From Poverty to Power Green, Oxfam 2008 - weman

FROM POVERTY TO POWERFund now both acknowledge the crucial role of essential services suchas health, education, water, and sanitation, the IMF refuses to rule outcompletely the imposition of limits on total government spendingon wages, such as for new teachers and nurses, far beyond therequirements of macroeconomic stability. 16 Economist Joseph Stiglitzargues that the Bank and Fund are still prey to a ‘fixation on single lowdigit inflation.’ 17 In July 2007, the Fund’s executive board agreed thatwage bill ceilings would ‘be used only in exceptional cases,’ but it hasfailed to specify what such circumstances would be and it remains to beseen whether this new policy will be respected in future negotiations. 18Numerous different currents of opinion can be found among theWorld Bank’s staff, some of whom have produced groundbreakingcritiques of structural adjustment and insights into the lives of poorpeople (some of them quoted in this book). 19 The Bank’s social developmentadvisers often differ with its economists on the relativeimportance of empowerment and economic orthodoxy in bringingabout development, and debates are often heated. However, a study ofthe Bank’s system for categorising ‘effective states’ suggests that itsliberalising DNA is largely intact. Its CPIA (Country Performance andInstitutional Assessment) purports to be an objective indicator of thequality of a country’s institutions, and is often used by donors toallocate aid. But to get a high score, a country needs to reduce importtariffs to less than 7 per cent and to have low levels of public debt, aswell as labour laws that allow workers to be hired and fired at low cost.Such recipes owe much more to ideology and bias than to any historicalevidence of what works for development.Any visitor to the Bank or Fund will soon realise that their staffs arehardworking and smart, and genuinely committed to promotinggrowth and poverty reduction in developing countries. So why doesthe sum of their actions fall so far short of their shared aspirations?Three powerful forces largely determine the intellectual and policyinertia that holds back efforts to learn from the failures of adjustmentand to change the way that the Fund and the Bank work:The power of their shareholders: The USA and, to a lesser extent, theother rich countries exert huge influence through their positions onthe boards of both organisations, and often use their position topromote their own national interests: for example, liberalisation302