Aid and Power - Second Edition: The World Bank & Policy-based Lending

In the introduction to the second edition the authors point out some of the recent changes of importance in terms of the operation of the World Bank and its role in shaping the development arena and discourse. They point to the fact that the World Bank can be diagnosed as an institution which suffers from a chronic ambiguity of, and conflict between, objectives. Over time it moves uneasily between four major roles.

These, the authors argue, are (i) a financial intermediary between world capital markets and its own borrowers - 'the bank as a bank'; (ii) an instrument for the advancement of the interests of the rich countries who are its majority shareholders; (iii) an evangelist seeking changes in the beliefs and behaviour of developing countries' governments; and (iv) an agent for the net transfer of resources from rich to poor countries.

The authors argue that in the last 15 years the Bank has placed increasing focus on the role as evangelist, with the introduction of policy-based lending with the aim to influence policy more effectively. In a nutshell the story presented in the book, argues the authors, is about the conflict between objective (iii) and (iv) in the context of adjustment lending.