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The monetization of global poverty: the concept of poverty in World Bank history, 1944–90*

  • Rob Konkel (a1)

Abstract

This article traces the history of the concept of poverty within the institutional framework of the World Bank, from its inception to its establishment of the dollar-a-day global poverty threshold. The Bank's evolving conceptualization of poverty and how it related to the development process affected the policies that were advanced to boost the productivity of underdeveloped countries. Internal and external influences and constraints conditioned the Bank's approach to poverty and its alleviation from the beginning, when poverty was conceived as a political issue beyond the scope of the Bank's mandate. Separating the political implications of poverty alleviation from the Bank's development agenda was tenuous, and by the 1970s a universal, absolute concept of poverty became the focal point of Bank operations. The eventual monetization of global poverty reflected the increasingly technical nature of the Bank's development work and its need for a practical yardstick by which to measure the success of its anti-poverty policies.

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I would like to thank Deborah Oxley and Jim Handy for their support during the early stages of this project. I am grateful to the editors of the Journal of Global History, and three anonymous referees for their very valuable comments. I also appreciate the efforts of April Miller and the rest of the staff at the World Bank Archives.

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1 Initially founded as the International Bank of Reconstruction and Development (IBRD), today the World Bank Group consists of five institutions but the term ‘World Bank’ refers only to the IBRD and the International Development Association (IDA). The IBRD makes loans near market rates to governments of middle-income countries and creditworthy low-income countries. The IDA, created in 1960, makes long-term interest-free loans and grants, called ‘credits’, to the governments of the poorest countries, which are otherwise ineligible for IBRD loans. This article uses the terms ‘World Bank’ and ‘Bank’ interchangeably to refer to either the IBRD prior to 1960, or to the IBRD and IDA from 1960 onwards.

2 Deaton, Angus, ‘The World development report at thirty: a birthday tribute or a funeral elegy?’, in Shahid Yusuf, ed., Development economics through the decades, Washington, DC: The World Bank, 2009, p. 108.

3 Reddy, S. G. and Pogge, T., ‘How not to count the poor’, in S. Anand, P. Segal, and J. E. Stiglitz, eds., Debates on the measurement of global poverty, Oxford: Oxford University Press, 2010, p. 43.

4 Kapur, D., Lewis, J. P., and Webb, R., The World Bank: its first half century, vol. 1, Washington, DC: Brookings Institution Press, 1997, pp. 56.

5 Spicker, P., The idea of poverty, Bristol: Policy Press, 2007, p. 3.

6 Finnemore, M., ‘Redefining development at the World Bank’, in F. Cooper and M. Packard, eds., International development and the social sciences: essays on the history and politics of knowledge, Berkeley, CA: University of California Press, 1997, p. 220.

7 Alacevich, M., The political economy of the World Bank: the early years, Stanford, CA: Stanford University Press, 2009.

8 Mason, E. S. and Asher, R. E., The World Bank since Bretton Woods, Washington, DC: The Brookings Institution, 1973, p. 28;

Wade, R. H., ‘U.S. hegemony and the World Bank: the fight over people and ideas’, Review of International Political Economy, 9, 2, 2002, p. 206.

9 IBRD, Annual Report 1946–47, Washington, DC: IBRD, 1947, pp. 58.

10 Ayres, R., Banking on the poor: the World Bank and poverty, Cambridge, MA, and London: MIT Press, 1983, p. 74.

11 Kapur, Lewis, and Webb, World Bank, vol. 1, pp. 456–7; Ascher, W., ‘New development approaches and the adaptability of international agencies: the case of the World Bank’, International Organization, 37, 3, 1983, p. 427.

12 IBRD, Annual Report 1965–66, Washington, DC: IBRD, 1966, p. 5.

13 IBRD, Annual Report 1990, Washington, DC: IBRD, 1990, p. 57.

14 Kapur, Lewis, and Webb, World Bank, vol. 1, p. 94.

15 Ibid., pp. 52–4.

16 World Bank Group Archives, WB IBRD/IDA 02 Central Files, Series 4219 Operations Policy Files, 1946–1968 (henceforth WBA, OPF), Folder 30132380, L. Rist, ‘Reflexions on economic development’, June 1954, p. 2.

17 WBA, OPF, Folder 30132378, ‘Memorandum on methods of financing the economic development of underdeveloped countries’, 6 May 1949, p. 2.

18 Ibid.

19 WBA, OPF, Folder 1070968, ‘Considerations on the development of economically underdeveloped countries’, 1947, p. 4.

20 O'Connor, A., Poverty knowledge: social science, social policy and the poor in twentieth-century US history, Princeton, NJ: Princeton University Press, 2001, p. 3.

21 ‘Considerations on the development of economically underdeveloped countries’, pp. 4, 5.

22 IBRD, Annual Report 1948–49, Washington, DC: IBRD, 1949, pp. 89.

23 WBA, OPF, Folder 1069992, ‘Common problems of economic development’, 30 April 1953, pp. 3–4; see also IBRD, Annual Report 1946–47, pp. 5–8.

24 International Bank of Reconstruction and Development (henceforth IBRD), ‘Articles of agreement’, Washington, DC: World Bank, 1989, Article I; Article IV, Section 10(ix); Article III, Section 4(vii).

25 Alacevich, M., ‘Early development economics debates revisited’, Journal of the History of Economic Thought 33, 2, 2011, pp. 145169; Kapur, Lewis, and Webb, World Bank, vol. 1, p. 8.

26 Alacevich, M., ‘The World Bank and the politics of productivity: the debate on economic growth, poverty, and living standards in the 1950s’, Journal of Global History, 6, 1, 2011, p. 63; Kapur, Lewis, and Webb, World Bank, vol. 1, p. 12.

27 Kapur, Lewis, and Webb, World Bank, vol. 1, pp. 76–9; Kraske, J., Becker, W. H., Diamond, W., and Galambos, L., Bankers with a mission: the presidents of the World Bank, 1946–1991, Oxford: Oxford University Press, 1996, p. 60.

28 Derviş, K., ‘The World Bank and the evolving political economy of development’, in Yusuf, Development economics, p. 115.

29 Wade, R. H., ‘Japan, the World Bank, and the art of paradigm maintenance: The East Asian Miracle in political perspective’, New Left Review, 217, 1996, pp. 336.

30 Alacevich, M., ‘The World Bank's early reflections on development: a development institution or a bank?’, Review of Political Economy, 21, 4, 2009, pp. 227244.

31 Alacevich, ‘Politics’, pp. 66–69.

32 Maier, C., ‘The politics of productivity: foundations of American international economic policy after World War II’, International Organization, 31, 4, 1977, p. 613.

33 WBA, OPF, Advisory Council Note no. 3, ‘Extent to which the Bank should take an active role in assisting its underdeveloped member countries to solve their development problems’, 29 June 1948, p. 3.

34 Ibid., pp. 1–2.

35 Ibid., pp. 6–7.

36 World Bank Group Archives, WB IBRD/IDA 44 Oral Histories, 1961–2005 (henceforth WBA, Oral hist.), Eugene Black, pp. 34–5.

37 WBA, Oral hist., Mahbub ul-Haq, p. 14.

38 WBA, Oral hist., Ansel Luxford, p. 7.

39 Ibid., p. 2.

40 WBA, OPF, Folder 30132378, Memorandum, Richard Demuth to John McCloy and Robert Garner, 11 February 1949, pp. 2–3.

41 H. S. Truman, inaugural address, in Inaugural addresses of the presidents of the United States, vol. 2, Bedford, MA: Applewood Books, 2009, p. 112.

42 ‘Extent to which the bank should take an active role’, pp. 4–5.

43 See Alacevich, Political economy, and Alacevich, ‘Politics’.

44 Alacevich, ‘Politics’, p. 60.

45 IBRD, The basics of a development program for Colombia, Washington, DC: IBRD, 1950, pp. xvi, 356.

46 IBRD, The economic development of Nicaragua, Baltimore, MD: Johns Hopkins University, 1953, p. 22.

47 WBA, OPF, Folder 1069992, confidential memorandum, ‘Technical assistance missions organised by the Bank’, 17 March 1951, pp. 1–2.

48 WBA, OPF, Folder 1069991, memorandum, Irving Friedman to directors and area departments, 8 February 1966.

49 IBRD, Annual Report 1954–55, Washington, DC: IBRD, 1955, pp. 33–8.

50 Kapur, Lewis, and Webb, World Bank, vol. 1, p. 115.

51 Quoted in ibid., p. 118.

52 Kuznets, S., ‘Economic growth and income inequality’, American Economic Review, 45, 1, 1955, p. 18.

53 Jolly, R., Emmerij, L., Ghai, D., and Lapeyre, F., UN contributions to development thinking and practice, Bloomington, IN: Indiana University Press, 2004, pp. 6883.

54 Gwin, C., ‘US relations with the World Bank, 1945–1992’, in Kapur, Lewis, and Webb, World Bank, vol. 2, pp. 205–207.

55 Peet, R., Unholy trinity: the IMF, World Bank, and WTO, 2nd edition, London: Zed Books, 2008, p. 134; Kapur, Lewis, and Webb, World Bank, vol. 1, p. 14.

56 WBA, Oral hist., Paul Rosenstein-Rodan, pp. 20–1.

57 WBA, OPF, Folder 1790424, memorandum, A. M. Kamarck to S. R. Cope, 12 October 1959.

58 Kapur, Lewis, and Webb, World Bank, vol. 1, p. 136.

59 Peet, Unholy trinity, pp. 132–3.

60 WBA, Oral hist., Harold Graves (II), p. 2.

61 Jolly, R., ‘The UN and development thinking and practice’, Forum for Development Studies, 32, 1, 2005, p. 50.

62 United Nations, The United Nations development decade: proposals for action, New York: United Nations, 1962, pp. 2–3, emphasis in original.

63 WBA, OPF, Folder 1069953, confidential memorandum, C. F. Owen to Economic Committee, S. Johnson, ‘IBRD: a new proposal’, paper EC/0/66-160, 19 October 1966, pp. 2–3.

64 Kraske et al., Bankers, pp. 116, 130–6.

65 W. Iliff, address to the Board of Governors, IBRD/World Bank, Annual meeting of the Board of Governors: summary proceedings, Washington, DC: IBRD/World Bank, 1960, p. 8.

66 WBA, OPF, Folder 1069953, memorandum, Paolo Leon and Attila Karaosmanoğlu to Stanley Johnson, 27 October 1966.

67 WBA, OPF, Folder 30132311, memorandum, R. Niebuhr to Files, 24 January 1966.

68 WBA, OPF, Folder 30132382, memorandum, ‘Development finance and non-governmental participation’, 30 October 1965, pp. 2, 3.

69 WBA, OPF, Folder 30132381, memorandum, ‘Principles for the grant of foreign assistance for economic development’, n.d., pp. 5–6.

70 World Bank Group Archives, WB IBRD/IDA 24, Folder 30132375, address by George Woods, Columbia University, 13 April 1967, p. 8, emphasis in original.

71 WB IBRD/IDA 24, Folder 1069953, H. B. Chenery, ‘The effectiveness of foreign assistance’, Round table conference on capital movements and economic development, 21–31 July 1965, p. 26.

72 WBA, Oral hist., ul-Haq, pp. 13–14.

73 WBA, Oral hist., Burke Knapp, p. 33.

74 Woods, G., Governors’, ‘Address to Board ofBank, in IBRD/World, Annual meeting of the Board of Governors: summary proceedings, Washington, DC: IBRD/World Bank, 1963, pp. 8, 11–12.

75 WBA, Oral hist., Graves (II), p. 29.

76 Kapur, Lewis, and Webb, World Bank, vol. 1, p. 16.

77 Kraske et al., Bankers, pp. 161–2.

78 McNamara, R. S., Governors’, ‘Address to Board ofBank, in IBRD/World, Annual meeting of the Board of Governors: summary proceedings, Washington, DC: IBRD/World Bank, 1973, pp. 16, 17.

79 O'Connor, Poverty knowledge, p. 154.

80 Kanbur, R. and Squire, L., ‘The evolution of thinking about poverty: exploring the interactions’, in G. M. Meier and J. E. Stiglitz, eds., Frontiers of development economics: the future in perspective, Oxford: Oxford University Press, 2001, p. 196.

81 Sen, A., Poverty and famines: an essay on entitlement and deprivation, Oxford: Oxford University Press, 1981, p. 22.

82 Green, M. and Hulme, D., ‘From correlates and characteristics to causes: thinking about poverty from a chronic poverty perspective’, World Development, 33, 6, 2005, p. 869.

83 McNamara, ‘Address to Board of Governors’, 1973, p. 17.

84 McNamara, R. S., ‘Forward’, in World development report 1978, Washington, DC: World Bank, 1978, p. iii.

85 See Finnemore, ‘Redefining development’, pp. 203–227.

86 WBA, Oral hist., ul-Haq, pp. 2–7.

87 McNamara, R. S., Governors’, ‘Address to Board ofBank, in IBRD/World, Annual meeting of the Board of Governors: summary proceedings, Washington, DC: IBRD/World Bank, 1972, p. 30.

88 Chenery, H. et al., Redistribution with growth: policies to improve income distribution in developing countries in the context of economic growth, Oxford: Oxford University Press, 1974, p. 3.

89 Ayres, Banking, pp. 76, 79–82.

90 Streeten, P., First things first: meeting basic human needs in developing countries, Oxford: Oxford University Press, 1981, p. vii.

91 Hicks, N. and Streeten, P., ‘Indicators of development: the search for a basic needs yardstick’, World Development, 7, 1979, p. 568.

92 WBA, Oral hist., Hollis Chenery, p. 12.

93 WBA, Oral hist., ul-Haq, p. 4.

94 Streeten, First things first, p. 3.

95 WBA, Oral hist., ul-Haq, p. 16.

96 WBA, Oral hist., Richard Demuth, pp. 26–7.

97 WBA, Oral hist., Knapp, p. 14.

98 WBA, OPF, Folder 1069992, H. Chenery, ‘The effectiveness of foreign assistance’, memorandum, B. Knapp to G. Woods, 4 April 1966, p. 1.

99 Yusuf, Development economics, p. 21.

100 IBRD, Annual Report 1977, Washington, DC: IBRD, 1977, p. 17.

101 Stern, N., ‘The World Bank as “intellectual actor”’, in Kapur, Lewis, and Webb, World Bank, vol. 2, p. 597.

102 Yusuf, Development economics, pp. 20–21.

103 Hicks and Streeten, ‘Indicators’, pp. 567–568, 577–8.

104 IBRD, Annual Report 1947–48, Washington, DC: IBRD, 1948, p. 14.

105 Chenery et al., Redistribution with growth, p. 10.

106 IBRD, The assault on world poverty: problems of rural development, education and health, Baltimore, MD: Johns Hopkins University Press, 1975, pp. v, 4, 19.

107 IBRD, Annual Report 1976, Washington, DC: IBRD, 1976, p. 39.

108 Ayres, Banking, p. 77.

109 Kapur, Lewis, and Webb, World Bank, vol. 1, pp. 726–9.

110 Ibid., pp. 224–9, 332.

111 Alacevich, ‘Politics’, p. 54.

112 Kanbur, R. and Vines, D., ‘The World Bank and poverty reduction: past, present and future’, in Christopher L. Gilbert and David Vines, eds., The World Bank: structure and policies, Cambridge: Cambridge University Press, 2000, p. 91.

113 Peet, Unholy trinity, p. 138.

114 Williamson, John, ed., Latin American adjustment: how much has happened?, Washington, DC: Institute for International Economics, 1990.

115 Kapur, Lewis, and Webb, World Bank, vol. 1, pp. 22, 598.

116 Stern, ‘World Bank’, p. 535.

117 World development report 1981, Washington, DC: World Bank, 1981, p. 5.

118 World development report 1978, pp. 5, 35.

119 See IBRD, Annual Report 1987, Washington, DC: IBRD, 1987, p. 16; IBRD, Annual Report 1988, Washington, DC: IBRD, 1988, p. 66.

120 IBRD, Annual Report 1989, Washington, DC: IBRD, 1989, pp. 84–5.

121 World development report 1980, Washington, DC: World Bank, 1980, p. 32.

122 World development report 1978, p. 7.

123 World Bank Group Archives, WB IBRD/IDA 02 Central Files, Series 2431 Policy and Research Division Files – Poverty Guidelines Subset, 1981–1983 (henceforth WBA, PRDF), Folder 1046757, Population, Health and Nutrition Department, ‘Guidelines for poverty analysis in population, health, and nutrition projects’, June 1981.

124 WBA PRDF, Folder 1046757, Policy Planning and Program Review Department, discussion draft, ‘Poverty and the least developed countries’, 2 March 1981, p. 1.

125 Ibid., p. 4.

126 WBA PRDF, Folder 1046757, Projects Advisory Staff, Economic Analysis and Projections Department, ‘Poverty measures in the Bank’, 16 May 1983, p. ii.

127 Ibid., pp. iii–iv.

128 Ibid., pp. 3–10, 13–14.

129 World development report 1990, Washington, DC: World Bank, 1990, pp. 25–9.

130 Ibid., p. 26.

131 Ibid., p. 27.

132 Sumner, A., ‘Meaning versus measurement: why do “economic” indicators of poverty still predominate?’, Development in Practice, 17, 1, 2007, pp. 810.

133 Kanbur and Squire, ‘Evolution’, p. 184.

134 Kanbur and Vines, ‘World Bank’, p. 100.

135 World development report 1990, pp. 3, 47–8.

136 Lister, R., Poverty, Cambridge: Polity Press, 2004, p. 7.

137 Bøås, M. and McNeill, D., Multilateral institutions: a critical introduction, London: Pluto Press, 2003, p. 8.

138 Wade, ‘U.S. hegemony’, pp. 225–229.

* I would like to thank Deborah Oxley and Jim Handy for their support during the early stages of this project. I am grateful to the editors of the Journal of Global History, and three anonymous referees for their very valuable comments. I also appreciate the efforts of April Miller and the rest of the staff at the World Bank Archives.

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