Bank policies for growth have failed

News|Bretton Woods Project|24 September 2005|url
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A meeting hosted by ActionAid, Christian Aid and the Center for Economic Policy Research (CEPR) questioned the effectiveness of aid and gave the IFIs a failing grade on their policies to help developing country economies to grow.

Romilly Greenhill of ActionAid described the findings of their new report, Real Aid, according to which only 39 per cent of total overseas development assistance is 'real aid'. The remainder is 'phantom aid', made up of overpriced technical assistance, double-counted debt relief and poorly targeted and uncoordinated aid. Less than 0.07 per cent of G7 country ODA is 'real aid' by these measures, though there is a high degree of diversity amongst donor countries, with Ireland scoring very well while the US and France fare disastrously. ActionAid hopes to highlight a "fundamental problem with unbalanced accountability", with excessive upward accountability to donors and weak downward accountability to citizens. The report calls for an international aid agreement to clarify financing policies, elaborate mutual commitments and allow for regular review of donor practices.

Mark Weisbrot, an economist with CEPR, outlined their latest report which finds that the growth policies of the IFIs have failed - a fact that "has been known by economists for a long time". Between 1960 and 1980, a period during which IFI policy influence in the region was virtually non-existent, the Latin American region grew 88 per cent. From 1980 until 2005, a period for which the IFIs had significant influence over national economic policy choices, growth was a miserly 14 per cent. The gap between the two periods is similar in other regions, and is reflected in lower rates of progress during the later period in reducing child mortality and improving educational outcomes. The report's authors conclude that this should "encourage skepticism with regard to economists or institutions who believe they have found a formula for economic growth and development."

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Published: 24 September 2005 , last edited: 27 May 2010

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