Download - Center for Social Sciences

countries, where the government and associated institutions are relatively efficient and the return on theinvested capital is guaranteed.Interestingly that in such cases neither form of government (democracy or dictatorship), norassociated additional factors (i.e. existence of civil society, observation of human rights, freedom ofpress, etc.) play any noticeable role – the most important is guaranteed capital circulation within thestable economic and social environment. That’s why about 2/3 of foreign direct investments in the worldare going into developed countries, while 2/5 of the remainder goes to China and Hong Kong.Even if in general development transfer process is not as effective as one might have expected,virtually all developing countries are engaged in it one or another way, while the most successful(China, for instance) are playing the increasing role in economic globalization. Obviously this mainlyhappens because the developing world has no viable development alternative. Still some kind of controlover the global economic processes is necessary even if to reduce risks of global market failures andprovide the poorest countries better development opportunities than they enjoy today.Today there are two major mechanisms of such regulation – the World bank and the InternationalMonetary Fund. Both were created after WW II for purposes pretty different form these they pursuittoday, but later they almost exclusively shifted their priorities towards servicing global integration andeconomic reform processes in the developing world. Still as time passes their credibility and efficiency(especially as regards corruption) raise more and more questions.They are mainly charged with excessive intervention into the internal affairs of debtor countries andabuse of power, especially as regards the smaller developing countries. First of all this concerns thenumber and nature of conditions they apply to financial support rendered to developing countries. Ifback in 1980-s the number of such conditions varied between 6 and 10, since 1990-s it increased to 25(there are known cases than they exceeded 100!). Number of spheres of government administrationthat needed improvement, strengthening or renewal as demanded by these organizations grewcorrespondingly. As a result, quite often the developing countries are enforced to subscribe to reformsthat are neither politically sustainable, nor efficient in the least.Activities of both organizations are entirely based on Anglo-Saxon neoclassic economic ideas andthey press the developing countries to adopt the appropriate economic policies disregarding the factwhether they are going to work within the particular context of any given country. In part such approachis determined by the rather limited number of development models both the WB and the IMF are able topropose countries that apply for their support, while it’s still an open question what kind of developmentoption may be successfully applied to one or another particular country. 28 Besides quite often one maybe left with impression that these countries are offered development options and concrete mechanismsthat are not working properly even in places of their inception in the most developed countries, or wererejected there altogether.As a result there is a widespread opinion that instead of supporting the development theseorganizations are actually harming developing countries, for instance by forcing them to adoptprivatization programmes that in the end lead to enrichment of a small group of local corrupt officials. Atthe same time both bodies look extremely helpless dealing with governments of countries that can notmeet conditions set by loan agreements. Such cases are abundant and universally these conditions arerevised and payments rescheduled. This is especially true as regards the poorest countries. Theiroutsdanding debts are pardoned and more loans are scheduled. Of course there may be plenty ofobjective reasons why poor developing country can not meet loan terms, still it looks like that some kindof strange game is going on when both lenders and borrowers know that these terms can not be met,but still pretend that everything is going as it should be.As a matter of fact such type of relations with donor organizations suits corrupt elites of manydeveloping countries – presence of large number of various conditions in loan agreements that thesecountries can not satisfy actually means that they may use this as a pretext to reallocate providedresources in a way that minimizes their efficient allocation for population while increasing personalprofits of the said elites. Relations of such type also lead to development of some queer kind ofdependency, akin to the Dutch disease. For many developing countries, especially the poorest ones,with weak, corrupt governments foreign loans and grants play the same role as natural resources playin case of the typical Dutch disease. Why invest received funds into the real market reforms anddemocratization if such support will still go on disregarding the fact how they are actually used (or rathermisused)? Besides the overall efficiency of programmes implemented by the same WB in developingworld is generally rather low because of the high transaction costs – the major part of loans never leavethe donor countries being used by the local firms and individual consultants. This part of problem isserious to the extent that it prompted the US Senate in 2005 to approve a special legal act calling for28 Just at the begging of the century the WB was quite officially operating with just 5 such models.139