A press release announced on Thursday that Professor Adam Lerrick of Carnegie Mellon University’s Tepper School of Business, a leading authority on international banking and finance, has appeared before a subcommittee of the U.S. Senate to argue that the World Bank is becoming an ineffective institution. Lerrick argued that the United States should demand greater accountability and transparency from the World Bank.
Lerrick stated, “After 60 years and $600 billion, there is little to show for bank efforts. n the last 20 years, the world has changed dramatically, but the World Bank has refused to change with it.” Lerrick went on to describe his belief that the advantage the World Bank once had is gone as private capital now channels over 300 times the amount of funds to emerging countries than the World Bank. Lerrick continued, “The private sector dwarfs official funding and emerging nation leaders are just as smart, just as skilled and know their countries infinitely better than anyone at the bank.”
Indeed, the founding purpose of the World Bank was to provide knowledge and finance developments in emerging countries. Some, like Lerrick, believe that emerging countries no longer need money or advice from the World Bank. Lerrick went on to testify that the World Bank isn’t really lending to those types of countries much anymore anyway, “More than half of bank loans since 2000 have flowed to six upper- middle-income nations where only 10 percent of the developing world lives.”
The next portion of U.S. funding for the World Bank is expected to be somewhere between $4 and $5 billion dollars. Lerrick argues that the United States must demand more information from the World Bank, as they historically don’t release information detailing the approximately 280 projects they fund each year.
General information describing projects the World Bank is funding can be found on their website, but Lerrick believes that U.S. officials should have access to more detailed data. Projects recently approved by the World Bank range from an HIV/AIDS prevention project in Afghanistan, an irrigation development project in Armenia, a higher education project in Mozambique, and an agriculture and infrastructure development project in Liberia.
Projects like unto these would suggest that the World Bank is fulfilling their initial purpose. However, if Lerrick gets his way, the U.S. will analyze in detail their relationship with the World Bank and consider whether the role of the World Bank in the global scene should change.