Hostname: page-component-586b7cd67f-rdxmf Total loading time: 0 Render date: 2024-11-28T01:11:01.096Z Has data issue: false hasContentIssue false
  • English
  • Français

On concealed dimensions of Third World involvement in international economic organizations

Published online by Cambridge University Press:  22 May 2009

Anthony D. Moulton
Anthony D. Moulton
Affiliation:
A manager in the Missouri State Division of Budget and Planning.
Get access

Abstract

International economic organizations once identified as Western have evolved in some cases to the extent that their survival depends importantly on forging symbiotic links with Third and Fourth World clients. Such national governments often derive net gains from membership in those organizations, for example, the World Bank. These gains may be as much political as economic. Thus the Government of India, influential in World Bank policy generally, has used Bank agricultural projects to overcome states' resistance to central priorities. Mobilizing domestic political resources is an important dimension of membership in the international economy. Where this occurs, it argues for a view of the governments of poor countries as active, rather than passive, and as agents of domestic social transformation.

Type
Articles
Information
International Organization , Volume 32 , Issue 4 , Autumn 1978 , pp. 1019 - 1035
Copyright
Copyright © The IO Foundation 1978

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

1 Moran, Theodore H., Multinational Corporations and the Politics of Dependence: Copper in Chile, 1945–1973 (Princeton: Princeton University Press, 1975)Google Scholar.

2 Katzenstein, Peter J., ‘Domestic Structures and Strategies of Foreign Economic Policy,’ International Organization 31 (Autumn 1977): 879–920CrossRefGoogle Scholar; Meltzer, Ronald I., “The Politics of Policy Reversal,” International Organization 30 (Autumn 1976): 649–668CrossRefGoogle Scholar.

3 For an example of the kinds of domestic pressures and international opportunities which may lead national elites to break with the dominant Western actors, see Moran, Multinational Corporations and the same author's “Theory of International Exploitation in Large Natural Resource Investments” in Testing Theories of Economic Imperialism, ed., Rosen, Steven J. and Kurth, James R. (Lexington, Mass.: Lexington Books, 1974), pp. 163–182Google Scholar.

4 On international diffusion as a process of social change, see Bendix, Reinhard, “Tradition and Modernity Reconsidered,” Comparative Studies in Society and History 9 (04 1967): 292–346CrossRefGoogle Scholar. On emulation as a mechanism for the spread of types of government organization and undertakings, see Barker, Ernest, The Development of Public Services in Western Europe (London: Oxford University Press, 1945)Google Scholar.

5 The leading contender for the seminal work is, of course, Allison's, Graham T.The Essence of Decision (Boston: Little, Brown, 1971)Google Scholar.

6 An extreme view never, to my knowledge, reduced to print, holds that the World Bank is a captive of India and other large Third World borrowers by virtue of what might be called their power of default. By incurring large obligations, the argument goes, India, Pakistan, and others build a credible tool of extortion since default, even though entailing diplomatic costs, might have repercussions in capital markets and national parliaments severe enough to endanger the Bank's survival. At the end of 1973 India owed roughly $3 billion to the Bank, more than three times the debt of Pakistan, the next largest borrower. National Advisory Council on International Monetary and Financial Policies, 1975 Report (Washington, D.C.: U.S. Government Printing Office, 1975)Google Scholar, Table 12.

7 Eldridge, P. J., The Politics of Foreign Aid in India (London: Weidenfeld and Nicholson, 1969), pp. 132–133Google Scholar.

8 Oppenheim believes that the quadrupling of petroleum prices, exogenous to the arena at hand, has led the Bank to retreat somewhat from its constituency of the poorest countries. Middle East members of OPEC have used part of their new wealth to increase their subscriptions to Bank capital and to enlarge their voting power on the Board of Directors. But there have been no significant changes in Bank lending to its poorest members. Oppenheim, V.M., “Whose World Bank?” Foreign Policy 19 (Summer 1975): 99–108CrossRefGoogle Scholar.

9 Weisskopf, Thomas E., “Dependence and Imperialism in India” in Remaking Asia, Essays on the American Uses of Power, ed., Selden, Mark (New York: Pantheon, 1971), pp. 200–246Google Scholar.

10 International Bank for Reconstruction and Development, Policies and Operations: The World Bank, IDA and IFC(Washington, D.C.: IBRD, 06, 1971), p. 31Google Scholar.

11 See my dissertation, Political Determinants of Innovation and Redistribution in Public Policy: A System-Level Analysis of Indian Agricultural Credit Programs (Chicago: The University of Chicago Press, 1977)Google Scholar.

12 Computed from data in annual issues of Survey of Current Business, published by the U.S. Department of Commerce. Specific references on request.

13 Ibid.

14 The reasons are apparent. Earnings on U.S. investment in India have been less than on investment globally in most years and often only one-half to two-thirds those from investment elsewhere in the Third World. Ibid.

15 On devaluation, see Bhagwati, Jagdish and Desai, Padma, India: Planning for Industrialization (London: Oxford University Press, 1970), p. 487Google Scholar; and Mason, Edward and Asher, Robert E., The World Bank Since Bretton Woods (Washington, D.C.: The Brookings Institution, 1973), p. 679Google Scholar. On petroleum, see Eldridge, , The Politics of Foreign Aid, p. 30Google Scholar. On fertilizer, see London, Paul A., Merchants as Promoters of Rural Development (Lexington, Mass.: Lexington Books, 1976)Google Scholar. But for an insider's views on Indian susceptibility to foreign influence, see the suggestion that U.S. and Bank influence often is a case of “leaning against open doors.” Jha, L.K., “Comment: Leaning Against Open Doors,” in The World Bank Group, Multinational Aid and the 1970s, eds., Lewis, John P. and Kapur, Ishan, (Lexington, Mass.: D.C. Heath, 1973)Google Scholar. Jha is a former governor of the Reserve Bank of India, through which the World Bank's agricultural credit projects were channeled, and as Indian ambassador to Washington was signatory and chief negotiator for a number of World Bank loans.

16 See the Wall Street Journal, 26 December 1975, p. 2, for a brief review of GOI tactics and pressures in the petroleum takeover.

17 See my study “The United States, the International Development Association and South Asia,” in Commission on the Organization of the Government for the Conduct of Foreign Policy (Washington, D.C: U.S. Government Printing Office, 1975), vol. 7, appendix 5: 244–253Google Scholar.

18 For an account of the reformulation and its implementation see Mason, and Asher, , The World Bank Since Bretton Woods, pp. 274–375, 473Google Scholar.

19 Data and computations on exports and imports are taken from various issues of International Financial Statistics and from the U.N. Statistical Yearbook for Asia and the Pacific. Full references on request.

20 U.S. oversight of the World Bank's operations is conducted through the National Advisory Council on International Monetary and Financial Policies, chaired by the Treasury and with State, Commerce, the Federal Reserve System and Export-Import Bank as its other members. AID attends Council meetings, functioning, in effect, as State's technical wing. Its evaluations frequently are decisive for State's position.

21 Mason, and Asher, , The World Bank Since Bretton Woods, p. 289Google Scholar.

22 Frankel, Francine, India's Green Revolution (Princeton: Princeton University Press, 1971)Google Scholar.

23 The evidence is reviewed in Mellor, John W., The New Economics of Growth (Ithaca, N.Y.: Cornell University Press, 1976), pp. 96–100Google Scholar.

24 Agricultural Refinance Corporation Credit Project (Credit No. 540 IN), 28 04 1975Google Scholar, Project Agreement, Art. II and Schedules 1 and 3. See also Supplement to the Reserve Bank of India Bulletin (July 1975): 79–80.

25 IBRD Operational Memorandum 2.61, 31 March 1971, cited in Mason, and Asher, , The World Bank Since Bretton Woods, p. 712nGoogle Scholar.

26 Agricultural Sector Working Paper (Washington, D.C.: IBRD, 06, 1972), p. 43Google Scholar.

27 Andhra Pradesh Agreement (Credit No. 226 IN), 8 01 1971, Art. II and Schedule 2Google Scholar.

28 Even the suggestion made in the ARC project agreement of ultimately merging short- and long-term credit cooperatives had been mooted by the Committee on Cooperation (the “Mirdha Committee”) in 1966Google Scholar. And consolidation of all national agricultural credit agencies into a single peak organization was suggested in an interim report of the National Commission on Agriculture in 1971 and had been urged by many commissions dating from the pre-Independence era.

29 See the editorial in the Quarterly Journal of the All-India Land Development Banks Co-operative Union Ltd. (Bombay), 06 1972Google Scholar: i–iv, and The Hindu (Madras), 31 July 1972.

30 For the Bank's rationale for market-determined input prices, see the sector paper referred to in note 26 above: 2–25.

31 See the sub-committee's Report (Bombay: Reserve Bank of India, 1945, reprinted in 1965), pp. 64, 111.

32 Since Independence, the Reserve Bank's set bank rate has changed as follows: raised from 3 percent to 3.5 percent in November 1951; raised to 4 percent in May 1957; raised to 4.5 percent in January 1963; raised to 5 percent in September 1964; raised to 6 percent in January 1965; lowered to 5 percent in March 1968; raised to 6 percent in January 1971; raised to 7 percent in May 1973; raised to 9 percent in July 1974. Source: Indian Institute of Public Opinion, Monthly Commentary 18 (08 1976): VIIIGoogle Scholar.

33 Report of the All-India Rural Credit Review Committee (Bombay: Reserve Bank of India, 1969), pp. 683–4Google Scholar.

34 Hadden, Susan G., “The Political Economy of Agricultural Policy: Rural Electrification in Rajasthan, India” (doctoral dissertation, The University of Chicago, 1972), p. 163Google Scholar.

35 Ibid.

36 Hadden, Susan G., “Assessment of a Bi-Lateral Economic Policy: AID's Program in Support of the Rural Electrification Corporation,” Commission on the Organization of the Government for the Conduct of Foreign Policy (Washington, D.C.: U.S. Government Printing Office, 1975), vol. 7, Appendix V: 221–230Google Scholar.

37 IDA lending has a “grant equivalent” of 86.4 percent. Mason, and Asher, , The World Bank Since Bretton Woods, p. 399Google Scholar.

38 Computed from the World Bank's 1975 Review of the Indian Economy (Washington, D.C., 1975)Google Scholar, tables 3.9, 4.1,4.2, and 5.8.

39 See, for example, Chenery, Hollis B. et al. , Redistribution With Growth (Oxford University Press, 1974)Google Scholar.

40 Dandekar, V.M. and Rath, Nilakantha, Poverty in India (Bombay: Economic and Political Weekly, 1971), p. 8Google Scholar.

41 For evidence of policy adoption (something different from, but related to the diffusion of values) proceeding up the international hierarchy (defined according to level of national economic development), see Collier, David and Messick, R.E., “Prerequisites Versus Diffusion: Testing Alternative Explanations of Social Security Adoption,” American Political Science Review 59 (12 1975): 1299–1315CrossRefGoogle Scholar.

42 Libby, Ronald T., “International Development Association: A Legal Fiction Designed to Secure an LDC Constituency,” International Organization 29 (Autumn 1975): 1065–72CrossRefGoogle Scholar.

43 See Robinson, James Arthur, The Monroney Resolution: Congressional Initiative in Foreign Policy-Making (New York: McGraw Hill, 1960)Google Scholar; Veit, Lawrence A., India's Second Revolution (New York: McGraw-Hill, 1976), p. 176Google Scholar, and Mason, and Asher, , The World Bank Since Bretton Woods, p. 471Google Scholar.

44 Mason, and Asher, , The World Bank Since Bretton Woods, p. 682Google Scholar.

45 Auerbach, Kenneth D., “Measuring and Determining Criteria for the Distribution of Multinational Assistance,” paper presented at the 1974 annual meetings of the American Political Science Association, Chicago, 111., 2 09 1974Google Scholar, table 2.

46 The general political, and more narrowly economic, orientations of “the West” in this arena are anything but uniform. Sweden, Great Britain, Canada, and other Western donors take a much less interventionist stance toward the Bank than do the United States, West Germany, and Japan.

47 Auerbach, “Measuring and Determining Criteria,” table 2.

48 Mason, and Asher, , The World Bank Since Bretton Woods, p. 698Google Scholar.

49 Ibid., p. 438.