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Tuesday, September 26, 2023
WASHINGTON, Sep 17 2011 (IPS) - Amid a global financial crisis that has shown little signs of reversing, next week’s fall meetings of the International Monetary Fund and World Bank are crucial in setting the tone for rebounding world markets, to which leaders of the Bretton Woods institutions offered optimistic, yet ultimately vague, solutions in speeches this week.
Robert Zoellick, president of the World Bank, said that political leaders needed to become “responsible stakeholders” in the world’s development in an appearance Wednesday at George Washington University.
“We need to leverage aid more effectively through new instruments, and we need to expand the contributors by involving more stakeholders through more innovative approaches,” Zoellick said, stressing private investment and entrepreneurship as avenues which needed to be more involved in global growth strategies.
IMF chief Christine Lagarde echoed Zoellick’s comments on Thursday, in her first speech in Washington since her appointment in July. Lagarde emphasised a need to restore confidence in the global economy, but said that the world would take its cue from the action and cooperation of political leaders.
“[Solutions] have to be demonstrated, implemented by political leaders who may have to put aside for a little while their ego and their partisan interests, and extend the agenda to beyond the next election,” Lagarde said.
Lagarde, formerly France’s finance minister, was herself the subject of partisan debate upon her appointment as head of the IMF in July, with many in the developing world balking at the idea of continued European control of the organisation.
“Growth is continuing to slow down,” Lagarde said, citing high levels of unemployment in the advanced economies of the world, combined with an increase in credit balances and high inflation in emerging markets. For the lower income countries, the degree of dependency on other countries for capital and assistance is still very high, placing them in a vulnerable position in the global marketplace.
“There are major conduits of connections generally in the financial system,” Lagarde said. “In this interconnected world, economic tremors in one country can reverberate swiftly and powerfully across the globe.”
Civil society organisations have weighed in on the need for a change in the modus operandi of development programmes, especially when it comes to how the money is handled.
“There’s growing consensus about the need for innovative new methods to raise financing for development,” Caroline Pearce, spokesperson for Oxfam International, told IPS Friday.
Among the options to be discussed at the upcoming meetings are taxes and new investment strategies, which Pearce said could be useful to help face the myriad of structural problems the world is facing, particularly relating to climate change.
“A tax on global financial transactions could raise at least 650 billion dollars annually, and a tax on shipping fuel could raise billions more,” she said. “We hope that the World Bank and IMF will be calling for proceeds to go to development and climate change adaptation.”
Zoellick’s remarks revealed much of the same perspective on the new reality for development in the 21st century.
“Today, we are seeing economic, trade, and financial interdependence that was incomprehensible in 1944,” he said, the year that the Bretton Woods system was created.
But despite the myriad of economic challenges that the world’s economies are facing, Zoellick, whose term ends next year, seemed optimistic about the patterns of investment in emerging economies.
“In the 1990s, developing countries accounted for about a fifth of global growth,” he said. “Today, developing countries are the engine driving the global economy.”
These countries are attracting 45 percent of global investment, a number that has more than doubled in 20 years.
And more and more, Zoellick said, developing countries are interacting with and taking a cue from not just aid donors, but from each other, as the share of foreign direct investment between the global south has increased to about 40 percent, up from just over 30 percent in 2008.
“Relationships among developing countries are changing the development world as we knew it,” Zoellick said.
Zoellick, who was appointed president of the World Bank in 2007, has proposed various development strategies in his tenure, including the “One Percent Solution” for development in Africa, with countries investing one percent of their Sovereign Wealth Funds in the region’s growth.
On Wednesday, he highlighted a new development focus, perhaps a major point in the meetings next week, on women in development, called the “Fifty Percent Solution”.
“Women make up 50 percent of the global population and 40 percent of the global workforce,” he said. “Yet women own only one percent of the world’s wealth.”
An important point in the discussions next week will include working to mainstream women’s rights as part of the development conversation as well as increasing the knowledge base on gender-related data, such as numbers on women’s access to credit and justice systems, Zoellick said.
“We will build on the 65 billion dollars we have provided over the last five years to support girls’ education, and women’s access to credit, land, agricultural services, jobs and infrastructure, ” he said. “This is important work, but it has not been central enough to what we do.”
Addressing global gender inequities would have an enormous impact on other elements of development, analysts said, and should be a focal point for discussion next week.
“Narrowing the gap between women and men – in terms of resources, opportunities, and decision-making at every level – is at the core of development,” Pearce said.
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