GRADE: 90/100

STRONG START TO A CLEARLY JUSTIFIABLE PROJECT. YOU KNOW

ALREADY LITERATURE REVIEW IS MISSING. CITATIONS WILL BE NEEDED.
SEE ADDITIONAL COMMENTS BELOW.
Anartia Gamboa
ENGL302 S05
anartia.gamboa@gmail.com

The impact of World Bank and International Monetary Fund on developing

nations: Blessing or Curse?
INTRODUCTION
Problems: It has been claimed that IMF investments are beneficial to the economies of
developing nations. MAY NOT BE NECESSARY HERE However, developing countries
cannot develop BECAUSE? ; the global economy is slowly disintegrating COMPLETE
THIS THOUGHT. There is evidence that shows that lending programs from the World
Bank and the International Monetary Fund (IMF) cause developing nations to go further
into debt. START WITH THIS SENTENCE.
Question: How do the IMF and World Bank THE ENTITIES OR THE INVESTMENTS
AND THE ACCOMPANYING RESTRICTIONS? affect developing countries
economies?
Conceptual/ theoretical framework: Specific examples and case studies will be described
to prove or disprove the hypothesis. The available studies and analyses are often outdated
or narrow in scope. For example, models to determine if it is possible to predict a target
countrys behavior only test the model on data from one year, and/or are from decades
ago. Predictive models that have been previously used will be reexamined to determine
whether they are applicable to present day situations. Past situations that were snapshots
in time will be reviewed and updated with the current status of the economies in target
countries. In addition, the recent changes in IMF policies will be examined to determine
if they have effected in and of themselves any improvement to the economies of
developing nations. OK
Hypothesis: World Bank and IMF policies cause developing countries economies to
weaken and/or collapse.
At a broad scale, IMF funding in relation to trends in GDPs of developing nations will be
examined to determine if there is a relationship between GDP levels and borrowing
trends per capita. More specifically, IMF loans and policies to Latin America will be
analyzed to determine whether standards of living have decreased or increased as a result
of these IMF interventions.
Ultimately, the results of this project will be used as the fountain of information for a
documentary that describes the IMFs effects on the developing world. And ideally, what

this will do is that it will cause an increased awareness of the inequalities and overall
unfairness SPECIFY? of global lending to developing economies. It is hoped that the
resulting change in public opinion will force the IMF and the World Bank to modify their
approach to assisting the economies of developing nations. It will also force them to
change their priorities to more closely match those of the countries they are helping.
OBJECTIVES:
To gather, synthesize, and analyze relevant data and information concerning the effect of
the infusion of IMF and World Bank funding on the economies of developing nations. To
film preliminary interviews and on location shots of infrastructure and livelihoods of
people in targeted developing countries. All this information will then be used to create a
feature length docufiction film.
METHODS:
Interviews will be conducted in Latin American countries to determine the standard of
living of individuals within the country. Interviews with policy makers within the nations
and the IMF and World Bank will also be attempted to determine current attitudes and
expectations related to IMF and World Bank loan projects.
Graphical representations of economic analyses will be compared and contrasted. Similar
projects will be linked to yield synergistic results. For example, one article speaks to the
impact of foreign direct investments in a country. Another analyzes the correlation
between IMF lending levels and foreign direct investments. By using logic, we will be
able to deduct that higher rates of lending equates to lower rates of foreign direct
investments, and therefore deterioration of national economies.
Where available, additional baseline data on trends in foreign investments over time will
be collected, including annual dollar amounts, number of foreign investors, and number
of project with international investors.
EXPECTED RESULTS:
It is likely that the publications resulting from this project concerning the World Bank
and the IMF will influence public opinion on the commonly-accepted approach to
international aid.
NEXT STEPS:
With the expected results from this study, a grant proposal will be written to create a
docudrama film. Next steps will also include a lengthy process of marketing and studying
the most successful methods for promoting and distributing docufiction films. In
addition, a project plan will be drawn up for creating a storyline, writing a screenplay,
recruiting and hiring professional actors, selecting film crews and equipment, seeking
additional backers for the film project, as well as any additional steps required in the
creation of any movie.
BIBLIOGRAPHY:
Bird, G., & Rowlands, D. (1997). The catalytic effects of lending by the international

financial institutions. The World Economy, 20(7), 967-991.

Provides information on an investigation of the catalytic effect of lending by international
financial institutions (IFIs) mainly focusing on the International Monetary Fund.
Researchers emiprical evidence as well as theoretical foundations to analyze whether
IFIs lending to differentc countries had a positive or negative catalytic effect on 90
countries from 1974-1989. The results showed that there impact of lending from the IMF
was neither positive nor negative. However, the analysis was performed on data from
1974-1989, this period of time does not include the economic crisis in Asia that occured
from 1997-1998. Because the data and processes are sound, the models used could be
applied now in the same way to find potentially different results.
Borensztein, E., De Gregorio, J., & Lee, J.W. (1998). How does foreign direct
investment affect economic growth? Journal of International Economics, 45(1), 115-135.
Researchers tested the effect of foreign direct investment on economic growth in a crosscountry regression framework, utilizing data on FDI flows from industrial countries to 69
developing countries over the previous two decades. Their results suggested that FDI is
an important vehicle for the transfer of technology, contributing relatively more to growth
than domestic investment. However, the higher productivity of FDI holds only when the
host country has a minimum threshold stock of human capital. Thus, FDI contributes to
economic growth only when a sufficient absorptive capability of the advanced
technologies is available in the host economy. This article is helpful because, when used
with the article on the effect of the IMF agreements on FDI inflows, it shows a
relationship between IMF policies and economic growth.
Jensen, N.M. (2004). Crisis, Conditions and Capital: The effect of International Monetary
Fund agreements on foreign direct investment inflows. Journal of Conflict Resolution,
8(2), 194-210.
This piece uses a selection model for 68 countries between 1970 and 1998 which is then
used to test the impact of International Monetary Fund programs on international capital
markets and examine how agreements are perceived by multinational investors. Results
revealed that even after controlling for the factors that lead countries to seek IMF
support, IMF agreements lead to lower levels of foreign direct investment. According to
the results, countries that sign IMF agreements, attract 25% less foreign direct investment
inflows than countries not under IMF agreements. Although this article doesnt help my
research topic directly, it can be used along with another article that studies the effects of
direct investment inflows on economic growth.
Kapur, D. (1998). The IMF: A cure or a curse? Foreign Policy, 111(Summer), 114-129.
This article examines and questions the IMFs interests and reflects as to whether or not
those interests serve the countries that draw from it. One of the arguements the IMF
made concerning developing countries that were stuggling through econominc hardships
was that those countries had poor domestic policies. However, this paper studies the
IMFs history as well as its policy changes and suggests that the Fund itself is in need of
structural adjustment. The article specificly examines the huge economic crisis that
occured in Asia in 1997, and draws four possible conclusions from irs findings. The most
concrete conclusion drawn is that the contradictions found within the Funds policies are
a sure road towards failure for countries that follow them fully. The main question

addressed in the article is answered, and the evidenced definitely supports my hypothesis.
This article will be very benificial to my final proposal.
Li, Q., & Resnick, A. (2003). Reversal of Fortunes: Democratic institutions and foreign
direct investment inflows to developing countries. International Organization, 57(1),
175-211.
This paper questions whether increased democracy promotes or jeopardizes foreign direct
investment (FDI) inflows to less-developed countries. Is argues that democratic
institutions have conflicting effects on FDI inflows. On the one hand, democratic
institutions hinder FDI inflows by limiting the oligopolistic or monopolistic behaviors of
multinational enterprises, facilitating national businesses' pursuit of protection from
foreign capital, and constraining host governments' ability to offer generous financial and
fiscal incentives to foreign investors. On the other hand, democratic institutions promote
FDI inflows because they tend to ensure more credible property rights protection,
reducing risks and transaction costs for foreign investors. Hence, the net effect of
democracy on FDI inflows is contingent on the relative strength of these two competing
forces. The articles argument reconciles conflicting theoretical expectations in the
existing literature. Empirical analyses of fifty-three developing countries from 1982 to
1995 substantiate its claims. Results find that both property rights protection and
democracy-related property rights protection encourage FDI inflows; after controlling for
their positive effect through property rights protection, democratic institutions reduce FDI
inflows. This article provides me with empirical data which proposes a very different
source for failing economies. However, it can also be used with relation to the IMF and
World Bank becase both of those institutions only lend to democratic nations. Although
this article isnt as closely related to my topic as most other ones, it provides a different
point of view to the same problem.
Pastor, M. J. (1987). The effects of IMF programs in the Third World: Debate and
evidence from Latin America. World Development, 15(2), 249-262.
This article reviews the debate about the effects of IMF-sponsored stabilization programs
in the Third World. After examining recent studies by Fund economists, results of a new
study on a Latin American country set are presented. In this research, IMF programs are
associated with insignificant changes in the current account, significant improvements in
the overall balance of payments, increases in inflation, mixed effects on growth, and a
strong and consistent pattern of reduction in labor share of income. The latter result is
incorporated into a distribution-oriented critique of Fund policy. This article will help me
analyze information of a more focused area. It can also provide possible models that I
can use when creating my own analysis.
Soederberg, S. (2003). Promotion of Anglo-American Corporate Governance in the
South: Who benefits from the new international standard? Third World Quarterly, 24(1),
7-27.
In response to the recent spate of financial crises in East Asia (1997-98), the IMF has
established a core set of international standards to regulate market behaviour in the global
South. These standards are embodied in 11 modules that comprise the IMF's Reports on
the Observance of Standards and Codes (ROSCs). Both content and form of the ROSCs
warrant further consideration. That said, the main objective of this paper is to explain

how and why one particular ROSC, namely corporate governance, has become
standardised. And, more importantly, to address the question of whose interests are
served. In doing so the essay suggests that, despite the claim that the international
standard of corporate governance embodies 'universal principles', the definition advanced
in the ROSCs intentionally draws on the Anglo-American variant. This article helps
examine a different arguement againts the IMFs standards.
Woods, N. (2000). The challenge of good governance for the IMF and World Bank
themselves. World Development, 28(5), 823-841.
This article explains how in the 1990s, the International Monetary Fund (IMF) and the
World Bank have embraced good governance as a set of principles to guide their
objectives in member countries. Both institutions faced pressures in 2000 to apply some
similar standards of transparency, accountability and participation to themselves. This
paper examines the challenges this poses for the organizations, beyond the steps they
have already undertaken to disseminate more information and to enhance their relations
with nongovernmental organizations (NGOs). The paper argues that if good
governance is to be furthered within the IMF and the World Bank, then changes in their
constitutional rules, their balancing of stakeholders' rights, their decision-making rules
and practices, and their staffing and expertise need to be considered. This article
provides me with potential changes that can be made in the IMF and World Bank which I
can then search for a way to create.
Woods, N., & Lombardi, D. (2006). Uneven patterns of governance: how developing
countries are represented in the IMF. Review of International Political Economy, 13(3),
480-515.
This article begins by explaining that the IMF is governed by a 24-member Executive
Board which represents 184 countries. Although often prized as a small and efficient
decision-making body, the Board represents some countries more effectively than others.
This is due to the institutional structure and incentives within which the Board operates.
Prime among them is a system of constituencies which have formed and evolved as
countries have sought to improve their position in the organization. These groups vary in
size, shared interests, and distribution of power. Their effectiveness is not only affected
by these attributes. It is also determined by decision-making rules across the institution,
by the lack of formal accountability of Board members, and by the strength of other
coalitions of countries acting informally within the institution. The analysis implies that
representation on the IMF Board could be improved without altering the size of the
Board. This is another article that includes information concerning possible changes that
can be made within the international financial institutions in a way that will benefit
themselves as well as developing countries.