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The governance of the World Bank : analysis and implications of the decisional power of the G10

This article discusses the World Bank's formal rules of governance. It states that theoretically, each of the World Bank's member states is represented within the decision making process but in practice it is otherwise. Indeed, we demonstrate that in reality the democratic imbalance in favor of the Most Developed Countries (MDCs), caused by the voting system of the WB, is much stronger than it appears. In the first place, our analysis of the formal decision making process demonstrates that the voting system is such that a coalition of particularly coordinated countries - the eleven countries of the G10 - can, on its own, constitute a majority permitting them to vote decisively on all issues. This implies that the remaining 174 members have no influence on voting results. Thus, this minority coalition alone is in position to approve loans and their attached conditions. In the second place, four features of the World Bank's governance which protect and re-enforce the power of this coalition are found. On the one hand, this analysis provides some explanations to the failure of various initiatives made to increase the voice of the Less Developed Countries (LDCs). On the other hand, it identifies several means susceptible of increasing the power of these countries in the institution. The main interest of this study shows that the democratic imbalance caused by the voting system is more important than it seems. Indeed, not only do the World Bank's formal rules of governance give the G10 the voting weight at all three levels of decision making but several governing features also permit the G10 to protect and re-enforce the power that they already have. Due to their right of veto, the MDCs can notably block any reform proposals.

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Paper provided by Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne in its series Documents de travail du Centre d'Economie de la Sorbonne with number r08007.

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Length: 34 pages
Date of creation: Jan 2008
Handle: RePEc:mse:cesdoc:r08007
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