John Briscoe: Bankrolling Change

John Briscoe, Gordon McKay professor of environmental engineering at Harvard University, argues on China Dialogue that China’s investment in the third world is a welcome development as it frees those governments from “unreasonable requirements set by Western financing agencies.” This is the first in a series on China Dialogue about dam construction:

China, India, Brazil and other middle-income countries (MICs) are appropriately using the financial crisis to push for reform of the Bretton Woods institutions, the global financial organisations established towards the end of the Second World War to help rebuild the world economy. In particular, they advocate changing the voting shares of countries on the governing boards of the International Monetary Fund and the World Bank to give emerging economies a greater say. The logic of such reform – the small countries of Belgium and the Netherlands until recently had the same weight as China – is undisputable. But, in the case of the World Bank, such changes alone will not fix much.

To understand why this is the case, one must look to events of recent decades. A vast gap has opened up between the practices of countries that have successfully grown and reduced poverty – the MICs – and the priorities of the World Bank and the aid community more broadly. The MICs have focussed heavily on getting right the basics, such as fiscal stability, infrastructure and agriculture, by setting priorities and sticking to these priorities. No country has more clearly demonstrated the wisdom of following this path than China. But with the Millenium Development Goals (MDGs) as the guiding principles, the World Bank and other donors have given little attention to such basics, have increasingly put the social cart before the economic horse and have adopted a faddish policy approach, constantly inventing new “flavours of the month”.

For a related article, see “Peter Bosshard: China’s Overseas Dam Builders: from Rogue Players to Responsible Actors?” via CDT.

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