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The World Bank's early reflections on development : a development institution or a bank?

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  • Alacevich, Michele

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 foreigncurrency 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.

Suggested Citation

  • Alacevich, Michele, 2008. "The World Bank's early reflections on development : a development institution or a bank?," Policy Research Working Paper Series 4670, The World Bank.
  • Handle: RePEc:wbk:wbrwps:4670
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    References listed on IDEAS

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    2. David, Paul A., 1994. "Why are institutions the 'carriers of history'?: Path dependence and the evolution of conventions, organizations and institutions," Structural Change and Economic Dynamics, Elsevier, vol. 5(2), pages 205-220, December.
    3. Currie, Lauchlin, 1978. "The objectives of development," World Development, Elsevier, vol. 6(1), pages 1-10, January.
    4. Hicks, Norman & Streeten, Paul, 1979. "Indicators of development: The search for a basic needs yardstick," World Development, Elsevier, vol. 7(6), pages 567-580, June.
    5. Barber,William J., 2006. "Designs within Disorder," Cambridge Books, Cambridge University Press, number 9780521034319.
    6. Hicks, Norman L., 1982. "Sector priorities in meeting basic needs: some statistical evidence," World Development, Elsevier, vol. 10(6), pages 489-499, June.
    7. Hicks, Norman L., 1979. "Growth vs basic needs: Is there a trade-off?," World Development, Elsevier, vol. 7(11-12), pages 985-994.
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    Keywords

    Banks&Banking Reform; Access to Finance; Corporate Law; Public Sector Corruption&Anticorruption Measures;

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