Background
Global capitalism creates diverse controversies in the contemporary global economy. Capitalism is gaining immense popularity due to the business community’s unrestricted engagement in business activities. Trade barriers continue to decrease, making it easy for multinational companies to conduct operations across the world (Harvey 2006, p. 134). Apart from reducing barriers, infrastructure development has enhanced the growth of global capitalism. Transport and communication infrastructure has been improving, making it easier than ever before to conduct business in the global environment. Modernization of transport infrastructure has made it easy to transport trade goods worldwide. The development also enables business persons to move across the world, thus supporting the conduction of business activities in the international environment (Berger & Dore 1996, p. 72). Countries worldwide have invested in creating modern seaports that have increased efficiency in sea transport. Global capitalists rely on sea transport to move bulky goods around the world. The railway sector has also experienced infrastructure development since the 17th century. Fast-moving trains with the ability to carry heavy loads have been developed, enabling global capitalists to move goods on land.
Countries continue to invest in creating super highways to support trading activities across borders. The investment in ICT infrastructure supports the exchange of trade information across the globe, thus promoting global capitalism. Global capitalism has led to uneven economic development, where some areas seem to benefit from international commerce at the expense of others (Gereffi 1994, p. 42). Such a trend makes some regions feel disadvantaged. Developed countries are the home to multinational companies that exploit business opportunities in less developed countries. The increasing global capitalism has resulted in numerous controversies necessitating the formation of international financial institutions aimed at controlling business activities across the globe. The World Bank is one of the key financial institutions that have been created to address the controversies of global capitalization. There have been increasing concerns about the operations of international financial institutions, making some stakeholders propose reforms. However, such reform usually faces obstacles erected by key stakeholders.
The World Bank and Global Capitalism
The World Bank was created in the year 1944 with the aim of correcting the problems caused by global capitalism (Dragos 2006, p. 258). Its goals have been changing in line with the dynamics of global economics (Dunn 2014, p. 112). The organization implements programs aimed at poverty reduction. It, therefore, advances loans to third-world countries to support economic development. World Bank is a unit of the World Bank Group that is the financial wing of the United Nations. The organization has two branches: the International Development Association (IDA) and the International Bank for Development and Reconstruction. Other components of the World Bank Group include the International Centre for Settlement of Investment Disputes (ICSID), the International Finance Corporation (IFC), and the Multilateral Investment Guarantee Agency (MIGA) (Annisette 2004, p. 319). All elements of the World Bank Group collaborate in addressing the negative impacts of global capitalism. The World Bank was formed together with the International Monetary Fund, and the two organizations collaborate in addressing challenges facing the global economy. The World Bank Group is headquartered in Washington DC, and America has substantial control over the group’s leadership (Harvey 2009, p. 91). Americans have dominated the group’s top leadership since its formation due to the relatively high voting power held by America in the group. Other countries possessing substantial voting power include Japan, China, Germany, France, and the United Kingdom.
The bank’s operations are carried out in line with the goals of the United Nations. The Millennium Development Goals (MDG) has been guiding World Bank’s operations since 2000. MDG spells out eight main goals that the international community seeks to realize. Implementation of these goals has been integrated into World Bank’s operations in the past fifteen years. Poverty and hunger eradication are one of the Millennium Development Goals. The World Bank has supported programs to reduce poverty in third-world countries. It also has, over the years, supported programs aimed at enhancing food security, especially in poverty-stricken third-world countries. Achievement of universal primary education is another goal of the international community, as specified by the MDGs. The World Bank supports projects aimed at promoting education. The promotion of gender equality is among the MDGs, and this goal has been shaping the operations of the World Bank. Reduction of child mortality is also a Millennium Development Goal that has been influencing World Bank’s operations. Child mortality has been raising concerns across the globe, and the World Bank has remained committed to promoting social programs to address child mortality. The MDG identifies the improvement of maternal health as a major goal of the international community. The World Bank is quick to support public health programs to improve maternal health. Confronting diseases such as malaria and HIV is one of the Millennium Development Goals. The World Bank has been financing projects directed toward the elimination of diseases (Robinson 2004, p. 126). The promotion of environmental sustainability is also a Millennium development goal that has guided World Bank’s operations since 2000. The World Bank conducts environmental assessments before advancing loans to ensure that specific projects do not have ecological footprints. The promotion of development-oriented global partnerships is the last goal of the international community as specified by the MDG. Global partnerships are diverse, and some may lead to skewed economic development. The World Bank has remained committed to supporting projects that tend to realize equitable economic development between developed and developing countries. The World Bank continues to face criticism despite being guided by Millennium Development Goals. The organization seems not to adequately address the negative impacts of the millennium development goals.
Developing countries are the main victims of global capitalism as developed countries seem to benefit at the expense of the former. Traditionally, third world countries are viewed as a source of raw materials used for supporting manufacturing activities in the developed world. As a result, western capitalists have been exploiting raw materials in Africa and Asia to support manufacturing activities in Europe, The Far East, and America. Other multinational companies based in the developed world have established departments in third-world countries. Such capitalism has some adverse impacts on third-world countries that need to be corrected. The exploitation of raw materials to support manufacturing companies in developed countries denies manufacturers in developing countries a chance to use the same raw materials. The absence of enough raw materials for local manufacturers cripples industries. Profit and capital repatriation strategies implemented by multinational companies operating in third-world countries have adverse impacts on local economies.
Increased global capitalism, therefore, makes poor countries poorer, thus necessitating the intervention of World Bank and other international financial institutions. However, the activities of international financial institutions continue to raise controversies that are making stakeholders in the global economy propose major reforms. Specifically, the World Bank has faced sharp criticism over the years from people and institutions who find the organization’s activities unfit. Some proposals have been implemented, while others continue to face opposition.
Reasons for Reforms at the World Bank
There are specific shortfalls in the World Bank’s operations that necessitate reforms. The shortfalls are many and have far-reaching impacts on the global economy, thus making concerned parties call for serious reforms. Implementing reforms has not been easy due to some impediments erected by some stakeholders within the World Bank. Failure to implement the proposed reforms paints a negative image of the organization. The World Bank is an essential institution, and protecting its image is important. Key stakeholders have portrayed some commitments in making reforms, but their efforts are unsatisfactory. There are various reasons why reforms in the World Bank are being proposed.
The absence of transparency is one of the main reasons for proposing reforms in the World Bank (Banerjee & He 2003, p. 33). The Bank’s activities are always carried out in great secrecy despite being an institution created to serve the public. There have been efforts to reduce secrecy through the sharing of information. The public lack adequate information concerning how decisions at World Bank are made. An organization’s credibility is improved when its operations are carried out in the open. The trust of the consumers and other critical stakeholders improves when they are allowed to access information about how operations in an organization are carried out. The consumers of World Bank’s products are from all corners of the world. Both developing and developed countries have, over the years, benefited from World Bank’s products. There is a perception that the World Bank only helps in addressing problems in third-world countries. This perception is far from the truth, as developed countries are also beneficiaries of the organization. In fact, France was the first country to be given a loan by the World Bank. The country received a total of US$250 million which was given under strict conditions. European countries later gained access to other sources of financing, making the bank lose popularity in the region. As a result, the World Bank shifted to developing countries that were in great need of financing. To date, third-world countries have been the major beneficiaries of the organization’s services. The beneficiaries of the World Bank are always interested in knowing how the organization operates. There have been numerous complaints concerning how the organization makes decisions. The Bank has made efforts to provide information relating to decision-making to reduce the tension between the organization and concerned parties.
Efforts towards promoting transparency have faced major obstacles, especially from countries with substantial control over the organization. Some critics argue that rich countries such as the United States, Japan, China, and Germany use the World Bank to pursue political goals (Dragos 2006, p. 302). Key decisions are made through voting, which gives the United States substantial control over the bank due to the country’s vast voting powers. The concerned countries never reveal the reasons behind major decisions, as some may be politically motivated.
Over emphasis on economic growth has made the World Bank receive criticism from different quarters. It is clear the World Bank operates based on the assumption that helping countries realize economic development would address other problems (Scholtens 2001, p. 626). The world’s problems today are diverse, and their solutions need to be complex. Political and social problems are common in the world today, and such problems require specific solutions. There are pressing social problems that are not directly related to economic development, implying that such problems cannot be addressed through economic development. Terrorism, HIV, and substance abuse are common social problems that cannot be addressed by merely promoting economic growth. The Bank, therefore, fails to address the specific problems. Political instability is also a common problem in the world today. Although some conflicts emanate from resources, most political unrest are caused by ideological differences. Political unrest emanating from non-economic factors cannot be prevented by supporting economic development. Stakeholders have been proposing reforms aimed at directing efforts toward solving the specific problems facing the world today. There are concerns that the World Bank should focus more on funding projects aimed at addressing non-economic problems. These reforms are facing challenges due to the increased visibility of economic problems. It is easy to link the problems facing third-world countries with economic hardships. It has become difficult for concerned parties to convince the key stakeholders to make reforms addressing non-economic issues.
The absence of input from third-world countries in the organization’s decision-making necessitating reforms (Butkiewicz & Yanikkaya 2005, p. 388). Countries that influence decision-making at World Bank are rich, making it hard for the Bank to have the interests of third-world countries at heart. Developed countries spearhead global capitalism, and its negative impacts are mostly felt by third world countries. The main goal of the World Bank is to support developing countries financially. Most developing countries are poor because of the economic exploitation caused by capitalists from developed countries. The fact that decision-making in the World Bank is dominated by the developed countries makes it hard to arrive at decisions aimed at empowering developing countries at the expense of developed countries. Concerned parties have been pushing for adopting a system that supports the incorporation of the opinions of developing countries in decision-making. This reform has faced strong resistance from developed countries as they contribute resources to support the bank. It is, therefore, unwise to make decisions that are likely to compromise their economic well-being. High corruption levels in developing countries are also impeding their involvement in World Bank’s decision-making. There is a need to put checks on third world countries to ensure that funds advanced are spent well. Key stakeholders in the World Bank are, therefore reluctant to increase the involvement of third-world countries in decision-making with the aim of making them more accountable.
In conclusion, the World Bank is one of the major financial institutions that make contributions toward correcting the problems caused by global capitalism. The organization has been helping poor countries to address different types of problems. The organization’s operations are characterized by challenges that are making some stakeholders in the global economy propose some reforms. However, the implementation of these reforms has faced many challenges.
List of References
Annisette, M., 2004. The true nature of the World Bank. Critical Perspectives on Accounting, 15(3), p.303-323.
Banerjee, A.V. & He, R., 2003. The world bank of the future. In American Economic Review. pp. 39-44.
Berger, S., & Dore, R. P. 1996. National diversity and global capitalism. Ithaca, NY: Cornell Univ. Press.
Butkiewicz, J.L. & Yanikkaya, H., 2005. The effects of IMF and World Bank lending on long-run economic growth: An empirical analysis. World Development, 33(3), p.371-391.
Dragos, P 2006. The structure of global capitalism: The stakeholder/ shareholder relationship and corporate governance from the viewpoint od Anthony Giddens’ structuration theory. Norderstedt: Books on demand.
Dunn, B. 2014. The political economy of global capitalism and crisis. Abingdon, Oxon: Routledge
Gereffi, G. 1994. Commodity chains and global capitalism. Westport, Conn.: Greenwood Press.
Harvey, D. 2006. Spaces of global capitalism: A theory of uneven geographical development. London: Verso.
Harvey, D., 2009. Reshaping Economic Geography: The World Development Report 2009. Development and Change, 40(6), p.1269-1277.
Robinson, W. I. 2004. A theory of global capitalism: Transnational production, transnational capitalists, and the transnational state. Baltimore [u.a.: Johns Hopkins University Press.
Scholtens, B., 2001. The World Bank. Kyklos, 54(4), p.626.
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