Cato Foreign Policy Briefing No. 43 September 4, 1996

Foreign Policy Briefing

The World Bank's Procurement Myth

by John G. Thibodeau

John G. Thibodeau is director of research at Probe International, a Canadian environmental group.


Executive Summary

The World Bank, once considered the world's premier foreign aid institution, is fighting for its life. Some of the bank's biggest donors, led by the United States, are tired of failed projects and the bank's increasingly risky loan portfolio and are scaling back their contributions to the bank's soft-loan window, the International Development Association. After a year of tense negotiations, the United States recently decided not to contribute any new money to IDA in 1997, and any future American funding remains uncertain.

To save IDA, the World Bank launched a misleading public relations campaign to convince Congress and the American public that U.S. taxpayers' contributions to IDA are good for the American economy because they return in the form of contracts for U.S. companies.

In fact, U.S. firms receive only about $0.23 in contracts for each $1.00 the United States contributes to IDA. Instead of being a boon for the American economy, IDA appears to be a black hole into which taxpayers pour billions of dollars for bad projects and pork-barrel contracts for a few American firms.

Members of Congress and lawmakers from other donor countries should reject the public relations pitches that accompany the World Bank's increasingly desperate search for new funds and refuse to commit their constituents' tax dollars to IDA in 1997 and beyond.

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