Trends and analysis: Yet another strong case for parting ways with World Bank

Editorial, NewAge, October 23, 2007. Dhaka, Bangladesh

THE World Bank, a champion of open market economy, has admitted in its annual World Development Report that trade liberalisation, which the bank strongly promotes across the globe, hurts net food importing countries like Bangladesh. Although similar views have been expressed in different circles in different times, the bank and its Bretton Woods twin, the International Monetary Fund, have always insisted that free trade across the world would be beneficial for all in the long run. It may be concluded from the statements of the bank publication, as reported in New Age on Monday, that wholesale and unplanned economic liberalisation has turned out to be one of the causes of rural poverty, not only in Bangladesh but also in many other countries at a similar level of development or with a similar economic scenario.

Although it has been long overdue, lending agencies promoting the neoliberal economic paradigm have refused to focus on agriculture or put emphasis on the sector for a long time. The last time that agriculture was the topic of an annual report was in 1982. While the bank rightly recognises agriculture as a potent avenue for poverty reduction, the current report ascertains poverty status on the basis of its ludicrous poverty line, which translates into about Tk 15 per day for Bangladesh. We have repeatedly pointed out that agriculture is among the most important sectors for Bangladesh since it is labour intensive. This sector contributes about just over a fifth of the national GDP and employs over half the labour force. The scenario is not too different in other developing and least developed countries, especially those in transition, where the share of agriculture’s contribution is shrinking but the sector continues to employ the largest portion of the labour force.

We must point out that while it is commendable that the World Bank has put emphasis on the crucial sector, its recommendations and suggested paths towards linking the sector with development must not be given unqualified support. These recommendations, naturally stemming from the lending agency’s bias for neo-liberalism, strives to attain a more market-oriented agriculture system across the world and discourage active government role as far as factors of economic value, ranging from input subsidies to distribution and export assistance, are concerned.

We have argued previously and severally that the state must retain some tools to be able to effectively intervene in the market in times of crisis, contrary to what the lending agencies propagate. As far as the lending agencies are concerned, it has been proved across the world that countries done far better and achieve higher growth by not following the prescriptions of these agencies. The incumbents should, therefore, stop accepting harmful prescriptions of these agencies and seriously consider severing ties with the multilateral lending agencies.

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