Governance, Neutrality, and the World Bank

Essay, 2017

13 Pages




Conceptual framework

Neutrality of the World Bank’s policies

Governance as a liberal placed notion

Empirical case: The World Bank in Brazil




The World Bank, not to be mistaken with the World Bank Group, is an international financial institution that temporarily gives money to nations around the world for capital programs. It is part of the World Bank Group. The Bank is composed of two institutions: the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA) (World.Bank, "About us"). The main declared goal of the World Bank is a reduction of poverty. Nonetheless, granted to the Articles of Agreement, all its decisions must be led by a commitment to the elevation of foreign investment and international trade and the aiding of capital investment(World.Bank, "About Us").

In the contemporary stage of globalization, always-changing multiplex interconnections across the world have driven to the toughening of global sites of authority on one side, and better coordination between nations on the other. From these processes, we identify more and more cases of global policy-making(Levi-Faur, 2012, p.698). Globalization has become a big part of everyday life in the mass media, and a usual word used by corporate executives, politicians and non-governmental organizations. In this contemporary era, globalization is the transformative development of connections among people across the planet that take a supraterritorial form(Levi-Faur, 2012, p. 699). “Transnational”, now and then, was used with the meaning of international but more and more the word has taken on another signification, that of supraterritoriality. Meaning that relations and transactions are made without the limitations of territorial borders of states. “Transnational also refers to transactions that include not only states, but also various non-state actors such as corporations, interest groups, and social movements, as well as government institutions whose mandate is broader than that of states”(Levi-Faur, 2012, p.700).

In this age of globalization, there is an expanding demand for global governance. Moreover, global governance should be perceived alongside a possible continuity of governance that ranges from international order to world government. In the late 1980s, the term of “global governance” was introduced, and it was defined as the possibility of states to collaborate under anarchy, by setting up international institutions. Global governance is a broad, ever-changing and intricate process of reciprocal decision-making that is always fluctuating. Furthermore, there is no singular form or model of global governance and no single structure or set of structure. The complexity of global governance contains a wide combination of actors, institutions, and processes that unfold at three different levels: supranational national and subnational(Levi-Faur, 2012, p.711-716).

The World Bank’s activities around the world are a frequent matter of analysis. This can be happening, because of the significance and impact of the Bank’s policies and recommendations on local societies and governments. The Bank’s mandate is without any doubt limited to the economic and financial aspects of government. Built on this, The World Bank take up an officially neutral position regarding internal politics of the nations with which it works, as shown in the article of Stevens and Gnanaselyam (1995). Nevertheless, other scholars, as Williams and Young (2005), argued that such neutrality is hard to realize, due to the fact that any policy the Bank proposes is based on pre-settled premises, based on liberal ideas placed on liberal ideals, which eventually become forced upon the states that want to receive a loan from the Bank.

This paper will display both views and apply the concepts presented in an empirical case in order to emphasize the World Bank’s governance as a transnational organization.

Conceptual framework

The notion of governance has an expanding importance of the activities definition of several international organizations dealing with worldwide development. Governance as explained by the World Bank in its publishing Governance and Development, in 1992, as “the manner in which power is exercised in the management of a country’s economic and social resources for development”. In this regard, we can determine three aspects of governance: “1. the shape of a political regime 2. the method through which authority is applied to a country’s economic and social resource management for development 3. the ability of governments to design, plan and carry out policies and discharge functions” (Stevens&Gnanaselvam, 1995, p. 97). These aspects are interdependent and have an important role in forming the foundation for governmental activities.

If we try to comprehend that the traits of each and every state, anywhere, are broadly characterized by its connections with the economy and society that echoes and both represents and rules over, in its historical, regional, and international background. Than the observing, a nation’s governance will allow a more accessible analysis of its main political and social components(Leftwich, 2005, p. 139). It can be used to find solutions to solve its main weaknesses. Having the goal of aiming for a good governance would establish on this, would be in essence close related with working towards a country’s development. Built upon this presumption, the international organizations are working in the development of countries have embodied governance as a basic examining tool to evaluate if a nation has fundamental traits that would lead to development. The main idea is that a correct government will achieve the desired economic development. From a more pragmatic view, strong and productive states are impossible without strong economies and healthy economies are improbable without the institutions of state that make them possible attainable(Leftwich, 2005, p. 153).

Since the end of 1980, the World Bank began to introduce governance aspects in its developmental policies. By doing this, it started to extend its starting area of work, moving beyond economic and financial projects. Hereby, some dispute has arisen related to the Bank’s capacity to control its neutrality and the influence of its hypothetical view on funded projects.

Neutrality of the World Bank’s policies

In the view of Mike Stevens and Shiro Gnanaselvam, the Word Bank is described as an institution that has the aim of pursuing the development of economic and financial policies while keeping its neutral position towards political and social issues. Their article shows, in terms of governance, that the relation between the partner countries and the Bank is one of equilibrium, the Bank having an observer position while giving suggestions and establishing its decisions on economic evidence.

The Bank discerns governance as an analytical groundwork and as a practical concept. Regarding the three features of governance presented earlier, the World Bank has confined itself to using only the second and the third feature that is more connected to the economic and financial politics. This is rooted in the fact that the Bank has the aim to keep its neutral position concerning political decisions in all the countries in which it operates. Its decisions stand on the analysis of the condition of the country’s ability to pay back loans. The theory is that while the Bank recognizes governance as always having a political dimension, it will restrict itself to the economic aspects of governance (Stevens&Gnanaselvam, 2005, p. 97).

The main work of the Bank is placed in improving the public sector administration, involving civil service reform, public financial administration, public enterprise reform and government decentralization reforms. Other projects are aimed at developing a legal structure that facilitates economic growth of countries. This kind of projects contains regulatory and legal reforms, the creation of a legal structure for the economy market, enhancement of economic laws, among others.


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Governance, Neutrality, and the World Bank
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Rares Dragan (Author), 2017, Governance, Neutrality, and the World Bank, Munich, GRIN Verlag,


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