Multilateral Development Banks
The same free-market policy prescription introduced in Chile was actively promoted by the World Bank and the IMF, not only in Latin America, but in all parts of the world. It was the driving force behind the structural adjustment programs being imposed on all indebted developing nations. World Bank and IMF loans became conditional upon the adoption of policies such as privatization, outsourcing, downsizing of public service workforces, reducing barriers to foreign investors and redirecting government spending away from public services and publicly-owned enterprises into debt servicing.
Both the World Bank and the IMF underwent a policy shift during the 1980s. They took on the free market policy prescription being advanced by corporate-funded think tanks in the US and the UK at the time.
Influence of Economists
The influence of the US government and policy groups on the IMF and the World Bank (see diagram) is reinforced by the dominance of economists in the World Bank, and the IMF. More than 80 percent of the World Bank’s economists, who are far more influential than the social scientists employed by the Bank, were trained in either Britain or North America. There is also a well-worn revolving door between these multilateral banks and the international financial firms such as Chase Manhattan, Deutsche bank and JP Morgan; something that is encouraged by the World Bank.
Despite the fact that the MDBs are supposed to make their lending decisions on the basis of economic criteria, the US habitually uses them for political purposes. A 1982 US Department of Treasury study found: ‘The MDBs, by and large, have been most effective in contributing to the achievement of our global economic and financial objectives and thereby helping us in our long-term political/strategic interests.’ It is no coincidence that the Bank deems countries that follow a free market, low-paid labour, foreign investment driven development model, to be economically sound and credit worthy, whilst those that seek equity and redistribution of wealth find it difficult to get loans.