The Influence of the World Bank on National Urban Policies: The Case of Mexico and Argentina during the 1990's
- Book Review,
by Maria Cecilia Zanetta
Peter M. Ward, University of Texas-Austin.
Zanetta has produced a tour de force analyzing the intersection between World Bank thinking and its application in housing polices.
Michael Cohen, former Senior Advisor to the World Bank's Vice-President for Environmentally Sustainable Development
This book is the best available comparative study of the impact of World Bank urban policies in Latin America.
Alan Gilbert, University College, London
This well-written book tackles an important question: how influential is the World Bank in practice?
Book Description
There is a widespread perception that sector policies in developing countries are becoming increasingly dependent on the courses set by multilateral and bilateral aid agencies, of which the World Bank is perhaps the most influential one. This book tests this premise by examining the urban agenda promoted by the World Bank in Latin America during the 1990s and how it has influenced urban and housing sector policies in the region. Using Mexico and Argentina as case studies, the book contrasts the economic reform programs implemented in these countries during the past two decades, showing that there have been significant differences in the way they have interpreted the so-called ‘Washington Consensus.’ While Argentina’s reform program was characterized by a strong macroeconomic focus, Mexico adopted a more pragmatic approach, attempting to balance macroeconomic and poverty alleviation objectives. The analysis shows that such differences were also reflected in the housing and urban policies implemented as part of the reform programs, as well as the portfolio of urban development operations financed by the World Bank in each country.
About the Author
Firmly grounded on her professional work, Dr. Zanetta’s academic research is aimed at building a bridge between practice and the world of ideas to ultimately improve living conditions in developing countries. During the past ten years, she has worked extensively on development projects in many Latin and Central American countries, including Argentina, Brazil, Chile, Ecuador, El Salvador, Honduras and Peru. Her main areas of interest include urban and housing policies, decentralization, public sector modernization and sub-national governments. Dr. Zanetta is an adjunct faculty member at the Department of Geography, University of Tennessee.
Excerpted from The Influence of the World Bank on National Housing and Urban Policies: The Case of Mexico and Argentina During the 1990s (Ashgate Economic Geography Series) by Cecilia Zanetta. Copyright © 2004. Reprinted by permission. All rights reserved.
It is widely recognized that policies in developing countries, including urban and housing policies, have become increasingly dependent on the courses set by international financial institutions (IFIs). The debt crisis of the 1980s forced many Latin American countries to undertake economic reforms along the lines defined by the International Monetary Fund (IMF) and the World Bank, implementing structural adjustment programs that emphasized macroeconomic reforms reflecting the thinking embedded in the so-called ‘Washington Consensus.’ The World Bank, as the ‘flagship’ of all development banks in the world (Yunus, 1994), also exercises significant influence on national sector policies. Within individual countries, the World Bank’s influence is thought to go beyond the project level, to affect the policies within individual sectors as well as the relative priorities assigned to the different sectors at the national level (Payer, 1982). Therefore, one could expect that the specific roles and relative importance assigned to the housing and urban sectors in Latin American during the past decade have been determined largely by the policies promoted by the World Bank within the region. At the same time, many argue that there are limits to the World Bank’s influence. To the question of whether the giving of aid confers power on the donor, Mosley, Harrigan and Toye (1991) respond that ‘a little, but not as much as the Bank hoped.’ Based on the examination of several case studies, they point to the ability of borrowing countries to affect considerably the way policies are tailored within each country as part of a process of ‘dynamic bargaining’ (Mosley et al., 1991). Rinne (2003) also challenges the assumption of an all-powerful World Bank based on its mixed success in inducing states to sign and comply with conditionality agreements as part of structural adjustment operations. In this context, one could expect considerable variations in national policies toward the housing and urban sectors reflecting the country-specific nature of policymaking. There are several dangers in overstating the influence of external agents, whether it is that the World Bank, other IFIs or industrialized countries. As pointed out by Sikkink (1991), one of the problems of viewing external agents as the overriding force behind the policies adopted in the Third World is that developing countries are depicted as objects rather than subjects. Likewise, it discounts the role of Latin American intellectuals, such as Hernando de Soto, in the conceptual development and acceptance of market-oriented reforms (see, e.g., Gilbert, 2002). Equally important is the lack of responsibility that such interpretation ascribes to national leaders, who become mere executors of the policies of others. Often, national authorities conveniently play off this interpretation and the nationalistic feelings of their populations, using the IMF and the World Bank as scapegoats for the policies they choose to implement. Perhaps more important, this view engenders a hopeless sense of disenfranchisement, as it renders developing countries hostages to the actions of others and powerless in shaping their future. While the World Bank undoubtedly influences national policies in borrowing countries, it is important to determine the extent of its influence. This is the focus of this book. Specifically, it examines the influence of the World Bank on the urban and housing policies adopted in Argentina and Mexico during the 1980s and 1990s. During the period of analysis, the World Bank’s urban policies in Latin America were consistent with the market-oriented reforms articulated by the Washington Consensus, focusing primarily on public sector reform, increased private sector participation and decentralization as a way of connecting the urban agenda to the broader objectives of economic development and macroeconomic performance. The urban agenda was translated into action through operations in the so-called ‘urban development sector.’ Urban development operations financed physical investments and technical assistance in a variety of areas, including housing finance, urban management, urban development and urban environment. During the past two decades, urban development operations constituted a significant portion of the World Bank’s portfolio in Latin America and Caribbean, accounting for 11 percent and 8 percent of the overall lending of the 1980s and 1990s, respectively. Significant resources were channeled into the region through these urban development operations, amounting to US$1.4 and US$1.2 billion during the 1980s and 1990s, respectively. In view of the significance of the urban development sector within the Bank’s overall portfolio in the region, as well as the magnitude of the resources channeled into the sector during this period, two fundamental questions arise. First, were the urban and housing policies implemented in Latin America during the 1980s and 1990s influenced by the World Bank’s urban agenda? Second, and more important, were these policies more or less effective because of the World Bank intervention? The close examination of urban development policies in Argentina and Mexico during this period, as well as of the urban development projects financed by the Bank in each country brings important insights into these questions.
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