The governance bank

While the cancellation of a number of high‐profile loans because of corruption concerns has made headline news, the World Bank's principal approach to poorly governed countries is lending in order to support reforms. Although designed to be an apolitical technocratic development financier, increasingly the Bank has focused its attention and resources on promoting good governance in its borrowers. Bank lawyers and presidents have attempted to hive of apolitical aspects of governance by arguing a distinction between the rule of law and the political character of government, but this distinction is illusory. The Bank's inability to address the political embeddedness of poor governance in neo‐patrimonial governments skews risk assessments and impedes the formation of effective strategies. Reform of the charter would not eliminate the Bank's bureaucratic and political constraints.     

The Contradictions of Pro‐poor Participation and Empowerment: The World Bank in East Africa

Participatory approaches remain central to development practice and the World Bank continues to espouse them with the promise to make its aid more pro‐poor. Yet participation's (in)effectiveness has become the focus of renewed, polarizing debates, and assessments of the form and function of the World Bank's participatory paradigm are still contested and unresolved. Through extensive field data collected in East Africa, this article seeks to move the debate forward. It presents three interrelated arguments: (1) the World Bank's participatory approach remains largely circumscribed by a Post‐Washington Consensus neoliberalism; (2) the approach, nonetheless, pro‐actively supports pro‐poor gains, and creates space for more alternative initiatives; (3) however, its effectiveness in fostering pro‐poor empowerment is undermined by deep inequalities and political economy dynamics on the ground. Two implications are discussed, which challenge conventional wisdom. First, the World Bank's approach could be seen as a hierarchical system of elements in which certain aspects, but not others, are insulated from popular deliberation. Second, participatory development should be (re)imagined as an open‐ended process rooted in the politicization of inequality and embedded in the dynamics of capitalist development, which also points to the critical role of a developmental state.     

Can the World Bank Enforce its Own Conditions?

In the 1980s, the World Bank stepped up policy‐based lending, making loans conditional on government policy and institutional reforms in the borrower country. In 2002, policy‐based lending (or adjustment loans) accounted for 64 per cent of total commitments. Some critics have argued that conditionality has failed because borrowers do not comply with conditions, and that borrowers do not comply because donors do not enforce the conditions, due to their own institutional incentives to lend. Accordingly, they argue that conditionality should be abandoned in favour of selectivity, a strategy in which donors would lend to governments that already have good policies and institutions in place. This article reviews the evidence that has been offered for this ‘enforcement critique’ and finds that it is not sufficient to support the argument. Although the critique is often asserted, and although there is ample evidence of lending pressures, no studies have attempted to determine whether borrower non‐compliance is a serious problem, or whether Bank failures to enforce are the principal reason for the failure of borrowers to meet conditions; nor have any studies been carried out to show whether lending pressures are the main reason for the Bank's failure to enforce.     

World Bank‐directed Development? Negotiating Participation in the Nam Theun 2 Hydropower Project in Laos

The omnipotence of the World Bank on a global scale means that it is often regarded as the most influential partner in bringing about transformations in developing countries. This article contributes to ongoing discussions of this issue by examining some effects of the Bank's participatory agenda in one of its flagship projects, the Nam Theun 2 (NT2) hydropower scheme in Laos. Critical accounts suggest that the Bank's promotion of participation in donor‐dependent countries like Laos is either a guise or an imposition. These propositions are considered in two settings where participation was debated around the time of the Bank's loan appraisal for NT2: first, an international stakeholders’ workshop held in Vientiane; and second, some international attempts to identify the concerns of villagers living near the NT2 dam site. In workshops and villages, participation is a negotiated performance whereby competing representations emerge through the interaction between village, state and international actors. More generally, this article shows that a grounded view of development can attend to the practices that constrain the hegemonic tendencies of the World Bank, even while maintaining awareness of the potency of its policies and interventions.     

Patronage or Participation? Community‐based Natural Resource Management Reform in Sub‐Saharan Africa

This article examines the institutional factors that account for the outcome of efforts to decentralize control over natural resources to local communities. It focuses on the political nature of institutional processes associated with decentralization in sub‐Saharan Africa through a comparative analysis of wildlife management reforms in seven east and southern African countries. Institutional reforms are largely dependent on state authorities' patronage interests, which in turn are shaped by the relative economic value of wildlife, the degree of central control over commercial utilization, and the accountability of governance institutions. Our findings have a range of practical implications for the design of CBNRM initiatives and institutional reform strategies.     

Italy and the World Bank: The European Foundations of Development Lending, 1947–51

Foreign financial assistance for economic development and the discipline of development economics have traditionally been associated with US Cold War policy toward the Third World. This article, however, suggests that these practices were also shaped by the experiences of foreign aid for European reconstruction after the Second World War. The article traces loan negotiations between the World Bank and the Italian government, and argues that this process played a substantial role in shaping not only the World Bank's lending policies, but also the way its staff understood the institution's mission. The article emphasises Europe's significance as a site in the early history of development, suggesting new ways of understanding the evolution of development ideas, practices, and institutions after 1951.     

Community Driven Development,Collective Action and Elite Capture in Indonesia

In response to the well documented limitations of top‐down, modernist and authoritarian approaches that have dominated development, practitioners and academics increasingly promote more community‐based approaches. The World Bank uses the term ‘community driven development’ to describe projects that increase a community's control over the development process. In an analysis of a community driven poverty alleviation project in Indonesia, this article examines the vulnerability of such an approach to elite capture. The expected relationships among a community's capacity for collective action, elite control over project decisions and elite capture of project benefits were not found. In cases where the project was controlled by elites, benefits continued to be delivered to the poor, and where power was the most evenly distributed, resource allocation to the poor was restricted. Communities where both non‐elites and elites participated in democratic self‐governance, however, did demonstrate an ability to redress elite capture when it occurred.     

Did Recent Voice Reforms Improve Good Governance within the World Bank?

Using the concept of good governance, this article assesses how voting rules in the World Bank Group's primary loan facility determine members’ ability to influence the formation of winning coalitions in the Executive Board. In weighted voting systems, the percentage of votes held by an actor does not adequately measure the ability of that actor to affect outcomes because voting weights do not account for either the possible number of coalitions that may form or the number of votes needed to pass a resolution. In short, weighted voting systems cannot be straightforwardly analysed with reference to voting weights but instead require the determination of relative voting power. Using multiple measures of a priori voting power, data are presented before and after recent voice reforms. Results indicate that the United States, as expected, holds the largest share of voting power. Also, as expected, most borrowing members have little voting power. Unexpectedly, in several voting groups a single member is able to ensure its election to the Board. Hence, other members of these voting groups have no formal influence on the Board. The article concludes by reflecting on the implications of voting power analysis for the concept of good governance within the World Bank.     

The Eurozone crisis and Italian corporate governance: the end of blockholding?

This article explains the process of change in domestic corporate governance. An actor-centred coalitional approach is applied to the Italian case to show how the main features of domestic corporate governance are a product of behavioural patterns (i.e. informal institutions), rather than formal legislation. Leveraging their superior financial means, business elites act as institutional incumbents shaping these informal institutions according to their preferences. It is argued that a change in corporate practices is more likely to be triggered by a socio-economic crisis, which weakens the domestic elite’s influence, rather than a legal reform. These findings call into question the excessively formalistic approach of many corporate governance scholars, and are confirmed by the Italian trajectory. After having resisted 20 years of liberalising legal reforms aimed at eroding their power, Italian blockholders are now being forced, as a consequence of the Eurozone sovereign debt crisis, to dismantle their cross-shareholding networks.     

Limits to the Washington Consensus: Boundary struggles and China's transition economy

This paper explores the interconnected normative and geopolitical-economic tensions between the Washington Consensus and the Chinese state through an analysis of reform discourses and practices at the World Bank. Frequently framed as opposing visions and templates of development, the World Bank and the Chinese state have engaged in a protracted relationship of mutually-informing exchanges of economic expertise, technical assistance, and policy formulation, evolving significantly since China's ‘opening up’ in 1978. I trace these shifting relations through an interpretive strategy inspired by Nancy Fraser's concept of boundary struggles, focusing on how the World Bank has challenged, affirmed, and affected China's institutionalized division between polity and economy. Through a new periodization of the World Bank/China nexus, this paper shows how transformations in geopolitical-economic relations condition the normative construction, representation, and reception of ‘economic models’. It also challenges antipodean conceptions of the ‘free-market’ Washington Consensus and ‘state-capitalist’ China through demonstrating the qualitative character of their state/market articulations.     

On the Limits of Liberalism in Participatory Environmental Governance: Conflict and Conservation in Ukraine's Danube Delta

Participatory management techniques are widely promoted in environmental and protected area governance as a means of preventing and mitigating conflict. The World Bank project that created Ukraine's Danube Biosphere Reserve included such ‘community participation’ components. The Reserve, however, has been involved in conflicts and scandals in which rumour, denunciation and prayer have played a prominent part. The cases described in this article demonstrate that the way conflict is escalated or mitigated differs according to foundational assumptions about what ‘the political’ is and what counts as ‘politics’. The contrasting forms of politics at work in the Danube Delta help to explain why a 2005 World Bank assessment report could only see failure in the Reserve's implementation of participatory management, and why liberal participatory management approaches may founder when introduced in settings where relationships are based on non‐liberal political ontologies. The author argues that environmental management needs to be rethought in ways that take ontological differences seriously rather than assuming the universality of liberal assumptions about the individual, the political and politics.     

Financial Deregulation in Japan

This article examines the process of financial deregulation in Japan and asks: what are the prospects for future reform of Japan's financial sector? In the past, reform of Japan's financial sector has been slow and incremental as various vested interests, including political interests, negotiated specific compromise outcomes rather than sweeping changes. This article argues that, in spite of recently announced reforms, change will continue to be gradual and piecemeal because the institutional structures which in the past worked against any rapid response to pressures for change are still in place.     

Asia's role in twenty‐first‐century global economic governance

The basic foundations of today's framework for global economic governance were laid in the years following the Second World War. Reflecting the balance of economic power at the time, Asia did not play a major role in either designing the institutional architecture or setting the agenda for global economic governance. In more recent decades the centre of gravity of the global economy has shifted towards Asia, and this trend is likely to continue in the decades to come. Asia's growing economic weight enhances its potential to play a much stronger role in shaping twenty‐first‐century global economic governance. Realization of that potential will, however, depend upon how successfully Asia addresses five key challenges: rebalancing sources of growth; strengthening national governance; institutionalizing regional integration; providing political leadership; and adopting the global lingua franca—English. While the Asian policy‐makers' ambition to play a bigger role in global economic governance is growing, their appetite for addressing the necessary policy challenges is not necessarily keeping pace with that growing ambition. This gap between ambition and action will need to be gradually closed—only then can Asia help itself in playing a bigger role in global economic governance.     

What do the World Bank's Poverty Assessments teach us about Poverty in Sub-Saharan Africa?

As part of the World Bank's poverty reduction strategy, Poverty Assessments have been carried out for a number of countries which analyse who the poor are, the causes of poverty and poverty reduction policies. This article reviews what can be learnt from the twenty-five Assessments prepared for countries in sub-Saharan Africa up to 1996. Whilst other factors are acknowledged in identifying the poor, the Assessments over-emphasize income-poverty defined against an inevitably arbitrary poverty line. The Assessments are shown to be weak in addressing the causes of poverty, often ignoring the historical perspective, political context, and international dimensions such as debt and commodity price trends, focusing instead on the lack of growth in recent years as the main cause of poverty. Weak understanding of the causes of poverty undermines the basis for country-specific poverty reduction strategies: policy recommendations are usually an uncritical presentation of the World Bank's three-pronged strategy of growth, investment in human capital and social safety nets. Although the Assessments do not explicitly acknowledge the point, they suggest that the number of poor people in Africa will continue to rise; nor is there any basis for confidence that policies are being put in place to redress the situation.     

Disequilibrium in Development Finance: The Contested Politics of Institutional Accountability and Transparency at the World Bank Inspection Panel

This article examines the dynamic nature with which independent accountability mechanisms operate. Focusing on the World Bank, the authors argue that its Inspection Panel evolves according to internal and external pressures. In seeking to achieve equilibrium, and protect its authority and independence, the Panel has gone through several distinct phases: negotiation, emergence, protracted resistance, assertion of independence and authority, renewed tension, and contestation. The core novelty of the article is its application of concepts from outside the field of development studies — notably institutional accountability from the governance literature, and judicialization from the legal studies literature — to the topic of the Inspection Panel. Examining the Panel in this way demonstrates that accountability mechanisms represent a hybrid of transnational governance influenced by a range of actors including project‐affected peoples, national governments, managers and development donors. Accountability in development finance is about competing interests as well as competing conceptions and expectations of accountability. In such a complex and multi‐scalar system, the Panel is not only concerned with delivering well‐researched investigation reports; it is also an entity seeking to ensure its own survival, as well as an arbiter of its own brand of legitimacy and accountability.     

Participation and Passive Revolution: The Reproduction of Neoliberal Water Governance Mechanisms in Durban,South Africa

Abstract: This article demonstrates that Gramsci's concept of passive revolution can be utilised to help unearth some of the contradictions of participatory development within neoliberal governance systems in the global South. I argue that some approaches to “participation” within neoliberal governance systems can, in part, be understood as moments within a protracted process of passive revolution. The argument is traced through eThekwini municipality's Community Participation Programme and the related extension of Free Basic Water (FBW). This article contributes to existing scholarship by demonstrating how a Gramscian analysis is indispensable to understanding the way in which state–civil society relations are conceived in participatory development strategies and the implications this might have for radical social change. I argue that a Gramscian approach compels us to reconsider current understandings of state–civil society relations so that we might overcome the impasse of passive revolution and move towards a more progressive form of politics.     

New State Spaces,Agency and Scale: Devolution and the Regionalisation of Transport Governance in Scotland

Abstract: New state spaces can be seen as products of the interaction between emerging initiatives and pre‐existing institutional arrangements ( Peck 1998 , Space and Polity 2:5–31). In the devolved territories of the UK devolution has created new political centres of policy formulation and this paper is concerned with how devolved policy initiatives are reshaping and rescaling sub‐national spaces of governance. We focus on the rescaling of transport governance in Scotland through a nationally orchestrated process of regionalisation involving the creation of Regional Transport Partnerships (RTPs), an initiative that has been shaped by tensions between changing national political objectives and local interests. Our approach draws on Neil Brenner's “new state spaces” (NSS) framework, which has value in emphasising the historically embedded and path‐dependent nature of restructuring processes. At the same time, its abstract nature leads the NSS approach to privilege the broad processes that generate new configurations of state power over the complex politics associated with the restructuring of particular spaces. In response, we suggest a new theoretical synthesis that draws NSS together with the ancillary notions of “regional armatures” and “the politics of scale” to provide a stronger purchase on the political agency and struggles that “form” and “mould” particular spaces.     

Book Reviews

Book reviewed in this article: Michael Fleet, The Rise and Fall of Chilean Christian Democracy. Richard E. Feinberg and Contributors, Between Two Worlds, The World Bank's Next Decade. US-Third World Policy Perspectives No. 7. World Bank, Recovery in the Developing World. The London Symposium on the World Bank's Role. OECD, Financing and External Debt of Developing Countries Stanley Please, The Hobbled Giant. Essays on the World Bank. Robert Cassen and Associates, Does Aid Work? Report to an Intergovernmental Task Force. W. Arthur Lewis, Racial Conflict and Economic Development. Gunnar M. Serbe, Tenants and Nomads in Eastern Sudan. A Study of Economic Adaptations in the New Haifa Scheme. Victor S. D'Souza, Economic Development, Social Structure and Population Growth. Mark Hnlmström, Industry and Inequality. The Social Anthropology of Indian Labour. S. M. Ghanem, OPEC. The Rise and Fall of an Exclusive Club. Shelagh Weir, Qat in Yemen: Consumption and Social Change. Ray Bromley (ed.), Planning for Small Scale Enterprises in Third World Cities. Ian Smillie, No Condition Permanent: Pump-Priming Ghana's Industrial Revolution. The ‘Geneva Group’, How to Run Small Development Projects. Val Curtis, Women and the Transport of Water. Marcia M. Gowen, with the assistance of Herbert A. Wade, Renewable Energy Assessments: An Energy Planner's Manual. Deepak Lai and Martin Wolf (eds), Stagnation, Savings and the State. T. G. Weiss, Multilateral Development Diplomacy in UNCTAD. Rune Skarstein and Samuel W. Wangwe, Industrial Development in Tanzania: Some Critical Issues. Ian Livingstone, Rural Development, Employment and Incomes in Kenya. Franceses Bray, The Rice Economies: Technology and Development in Asian Societies. Saadet Deger, Military Expenditure in Third World Countries: The Economic Effects. K. J. Davey, Financing Regional Government: International Practices and their Relevance to the Third World. Stella Lowder, Inside Third World Cities. H. A. Reitsma and J. M. G. Kleinpenning, The Third World in Perspective.