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UBC Theses and Dissertations

Development banking in transition : sustainable development and the World Bank Crompton, Linda C.


In recent years, the World Bank, the biggest international development lender in the world, has paid considerable attention to the issue of sustainability in its lending activity, publishing many reports on its progress. Nonetheless, private criticism over its decision-making and international resistance to many of its development projects continues to grow. The current public furore over the Bank's decision to continue funding the Sardar Sarovar Dam project in India's Narmada Valley, despite a condemnatory report which the Bank itself commissioned, is only the most recent illustration of this contradiction. This thesis explores the background to this dilemma for the World Bank, in an attempt to explain this contradiction and suggest the direction for its remedy. Beginning with a discussion of the term "sustainable development", the first chapter concludes that, while a precise definition is still lacking, certain fundamental principles have emerged from the debate which can be considered to form the essence of a working definition. These principles effectively give voice to the call for a more contemporary development theory, for a more meaningful system of measuring human welfare than provided by gross national product (GNP) statistics, and for recognition of the importance of local control of resources and freedom from debt in maintaining self-sufficiency and a decent standard of living. Given these basic tenets, the discussion then turns to a brief historical review of the economic conditions leading to the formation of the World Bank in an attempt to understand its original mandate. This then forms the basis for appreciating the evolution of that mandate as the World Bank responded to changing international economic conditions, then later, the debt crisis of the early 1980's and environmental pressures toward the end of that decade. The operation of that mandate, the Bank's lending policies and practices, are the next focus of discussion. Turning first to the project lending which has always represented the majority of disbursements, the thesis highlights both the rationale behind the energy and forestry loans which form the backbone of the lending programme, and the documented weaknesses of schemes like the Tropical Forestry Action Plan. The need to ensure debt repayment following the oil price crisis of the late 1980's led to the emergence of “structural adjustment" programmes, the effects of which conclude the discussion of the changing face of World Bank lending. In the final section the thesis delineates the various pressures on the World Bank today which challenge its ability to deliver on its mandate. These pressures range from increasing public criticism of the human consequences of large development projects, to the growing unpopularity of investments requiring large capital outlays and long waits for returns, and include the potential exposure of the World Bank to the emerging lender liability issue. None of these challenges seem likely to diminish in the near future. To deal with these challenges effectively, the thesis concludes, the World Bank must go beyond developing strategic responses to them. It must begin, instead, to examine its implicitly Western view of progress which assumes an industrial "route to advancement” and an instrumentalist approach to nature. Rather than advocating the continuous and rapid conversion of natural resources to tradeable goods in order to create a "permanent” wealth to improve living standards, the Bank must pay attention to the growing wealth of data illustrating the human misery and environmental degradation that are the result. Sustainable development cannot be an "add on" to present World Bank operations, but must rather redefine the entire context in which the organization functions. Unless and until this occurs, the World Bank, with its public commitment to the alleviation of poverty and ecological responsibility, will face growing evidence of its failure to meet those commitments.

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