Researched by Victoria Masucci
Evaluated by Professor of Business Administration Robert Girling
Sonoma State University
As the US is hit by global economic crisis, developing countries are being hit much harder, in large part due to bad advise from the World Bank. In its 2008 World Development Report, the bank acknowledged its trade policies, which demand poor countries cut import tariffs, and reduce government’s role and investment in agriculture and resource management, has left many developing countries on the brink of starvation. Loans, which mandated these “structural adjustments” as a path toward economic growth, have instead turned agricultural exporters into import dependants at a time of extreme volatility in food commodity prices. El Salvador, for example was a net exporter of rice 20 years ago; now it imports 75 to 80 percent of what it consumes. In Honduras 23,000 rice farmers went out of business after the government trimmed import duties. Honduran farms now supply 17 percent of domestic demand for rice, down from 90 percent before World Bank structural adjustments were enforced. Meanwhile, in 2007 and 2008 world food commodity prices rose 82 percent. The World Bank has “given consistently wrong advice,” said Jose Ramos-Horta, the president of East Timor and the 1996 Nobel Peace Prize winner. “It is their advice — that buying externally is better than producing — that has resulted in this.”
“World Bank’s ‘Wrong Advice’ Left Silos Empty in Poor Countries” Alison Fitzgerald and Helen Murphy, Bloomberg, December 10,2009 http://www.bloomberg.com/apps/news?pid=20601086&sid=aSueX0nYxMrg#