic order under fairer terms. Hoogvelt notes the links are unquestionably tight:
Structural adjustment has helped to tie the physical economic resources of the African region more tightly into servicing the global system, while at the same time oiling the financial machinery by which wealth can be transported out of Africa and into the global system. (Hoogvelt 1997: 171)
4. Financial/knowledge
Strange calls financial power the ability to “create credit”. It “implies the power to allow or to deny other people the possibility of spending today and paying back tomorrow, the power to let them excercise purchasing power and thus influence markets for production, and also the power to manage or mismanage the currency in which credit is denominated (Strange 2000: 90).”
The World Bank’s vast lending capabilities, as shown earlier, means the Bank literally has the power to switch the lights on or off in a country’s economy. It has also been in the forefront of creating today’s “casino” economy, as Strange calls it, the 24/7 financial markets. It has served the interests of the core economies in this arrangement, as Hoogvelt elaborates:
In a world economy dominated by global financial markets, by money careening around the globe at a frenetic pace, the principal national economic objective of the core countries has to be, and indeed has become, one of maintaining the competitive strength of their currency vis-a-vis each other, fighting domestic inflation that threatens this competitive strength, and trying to catch as much as possible of the careening capital flows into the net of their domestic currency areas. (Hoogvelt 1997: 165)
As Fieldhouse reminds us, “In the later twentieth century, in fact, the World Bank and the IMF were the main proponents of free trade and other related principles in the less-developed world. They thus filled the same role as Britain had done a century earlier (Fieldhouse 1999: 20).”
After World War II, it became apparent the world financial system was not going to be able to function with a hands-off United States. The Marshall Plan in Europe established the precendent of significant loans to aid countries to economically “recover”. As these two influential World Bank economists wrote, it was partly about creating conditions amenable to investors’ interests: “Thus, basic fiscal and monetary discipline, including a properly managed exchange rate, helps establish the credibility of economic policy that gives entrepreneurs the confidence to invest (Stiglitz and Squire 2000: 386).”
And they confirm the whirlpool effect: “Entrepreneurs will not invest in countries where the policy regime is unstable – investors require a degree of certainty (Stiglitz and Squire 2000: 386).”
The World Bank since 1996 has called itself the “Knowledge Bank”, because “We live in a global knowledge economy where knowledge, learning communities, and information and communications technologies are the engines for social and economic development (World Bank).”
In many respects, the World Bank has defined development as most people understand it. As Hancock reminds us, “Consciously or unconsciously we view many critical global problems through lenses provided by the aid industry (Hancock 1996: xiv).” Knowledge and intelligence-gathering is key in an age dominated by information. As Clark notes of development organizations,
The ‘software’ of their trade – ideas, research, empowerment, and networking – are rapidly becoming more important than their ‘hardware’ – the time-bound, geographically fixed projects, such as wells and clinics. In this new age, information and influence are the dominant currencies rather than dollars and pounds. (Clark 1992: 193)
The vast volume of statistics and reporting produced by the Bank on the global economy is valuable and it is frequently used as a source even by its critics. This quite possibly is the Bank’s greatest success. The Bank’s focus on information technologies is also valuable and it is aiding developing countries around the world to gain access to the internet for example. Keohane notes that information by its very existence can generate greater cooperation between states:
Informaton, as well as power, is a significant systemic variable in world politics. International systems containing institutions that generate a great deal of high-quality information and make it available on a reasonably even basis to the major actors are likely to experience more cooperation than systems that do not contain such institutions … (Keohane 1984: 245)
Conclusion
Like a chameleon, the political and economic actors in development change their appearance according to evolving conditions. I have argued in this paper that the fundamental needs – a desire for markets, global interconnectivity and political control – ensure the World Bank’s role in international development remains principle to the day-to-day lives of developing countries. It is also a fact that development organizations such as the World Bank have amassed a wealth of knowledge and expertise that binds donor nations to them, though this is being supplanted by NGOs as they in turn create a dependency between themselves and the World Bank.
The World Bank’s greatest success has been the perpetuation of the development industry and its role vis-a-vis the global power structures. It is particularly remarkable that development aid has been so robust for such a lengthy time, and points to the key needs in the power structure that it fulfils. However, the World Bank has failed to significantly reduce poverty in the world, and since it defines development as principally poverty reduction, its form of development has failed.
Development aid in and of itself is a highly successful formula, as attested by the boom currently experienced by NGOs. The trend towards these new actors is well advanced, as The Economist noted: “NGOs have become the most important constituency for the activities of development aid agencies (The Economist 2000: January 27).”
Even more compelling, “Between 1990 and 1994, the proportion of the European Union’s relief aid channelled through NGOs rose from 47% to 67%. The Red Cross reckons that NGOs now disburse more money than the World Bank (The Economist 2000: January 27).”
Unfortunately, there seems to be little evidence that any organization working in development will be out of a job by 2015. In the meantime, the poor remain peripheral actors in a play staged for the benefit of those who are not poor. As Fieldhouse notes:
Thus aid is no longer charity. It has become intrinsic to the maintenance of the international capitalist economy, a system by which western governments directly or through multilateral agencies, mobilize debtors so that they can continue to meet their obligations to both public and private creditors. (Fieldhouse 1999: 253)
David South Consulting 
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