The World Bank's Early Reflections on Development: A Development Institution or a Bank?

21 Pages Posted: 20 Apr 2016

See all articles by Michele Alacevich

Michele Alacevich

University of Bologna - Dipartimento di Scienze Politiche e Sociali; Institute for New Economic Thinking (INET)

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Date Written: July 1, 2008

Abstract

Until the late 1960s, the World Bank presented itself as an institution devoted to making sound and directly productive project loans. Yet, during its very early years, some discussions developed inside the Bank regarding the possibility of issuing different types of loans, namely (i) loans aimed at tackling social issues (social loans), and (ii) loans aimed at providing foreign currency to address disequilibria in the balance of payments (impact loans). This paper brings together historical analysis and theories of organization development to study the housing issue as a case in point. The analysis reveals that the Bank was unwilling to lend for housing programs not because these were not sound - in fact, they were - but because they were geared toward achieving social welfare objectives and were not directly linked to productive investment projects, such as dams, power stations, and railroads. This early decision had a significant impact on the subsequent development of the Bank's view of policy-making: it locked the institution into a particular lending pattern, and deprived it of important intellectual resources. It was not until the late 1960s that the Bank began to take social issues into consideration, rather late compared with other multilateral institutions.

Keywords: Banks & Banking Reform, Access to Finance, Corporate Law, Public Sector Corruption & Anticorruption Measures

Suggested Citation

Alacevich, Michele, The World Bank's Early Reflections on Development: A Development Institution or a Bank? (July 1, 2008). World Bank Policy Research Working Paper No. 4670, Available at SSRN: https://ssrn.com/abstract=1233046

Michele Alacevich (Contact Author)

University of Bologna - Dipartimento di Scienze Politiche e Sociali ( email )

Strada Maggiore 45
Bologna, 40129
Italy

Institute for New Economic Thinking (INET) ( email )

300 Park Avenue South, 5th Floor
New York, NY 10010
United States

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