What are the main criticisms of the World Bank?

Question

What does it mean that "Public Capital Transfers are no longer needed"

Answer 1

'Public Capital Transfers' simply mean government to government or World Bank to Government transfers of funds, Aid.

It has been argued that simple aid is not effective because:
1 A large chunk simply disappears due to lack of accountability
2 Most of it is used for immediate needs, yielding little change in the long run

lack of accountability is nothing new; bribes and such are common in many countries. The idea that aid is mainly used for immediate needs is linked to the fact that Aid arrives mainly at times of catastrophe, earthquake, tsunami... It is obvious that funds would be used to help people survive rather than build a tsunami early warning system for example. I think this has more to do with the timing of the funds. Nobody would have donated anything for tsunami early warning to say Thailand if there hadn't been the Tsunami. However the funds that arrive rightly go to disaster relief.

There have been calls for tied-Aid, where the transfers are linked to using the funds for specific purposes, often with specific companies involved. basically the idea is that the developing country is incapable of managing the fiunds and the donor country needs something in return (the companies chosen are more often that not based in the donor country, so in fact the aid is just a pretext for government transfering money to its own private sector, but the developing country can also benefit if the project is indeed worth doing).

Another method is to use the private sector rather than public sector. That is, the developing country can engage in a BOT project whereby it hires a private company who will Build Operate then Transfer the resource back to the developing country government. For example if a highway is built, the private contrator gets to keep toll receipts, and after making a pofit, gives the highway back to the government. Some issues with that include the financial projections of such projects, the upkeep of the resource espeically as the time to Transfer ownership to the government approaches.

Personally I also think that the 2 main institutions such as WorldBank and IMF are living in the past. Witness their advice to SouthEast Asia in the wake of the currency crisis to increase interest rates. This backfired, driving more people and businesses into bankruptcy rather than stopping a speculative attack. Malaysia who ignored this advice is doing much better today than Thailand who listened.

This is either incompetence or deliberate sabotage, as once the local businesses went bankrupt, foreign companies picked-up the pieces jus liek carpet-baggers after the US civil war.

To me, that is the major criticism of the world bank.

Answer 2

Read this

http://www.econometricsociety.org/meetings/wc00/pdf/1936.pdf