Banking on the Poor:

...Not all Bank officials shared McNamara's passionate commitment to alleviating world poverty...

...Although the Bank has adopted a more conservative stance under the leadership of A.W...

...He maintains that the World Bank's primary objective is "modernizing the international economy in its capitalist variant for the sake of its long-term preservation...

...Ayres sees the reforms initiated by McNamara during the 1970s as analogous to those undertaken by Roosevelt during the Great Depression to save the capitalist system in the United States...

...In fact, Bank-sponsored rural development projects were often defined as those in which at least fifty percent of the benefits went to the poor...

...Banking on the Poor is a dispassionate centrist defense of the World Bank as a reformist institution committed to reducing world poverty...

...McNamara also increased the amount of funds channeled through the International Development Association (IDA) to the poorest countries in the form of long-term interest-free loans...

...Yet the Bank provided little analysis to demonstrate that its rural development projects had more than marginal effects in reducing rural poverty...

...At the same time, McNamara called upon the developed countries to step up its aid to the Third World, lower tariff barriers restricting trade, and participate in a North-South dialogue...

...Sheldon Gellar LONG a target of critics on the left for supporting reactionary regimes, the World Bank during the late 1970s came under fire from critics on the right who charged that the Bank was supporting socialist schemes and financing massive welfare programs in the third world...

...The rural poor and the small farmer became the main foci of rural development projects...

...To alleviate the fears of the American business community, he insists that the World Bank is a sober financial institution promoting sound economic policies and capitalist development in the third world...

...He chides them for vastly oversimplifying political realities and rejects their calls for socialist revolutions as undesirable and unlikely to produce positive results...

...Assaults on the World Bank and multilateral foreign aid in general intensified when the Reagan administration came to power in 1981...

...Ayres, a political scientist, former Brookings Institution scholar, and senior fellow at the Overseas Development Council (ODO), provides a respectful inside view of the operations of the World Bank...

...Neoliberal economists dominated the Washington-based staff and tended to be primarily concerned with more traditional macro-economic issues like creditworthiness, export performance, and internal rates of return on development project investments...

...Clausen, a commercial banker and ex-head of the Bank of America, Ayres does not foresee any major shifts in the Bank's basic agenda...

...Given the mounting indebtedness of the Third World, the World Bank's alter ego, the International Monetary Fund (IMF), is more likely to have its way...

...Yet Ayres does not take radical critiques very seriously...

...However, like many liberals, he is worried that the Reagan administration's desire to reduce the country's contributions to multilateral aid institutions and enthusiastic promotion of private sector investments will adversely affect the World Bank's antipoverty programs...

...Bank project designs were often flawed by lack of knowledge of local conditions...

...Under McNamara, the World Bank began to champion "redistribution with growth" (RWG) development strategies which aimed at improving conditions for the bottom forty percent of the third world populations living in absolute poverty...

...It presents the World Bank as a very cautious lending institution until Robert S. McNamara resigned as Secretary of Defense and became the Bank's president in 1968...

...Banking on the Poor provides much grist for the mill of critics on the left who dismiss the Bank's efforts to alleviate world poverty as little more than tokenism...

...And that usually means that the poor will bear most of the burden of IMF-imposed third world austerity programs...

...While defending its record as a development agency, Ayres does not shy away from revealing the Bank's many weaknesses...

...During McNamara's tenure (1968-1981), the Bank expanded its lending commitments from less than $1 billion in fiscal 1968 to over $12 billion in fiscal 1981 and became the "world's largest antipoverty agency...

...The urban poor received considerable attention through projects to generate employment and improve housing and health conditions in the slums...

...The RWG proponents in the Bank argued that poverty-oriented projects could promote economic growth and more equitable distribution by increasing the productivity, incomes, and output of the poor...

...His book is obviously more concerned with defending the World Bank from attacks from the right...

...The author conducted approximately 300 interviews with Bank staff and officials and was given access to many internal and confidential documents . The book often reads like a World Bank report with its references to "project software," "enhanced export performance," and "autonomous project implementing units...

...McNamara's obsession for quantification led to an excessive emphasis on the importance of "moving money" into projects as rapidly as possible...

...Thus, it was not surprising that bank officials preferred to promote large-scale development projects over smaller scale projects despite the fact that the larger projects often provided few direct benefits for the poor...

...On the contrary, he provides a wealth of evidence which points to the great gap between the Bank's antipoverty rhetoric and its actual accomplishments in improving the lot of the poor...

...Projects located in the more underdeveloped regions of third world nations were generally assumed to benefit the poor living in those regions...

...How could it be otherwise, with ninety percent of the Bank's staff working out of Washington and decision-making highly centralized in the Bank's top management...

...At any rate, it seems highly unlikely that the World Bank will exercise as much influence as a reformist institution as it did during the McNamara era...

...The new orientation of the Bank announced by McNamara during a now famous presidential address delivered in Nairobi in 1973 was largely a response to the failure of the trickle-down development strategies of the 1950s and 1960s to reduce poverty in the Third World...

...More resources were mobilized and redirected towards the rural areas...