Written by Antje Vetterlein and Tobias Schmidtke

Image credit: Adobe Stock

Eighty years after the World Bank was founded at the Bretton Woods Conference on July 7, 1944, both the organization and the world around it look very different today. Originally mandated to oversee the reconstruction of the European countries devastated by World War II, the Bank has evolved into a group of five organizations, known as the World Bank Group (WBG), with the aim of reducing poverty, increasing shared prosperity, and promoting sustainable development around the globe. Remaining the world’s most powerful development institution, the Bank’s membership is now almost global, while its size and mandate have expanded considerably. Throughout its existence, the organization has constantly reinvented itself in response to the pressures and changes of its authorizing and task environment. Despite these changes, many of the key criticisms directed at the Bank have remained remarkably similar over time. This raises the questions of whether the Bank has truly changed its policies and its overall approach to development, or whether these adjustments amount to mere “paradigm maintenance” (Wade 1996), and ultimately, whether the Bank is equipped to deal with the multiple crises and challenges of the 21^st century.

Since the Bank’s establishment in the context of the post-war period, the environment in which it operates and the political challenges it faces have changed significantly. Many of today’s increasingly complex and interrelated policy issues were not on the agenda then, or at least were of a different nature, such as environmental degradation and climate change, gender equality, urbanization, digitization, and human security, to name but a few. The geopolitical context has shifted from the beginning of the Cold War and the era of decolonization to one in which emerging economies and rising powers, such as China, and club forums, such as the BRICS plus or the G20, are increasingly challenging the global distribution of power and calling for reforms to the Bank’s governance structure to reflect economic and political changes. The end of the last century saw remarkable changes in the global governance architecture and in practices of policymaking, leading to a growing influence of international organizations (IOs) and non-state actors, such as social movements and non-governmental organizations (NGOs), epistemic communities, and the private sector. Ongoing criticism, mainly by social movements, has contributed to a shift in the understanding of development from a dominant emphasis on market liberalization to an increased focus on poverty reduction and state intervention, sometimes referred to as a shift from the Washington Consensus to the Post-Washington Consensus (Stiglitz 2005). Finally, the beginning of the 21^st century has seen an unprecedented number of global crises, such as increasing environmental disasters resulting from human-caused climate change, the 2008 financial crisis, the COVID-19 pandemic, and Russia’s full-scale invasion of Ukraine in February 2022. In contrast to previous crises, these events are increasingly discussed in terms of a “global polycrisis”, understood as “the causal entanglement of crises in multiple global systems in ways that significantly degrade humanity’s prospects” (Lawrence et al. 2024: 2). Addressing them requires going beyond the narrow sectoral focus that still dominates policy making today.

Not just the World Bank’s environment, but also the organization itself has changed in response to these challenges. The organization has grown in terms of staff and lending volume and now employs more than 10,000 people in over 120 offices worldwide[1], providing some US$ 45,9 billion in financial assistance[2]. Its lending portfolio has continually expanded from an initial focus on infrastructure and economic development to include an ever-widening range of policy issues, such as education, health, environmental sustainability, and good governance, reflecting its evolving role in addressing global challenges. The Bank’s voting structure, originally dominated by a small group of economically strong countries, has gradually shifted to reflect changes in global power tectonics and to increase the voting share of borrowing countries. A notable reform in 2010 has redistributed voting power to emerging economies, such as China, India, and Brazil, although it fell short of achieving an equitable level of voting power and maintained the veto power of the US. New policy instruments, such as multi-stakeholder initiatives and public-private partnerships, were introduced to allow for increased engagement with non-state actors, and an independent Inspection Panel was created in 1993 to increase the Bank’s accountability and address complaints from people and communities adversely affected by Bank projects. In response to protests and pressure, the Bank’s development approach has shifted from the neoliberal, market-oriented policies of the Washington Consensus to a greater emphasis on poverty reduction, inclusive growth, and sustainability, as embodied in the Post-Washington Consensus. To address the threat of a global polycrisis to its development efforts, the World Bank launched the Global Crisis Risk Platform in 2018 and published a Global Crisis Framework Paper in 2022 as first steps to guide its operational responses to this challenge.

Despite these changes, important criticisms of the World Bank remain. First of all, the Bank is criticized for its lack of developmental success, with more than half of the world’s population still living on less than US$5.50 a day (World Bank 2020), while global inequality is on the rise. This is, secondly, often attributed to the Bank’s organizational culture that has been described as econocentric, technocratic, and apolitical (Cernea 1996; Miller-Adams 1999), and which limits the potential for more far-reaching policy reforms through its narrow focus on economic growth and lack of flexibility with regard to context and country-specific particularities. Third, its apolitical culture is further linked to the absence of an explicit human rights agenda within the Bank and the marginalization of human rights issues over economic growth in its development discourse and operational policies. Finally, the Bank’s democratic deficit remains an issue, with the dominance of the self-interests of economically strong countries and a lack of representation of the concerns of borrowing countries in its decision-making bodies.

The persistence of these criticisms over time has raised the question of whether the World Bank is truly capable of reflecting on past and present experiences in a way that allows for major changes in its organizational beliefs about the nature of development and its organizational ends, or whether the changes outlined above amount to little more than minor adjustments in its organizational means without challenging the underlying development paradigm. In the introductory chapter of The Elgar Companion to the World Bank , we argue that this question is too simplistic as the answer depends on one’s own normative position towards the Bank’s core mission and policies, and on one’s scholarly perspective and its consequences for the definition and measurement of change. We therefore unpack how different IR theories understand the concept of change along three dimensions, namely the triggers of change (why?), different characteristics such as the speed and scope of change (how?), and the location of change within the IO (where?), inviting readers to find their own position within these theoretical debates and to form their own nuanced judgments as they read the chapters collected in the Companion.

This plurality of perspectives is also reflected in the different contributions to The Elgar Companion to the World Bank, which is structured into seven parts to provide a comprehensive and holistic picture of the organization. After the introduction, Part II is setting the scene with four chapters on different disciplinary perspectives on the Bank from History, Development Economics, Anthropology, and Law. As the Companion mainly engages with the literature in the discipline of IR, Part III provides different theoretical angles on researching the World Bank from an IR perspective. Part IV presents the outside perspective, focusing on the Bank’s relations with five different types of actors in its organizational environment and how these relationships have changed over time. The contributions in Part V provide what we call the impact perspective, covering a range of 12 policy areas in which the Bank is engaged, with some chapters looking at the impact and progress made in particular countries in a specific policy area, while others examine how policies have changed over time within the organization, or take a more critical perspective on particular policy approaches pursued by the Bank. Part VI aims to provide the inside perspective from some of the World Bank’s former employees, to also give a voice to the Bank’s staff, and to provide a glimpse into what goes on inside this huge and complex organization. Finally, Part VII engages with future perspectives, offering critical perspectives and visions for reforming the Bank. Taken together, these contributions offer a nuanced picture regarding the question of change and continuity in the World Bank’s eighty years of existence, and identify key challenges and opportunities for the organization going forward.

References:
Cernea, M. (1996) Social Organization and Development Anthropology: The 1995 Malinowski Award Lecture, Environmentally Sustainable Development Studies and Monographs Series No. 6., Washington, DC: World Bank Group.

Lawrence, M.; Homer-Dixon, T.; Janzwood, S.; et al. (2024) ‘Global polycrisis: the causal mechanisms of crisis entanglement’, Global Sustainability 7(e6), pp. 1-16.

Miller-Adams, M. (1999) The World Bank: New Agendas in a Changing World. London: Routledge.

Stiglitz, J. E. (2005) ‘More Instruments and Broader Goals: Moving toward the Post-Washington Consensus’, in Shorrocks, A. (ed.) (UNU-WIDER) Wider Perspectives on Global Development. Houndmills: Palgrave Macmillan, pp. 16–48.

Wade, R. (1996) ‘Japan, the World Bank, and the Art of Paradigm Maintenance: The East Asian Miracle in Political Perspective’, New Left Review, I/217, pp. 3–36.

World Bank (2020) Poverty and Shared Prosperity 2020: Reversals of Fortune. Washington, DC: World Bank Group.

[1] https://www.worldbank.org/en/about/what-we-do

[2] https://www.worldbank.org/en/who-we-are

The Elgar Companion to the World Bank

Edited by Antje Vetterlein, Professor of Global Governance, Department of Political Science, University of Münster and Tobias Schmidtke, Research Fellow, Department of Political Science, University of Münster, Germany

Find more information on this title here.
Free chapter available on Elgaronline.