NCPA - National Center for Policy Analysis

Economist Made Scapegoat for World Bank Woes

September 12, 2001

In a widely-praised new book, "The Elusive Quest for Growth" (MIT Press) and an op-ed article in London's Financial Times, World Bank economist William Easterly criticizes development aid.

"Contrary to conventional wisdom, aid to the developing world has been a big disappointment. Consider the facts and it soon becomes evident that the $1 trillion spent on aid since the 1960s, with the efforts of advisers, foreign aid givers, the International Monetary Fund and the World Bank, have all failed to attain the desired results."

Many developing countries are worse off today, by any measure, than they were 40 years ago. However, according to the New York Times, the World Bank launched an official inquiry, saying Easterly violated its policy by publishing the Financial Times article without prior approval.

Many observers believe Easterly is being made the scapegoat for recent attacks on the World Bank's policies and its president, James Wolfensohn, who was appointed by Bill Clinton in 1995.

  • In "Foreign Policy," journalist Stephen Fidler writes that "Since June 1995, James D. Wolfensohn has presided over what many close to the bank view as a tragic deterioration of the world's premier development institution, which they describe as rudderless and lacking strategic vision."
  • In "Foreign Affairs," former World Bank Managing Director Jessica Einhorn says Wolfensohn has jumped from one development fad to another, adding new responsibilities to the bank in areas such as the environment under pressure from outside interest groups.
  • Former Treasury Secretary Lawrence Summers believes Wolfensohn is allowing NGOs (non-governmental organizations) to guide Bank policy rather than its member governments.

Bush administration officials have publicly stated reservations about where the Bank is going. But unfortunately, Wolfensohn's second term runs another four years. He was reappointed by Bill Clinton last year.

Source: Bruce Bartlett, senior fellow, National Center for Policy Analysis, September 12, 2001.

For Fidler


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