The Globalizers: The IMF, the World Bank, and Their Borrowers

By N. Woods. 2006

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The disputes over Paul Wolfowitz’s tenure as head of the World Bank and the replacement of Rodrigo de Rato as managing director of the International Monetary Fund pushed those institutions into the headlines and raised difficult questions about their leadership and governance. This scrutiny of the prerogatives of the United States and European Union to choose their successors comes at a time when the very purpose and continued existence of the World Bank and the IMF have been challenged. Asian governments have accumulated sufficient foreign exchange to ride out a currency crisis without the need of an IMF emergency loan. China has become a rival to the World Bank as a lender in Africa, prompting fears of a new debt burden. All these developments make the appearance of Ngaire Woods’s The Globalizers: The IMF, the World Bank, and Their Borrowers most timely and welcome. The director of the Global Economic Governance Programme at Oxford, Woods is an insightful and thoughtful authority on the Bretton Woods institutions. In this book she examines their activities and focuses on their engagements with Mexico, Russia, and the sub-Saharan African nations. Woods sees three forces shaping the actions of the IMF and the World Bank. First, the United States and other Allied victors of World War II established the organizations and continue to dominate them. Their influence is due in part to the institutions’ voting scheme, which reflects economic size and provides the United States with the ability to veto organizational changes in the institutions. But Woods cautions against treating the agencies as tools of U.S. foreign policy. U.S. interests are not monolithic, and the IMF and the World Bank have been the target of controversies within the United States as to what that country’s position toward the institutions should be. Other nations also have clout, particularly when there are no U.S. interests at stake. Second, the IMF and the World Bank are also influenced by the people who run them. The professional staff of each organization consists largely of economists, typically with graduate degrees from North American or British universities. Not surprisingly, the policies they prescribe reflect the analytical framework of economics, which provides a systematic understanding of the nature of economic problems and their solutions. Woods writes that the downside of that training is limited knowledge of local circumstances, which may not be congruent with the proposed remedies. Finally, the institutions are dependent on domestic government partners in countries where they lend money and advocate policies. The stereotype of Washington-based staff members imposing their views on passive governments is misleading and ignores the need of the IMF and the World Bank for sympathetic interlocutors who share their views of what policy measures to implement. The Fund and the Bank form coalitions with sympathetic members of the borrowing governments, which give the latter an advantage over other officials who do not share the international institutions’ views. Woods shows how these three forces played off each other in Mexico, Russia, and sub-Saharan Africa. The Mexican debt

Subfields: Development

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