The World Bank giveth and the World Bank taketh. It gives loans to developing countries at high interest rates, and demands the power to affect domestic policy changes over that country in exchange for this ‘generous’ loan, loans that can often never be paid back. And who gets the best deals, the most power when it comes to the world bank? Well, according to a recent study, it should not be surrising that multinational corporations get the best deals, especially when they come from the US (number one stockholder in the World Bank at 17 percent) and Japan (number two stockholder at 7 percent).
Remember folks, he or she who controls the banks, controls the world.
|Multinational corporations have a hold on the World Bank, according to new research|
Not every company that works with the World Bank is on equal footing. Multinationals from the United States and Japan are much more likely to have their contracts paid out than others. Due to their political power at the bank, these companies can get paid even when they might not deserve it.
That is the argument of a research paper by the political scientists Rabia Malik and Randall Stone recently published in The Journal of Politics . Malik and Stone, professors at New York University Abu Dhabi and the University of Rochester, analyzed 4,000 World Bank projects approved from 1981 to 2012 to see if disbursement for World Bank project payments was impacted by the type of company involved. Even after accounting for factors like the size and performance of the project, they found that projects with multinationals received higher disbursement rates.
The average project received a disbursement rate of 89.5%, but projects with multinationals did almost three percentage points better. There was an even larger effect on projects where a multinational took on management responsibilities. In those cases, their analysis shows that disbursement rates were about seven percentage points higher. The results are statistically significant, but even more importantly, they make sense. The effect is strongest for US and Japan multinationals, the two countries with the largest ownership stakes in the World Bank, and thus access to influence at the bank.
|Read More at qz.com|