The World Bank and the Imf in Developing Countries: Globalization and the Crisis of Legitimacy | Research & Encyclopedia Articles

The World Bank and the Imf in Developing Countries: Globalization and the Crisis of Legitimacy

The Conflict

Some of the poorest nations in the world are currently spending inordinate proportions of their revenues repaying debts to the IMF, World Bank, and other international lenders. The amount these nations owe is well beyond what they can pay, and their social systems, such as health and education, have suffered from cutbacks due to servicing debts. The IMF and the World Bank have loaned money to the developing nations to help them service their debts, but they require the nations to follow prescribed economic strategies. These strategies, according to critics, have been highly unsuccessful. Many developing nations are in a debt treadmill, forced to take new loans to service old ones or risk default and economic collapse.

Political

• In the 1990s the IMF and World Bank acknowledged the need for greater political and cultural awareness in carrying out their lending. The institutions have attempted to work with other international actors and to set long-term development goals more attentive to state-building and good governance. Critics note, however, that there is no strategy in place for creating a more equitable economy or decreasing the gap between the wealthy and the developing nations.

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