Literature review

In recent decades, research in the field of social policy has undergone

changes to take into account the emergence of political and socio-economic
phenomena that have influenced this field in different ways.

Literature, in particular by Argentine and Brazilian authors, was

considered as a theoretical basis. So, in 2015, a study was published by Faure,
Prizzon, Rogerson, aimed at examining multilateral development banks -
international organizations that offer financial and technical assistance for
activities related to the economic and social development of developing
countries. The authors argued that since most of their operations are related to
economic infrastructure, the convergence of these banks with social policy
stems from a certain criticism of the strictly economic activities of banks,
ignoring other factors such as poverty eradication and the promotion of
sustainable development, which led to the extension of the mandate of these
entities

The growth of human development prospects in the mid-1990s formed

the basis for BMD's activities in these other areas. In general, interbank
organizations have already been recognized as important players in public
policy and were considered by NYE and Keohane back in 1977. With regard to
a specific area of social policy, Yates considered the ways in which they
actively participate in political and social policy processes (politics and
policies), defining (or trying to influence the definition): (i) terms of trade, aid,
and international development policy; (ii) allocation and use of funds for
development, assistance and social funds; and (iii) social norms and standards.
The author also notes that multilateral development banks can directly
participate in the implementation of social policies and programs, determining
the allocation and redistribution of resources at the international level and
shaping the debate on social policy in the national and local spheres of
government.

Criticism of the activities of such organizations should also be considered

within the framework of this work, in particular the work of Diaz, who argued
that these organizations are recipient-oriented, are the main indicators of the
economic and social efficiency of the population and make this population
dependent on appropriate financial support. The works of Segundo Stubbs
(2003), on the destabilization of the International Bank for Reconstruction and
Development, on public health policy, and on how the central bank promotes
policies in the field of macroeconomics and neoliberalism, are also interesting.
Методология (в двух словах если скажу, мб не то распишите, поэтому
подарок от заведения):

The database used for the analysis is located on the World Bank website
(WORLD BANK, 2022). This database includes a number of data related to
projects funded by the bank, available since 1990, including basic information
about the country, the year of approval of financing, the origin and volume of
resources provided, industry and thematic ratings, personnel, executing agency
and others. A number of adjustments were made from the raw data. First, a
temporary and geographical reduction was made, reducing the base to projects
approved between 2013 and 2023 in Latin America and the Caribbean. This
means that we will consider in the analysis the year in which the projects were
approved, which is formally understood by the bank as the "obligations"
assumed in this financial year. This classification differs from the payments
themselves: the latter relate to the terms in which loan or financing
contributions are paid, as well as to the bank's own budget. In addition, we
believe that the decision to grant an appeal – whether through loans, loans or
financing – better reflects the Bank's position on the distribution of the appeal,
as it is the result of the Bank's board of Directors, without reflecting operational
issues related to payments.

A thematic pruning of the received data was also carried out. In social
policy, we define projects whose thematic classification corresponds to the
following topics: social development, gender and inclusion, social protection
and risk management, rural development and urban development. The database
presents a thematic ranking in a broad sense with different themes and thematic
goals associated with each project.

As for the proposed product lines, we have retained only those projects
that used funds from the World Bank itself, that is, the IBRD and IDA. Thus,
the resources coming from specific funds and special investments, cases where
the bank performs only an operational role, were not considered in the analysis,
since the organization has no influence on the allocation of these resources –
only a supervisory and evaluation role, in most cases.

The last reduction performed in the sample concerns the exclusion of

projects intended for groups of countries, such as "Andean countries", "OECS
countries", "Latin America", since such a classification does not clarify which
countries in the group participate or do not participate effectively, and thus does
not allow assigning to countries the volumes of the considered projects,
hindering the analysis of the distribution of funding

Seven variables of interest from the original database were retained:

project name, product line, country, project approval date, total amount
provided by Banco, loan instrument and main topic. To these, we add a variable
corresponding to the grouping of amounts into 5 categories, according to the
distribution of a continuous variable of the total amount provided by the bank,
divided into 5 percentiles, in order to make the distribution uniform in the
ranges of values transferred to the projects. The percentiles in question were:
20, 40, 60 and 80, so there are a total of 5 ranges of values. This strategy was
adopted to make possible an analysis reflecting the level of monetary
contributions intended for projects, as well as a relationship analysis for
categorical variables (to the detriment of continuous ones). The table below
summarizes this reorganization:

Contribution (grouped)

Percentage frequency, valid Cumulative

percentage percentage

<= 20000000 (1) 53 22,9 22,9 22,9

20000001 – 40000000 44 19,0 19,0 42,0

(2)

40000001 – 65000000 42 18,2 18,2 60,2

(3)

65000001 - 51 22,1 22,1 82,3

200000000 (4)
 200000001+ (5) 41 17,7 17,7 100,0

Total 231 100,0 100,0

The statistical analysis of the data was divided into two blocks. First, an
attempt was made to determine the distribution structure of World Bank social
policy projects in Latin America and the Caribbean from 2013 to 2023. We used
basic descriptive statistical indicators to determine the behavior of data
distributions associated with various variables. In addition to central trend
metrics such as the mean (FIELD, 2009, p. 33), we observe the standard
deviation of the sample and the frequency distribution, as well as cross-
switching between variables.
As part of writing this study, it was decided to combine three different
statistical procedures: descriptive statistics to demonstrate the relationship
between the financial resources provided by the bank and the well-being of
Latin American countries, using the example of Argentina and Brazil; Then the
Pearson Chi-squared criterion was applied to find out whether there is a
significant relationship between the resources provided by the bank, and the
state potential of Latin American countries on the example of Argentina and
Brazil (the variable "Wealth gap"). After that, we supplement the analysis with
the Pearson correlation coefficient for the same variables, which is a measure of
the strength of the relationship between two variables (FIELD, 2009, p.128), in
order to confirm the previous results and determine the direction of correlation
between the variables.
Chapter 1: Analysis of the impact of the World Bank’s activities on
international economic processes

1.1. The history of the creation of the World Bank, the evolution of its role
in the development of the world economy

The World Bank is one of the most powerful global financial institutions
to offer leveraged loans. Despite its numerous aims and missions, the chief
target of the World Bank is poverty reduction. Embraced by two main
institutions like the International Development Association and the International
Bank for Reconstruction and Development, the World Bank is today an
internationally vital funding institution.

The World Bank was initially an inception of Bretton Woods Conference

(The United Nations Monetary and Financial Conference) in July 1944, New
Hampshire. It was the first from five institutions shaped, as a need of regulation
of the international monetary and financial order subsequent to World War II.
The conference gathered 730 delegates from each 44 joined countries, where the
most potent and dominated countries subject to discussion were the United
States and United Kingdom, represented respectfully by Harry Dexter White
and John Maynard Keynes. Although initiated together, and both based in
Washington, D.C., the World Bank and the International Monetary Fund differ
from each other in the leading process. The World Bank has an American
leader, whereas the International Monetary Fund is led by a European.[1]

From 1945 to its notion until 1967, the World Bank was following a low
level of lending, due to the fact that the loan transmission was regular and
ordinary. Considering the specifics, the bank made its efforts to design a
steadiness level of equilibrium to renovate the loans on the purpose of achieving
the trust in the Bank’s activity. France was chosen from the Bank president to
be the first beneficiary country of the World Bank aid, while Chile and Poland’s
requests were rejected.

The first amount of the loan was USD 250 million and it enclosed
rigorous restraints restrains. As argued at Mason, E. (1973), after a range of
observations from the World Bank regarding the fund utilization, the French
government offered a very stable budget budged on debt repayment, although it
was pointed out the need to eliminate the communism components inside the
Cabinet. Later on, the Marshall Plan in 1947 changed the flow of the World
Bank aid. Many other European countries obtained financial support, and
shortly after, the interest emerged in non- European countries until 1968, in
which the loans were intended to those projects that could help the borrower
country to repay the loans mainly at infrastructure and ports construction. It was
again Mason, E. (1973) criticism of the on the early World Bank role as
ineffective to fulfill the mission, by letting the Marshall Plan become becoming
the only financial engine of Western Europe lending more than USD 41 billion
by 1953.

From 1968 to 1980 the chief operation of the World Bank was to
accomplish the fundamental needs of developing of the developing countries.
Moreover, the number of loans to borrowers was amplified, especially in the
infrastructure in infrastructure or social services sector. The former changes
were due to the selected American business executive Robert McNamara
allotted by the presidency, whose intentions were in generating an innovative
innovate system that would connect the borrower country with the Bank, to
facilitate the loan process. He immediately modified the Bank’s policies into
vital trials such as the investment in the health system, agriculture enhancement;
building schools etc.[2] With the purpose of financing additional loans, the new
president in assistance with the Bank treasurer Eugene Rotberg, managed to
enhance the capital available to the Bank only by searching new external
sources of capital such as those banks which have been major sources of bank
funding. Unfortunately, the effect of the period of the alleviation of the poverty
took a debt rise of developing countries with the annual rate of 20% from 1976
to 1980. According to Goldman, M. (2005) on its very first decades the World
Bank was explicitly predestined to decline, confined also by the political
pressure of the United States. The new decade brought innovative news for the
World Bank. In 1980 the new president Alden W. Clausen was selected by the
United States.

President, Jimmy Carter. Soon after, he followed a series of pioneering

strategies starting from the substitution of the previous Bank team force,
offering a new image of the Bank, and up to the substitution of the Chief
Economist Hollis B. Chenery in 1982 by Anne Krueger, who was very famous
for her disapprovals on development funding.

From 1980-1989 the loaning process was designated to the developing

countries. In addition, as a part of the World Bank policy, the new structural
regulation policies aspired to reform the third world economies. Thus, the new
regulation established a reduction of “health, nutritional and educational levels
for tens of millions of children in Asia, Latin America, and Africa” After an
extensive phase of criticisms, the World Bank shaped its activity as a reaction to
several non-governmental organizations and environmental groups, which were
already integrated on the lending processes of the Bank.

The World Bank missions are firmly conducted from the Millennium
Development Goals (MDGs), a set of eight international goals where each
United Nations country member has acceded to accomplish. The main mission
of the Bank relies on the universal poverty reduction, which at the meantime is
the world’s most imperative increasing concern.
 Some of the chief issues in the center of attention are devoted to the
completeness of lending activity, such as supporting the middle-income
countries at certain interest rates that will replicate low gains than its own
borrowings from capital markets. Furthermore, no interest loans and donations
to the low income nations with minor or no admission to global credit markets
are supplied by the International Development Association.

Controversially, the International Bank for Reconstruction and

Development is a market-based nonprofit organization loaning money for
various development sectors and using the high credit rating with the aim of low
interest rate on its loans. Alternatively, the IDA was financed by periodic
donations selected to the institution by its most wealthy member nations.

The World Bank primary missions consist on giving support to the

developing countries and assist on poverty reduction, sustain the economic
growth upward to a promising investment background, build up jobs, all in the
course of a relentless financial supply. Considered to be its major five features
for the economic development, the World Bank comprise the governmental
amplification and their certified executive’s education, achievement of legal
systems for the businesses, protection of private assets rights, founding of
powerful supporting systems from micro credit to bigger business enterprises,
helping countries to fight corruption, and finally, offers researches and
programs on consulting services, training procedures which will be especially
useful to non-government organizations, academies and even governments
itself. The entire above mentioned goals are determinant for an expanded
economical development (Goldman, M., (2005)).

The Bank’s funding is acquired first and foremost from the AAA-rated
bonds sold throughout the IBRD in international markets. It is this institution
itself that creates earnings from its contribution actions, whereas IDA earnings
are collected throughout the donor nations which refill the Bank’s finances each
three years and from loan refunding.

In order to fulfill the missions of the MDG objectives by the year 2015, it
is required to firstly complete six standards as follows: an intense growth for the
developing countries, African countries and especially the tenuous ones,
development of other sectors like education and health, incorporation of
environment and growth programs, higher and healthier aid, advanced trade
conventions, and finally a more powerful alerted support from other
international institutions such as the World Bank is.6

From year 1990 to 2004 there was a decline in the percentage of people
living in extreme poverty. The prime impact of the Bank is extreme poverty and
hunger. Thus, the World Bank utilizes its responsiveness to develop the life
standards for millions of poor people and low income countries by increasing
the level of its funding to USD 106 billion in 2009-2010 periods. According to
statistics, the frequency of children school attendance in developing countries
increased from 80% in 1991 to 88% in 2005. In addition, 57% of 72 million
children of primary school age were not being educated, most of them females.
(Gilbert, C. and D. Vines, (2000)). Seeing it as a problem for several countries,
the World Bank also contributes in promoting the gender equality, by
stimulating female’s force in the labor market, as long as 60% of them are
unpaid family employees. Another significant scope is child mortality declining.
According to statistics, an evaluation of 10 million children died in 2005 under
the age of five, where the majority of deaths came from unavoidable reasons.
Still, the radical circumstances made it very hard to face the harsh problems in
the region; given that more than half million women died during pregnancy or
childbirth. Such causes called for deep health care involvement from the World
Bank and its activities which also made it broadly available.
 Another struggle of the World Bank regards the fight against AIDS,
Malaria and other contagious diseases particularly in Africa, where the
mortality due to HIV/AIDS have reached 1.6 million in 2007. Mortality as a
result of malaria causes 300 to 500 million deaths each year, where almost 95
percent of deaths take place in Sub-Saharan Africa.

Other important activities of the World Bank comprise the biological

protection and deforestation mainly in unfavorable regions; standards for air
pollution and emission of the gas that reach the critical standards. The Bank also
cooperates with various international associates and local ones in order to
rapidly fulfill the MDGs targets. The United States is eventually the prevalent
shareholder of the Bank, and the Board represents the member nations and is
formed by the Executive Directors who meet twice a week to supervise the
administrative issues, innovative policies, loaning decisions and mission
strategies for specific countries. The Board of Directors is formed from 25
Executive Directors including the President while the Bank itself comprises 24
Vice Presidents, three Senior Vice Presidents and , two Executive Vice
Presidents.

In order to have a good occurrence of its competences, the World Bank

evaluates all its policies with the purpose of supporting the poor by stressing out
the financial options that would be complementary to the improvement
concerns. The strategies of the World Bank are established on three pillars:
resources; reforms; efforts and the results. Reforms usually tend to develop the
general activity of the projects and strategies from their conception till the
information distribution, whether it is being reachable, and finally the
governmental accomplishment. It also organizes various campaigns to
undertake the certainty that the financial activities are strictly affirmed into the
country members, such as capital improvements.
 Stiglitz J. (2001) argued that ‘a range of policies and institutional changes
are needed in order to enhance participation. This includes better education,
investments in communication infrastructure, rule of law and full employment
policy’.9 Its main products consist of two main groups: lending products and
Analytic and Advisory Activities (AAA). The first one contains programmatic
loans, adjustment loans and investment credits; whereas the second includes
donor coordination, non-lending technical assistance and fee-based advisory
services. On the other hand, the World Bank Group integrates five narrowly
connected entities that work jointly toward poverty reduction: the World Bank
(IBRD and IDA), the International Finance Corporation (IFC), the Multilateral
Investment Guarantee Agency (MIGA), and the International Centre for
Settlement of Investment Disputes (ICSID).

Each of the biggest shareholder countries like the United States, United
Kingdom, Japan, Germany, and France assign an executive director.
To facilitate all the operation procedures, in 1993 the World Bank assembled a
board that would adhere the international strategies and guidelines. After
surveys and examination supported from the Bank, the board covers the
advantage for giving the opportunity to express the people’s opinions regarding
the projects and missions. The World Bank is a colossal institution which
incorporates approximately 10.000 development professionals from roughly
each country in the world. Only in Washington, D.C., it contains more than 100
nation offices, together with economists, financial advisers, analysts, etc10
whether, in developing countries are around 3000 employees working in
national offices. Fundamentally required to build a connection between poor
and rich nations, their devotion is essential on generating the World Bank
guiding principles. At Winters, J.A. and Pincus, J.R. (2002) it is analyzed the
need of reforming the Bank’s policies, and the necessity to improve its
strategies so that their implementation could not create negative implications
especially in developing countries. New policy changes were needed, as the
Bank was facing difficulties and controversies in several nations. As analyzed at
Bhargava, V., (2006), at the attempt of offering debt relief, they couldn’t soothe
critics of alleviating poverty.

In order to sustain the proper poverty reduction, the World Bank strives to
daily innovate its support towards the low-interest and no-interest credits and
donations from its own institutions (IBRD and IDA), especially in the low-
income nations. The bigger the finances, the more loaning will be obtainable for
re-investing to complete the Bank’s priorities. Therefore, the World Bank is
very cautious at keeping a financial discipline in order to keep the AAA-rated
bonds and continuing its activity. Instead, contributes and the financial sustain
of all the shareholders is essentially needed, so as to display straightly the
capital they obtain.

To fulfill the IBRD obligations it is compulsory to appraise that in extra

ordinary case, the Bank possesses the 178 billion dollars in what is known as
the callable capital, even though the call on such store was never required
before. On the other hand, IDA remains the biggest source of funding which
grants interest free loans to the developing countries, restocking 40 donor
countries every three years. At the end of the fiscal year, the World Bank is
automatically in a surplus, a part of which is targeted to the IDA missions and
strategies to be accomplished. Whereas the rest serves as a debt in needs of poor
countries or in case of prerequisite conditions.
The evolution of the World Bank over the past forty years implemented a
positive impact especially in developing countries (raised by 20 percent) and
heartened its activity in successful projects. The World Bank activity is highly
concentrated in the growth promotion and development of the developing
countries mainly by helping new work places, revenue boosting and providing
all the financial assistance.
 In spite of a variety of campaigns and promotions, nowadays the role of
the World Bank is being misinterpreted because of the criticisms it is facing. In
the globalization era there is a massive flow of goods, services, technology,
capital and people; therefore the mission of the World Bank becomes more
dense and complicated. The World Bank has to fulfill the Millennium
Development Goals particularly in reducing the poverty. The process was
accompanied by reforms of the economic policies by the developing countries
whose major intention is reaching a stable access to food and water. The global
economic crisis displayed a variety of improvement towards the stabilization of
hunger, gender parity and school system progress. According to the World Bank
data, 64 million people live on less than USD 1.25 per day showing a clear life
improvement in these countries.

As forecasted, in 2015, the estimated number of poor people because of

the economical crisis will be 53 millions, living with less than USD 1.25 per
day (Lin. 2008).
Despite this, these economies should focus on empowering the sustainable
economic growth and alternation with the tough social policies. Another big
challenge lies in key sectors such as health care system and infrastructure in
affording education for the poor. The World Bank role in reducing the poverty
is of an essential support for the local governments which have to protect the
gains and continuously aim the MDGs level. Poverty enhancement is also
related to unemployment and poorer remittances. They both collaborate on
international demand layoffs. In order to subordinate poverty, the key strategy is
trade.

The World Bank is having a major role in facing the challenges at

conflict-affected countries by developing a widespread agenda. As indicated in
the figure below, there is no Millennium Development Goal achieved by
FCC11. Finding their selves striving for MDGs accomplishment, they remain
40-60% faraway distant from middle-income countries and low income
countries.

Furthermore, as a financial institution the World Bank assists in

consulting for new economic opportunities aiming mainly the middle-income
and low income countries reaching a double lending of USD 106 billion in
2009-2010. Studying the role of aid, Collier (2007) argues that due to poor
assimilative extents, aid turns out to be less proficient in countries where aid
reaches 16 percent of GDP, keeping them in a holding pattern. Furthermore he
brings up the conclusion that donors should support fragile countries. The
global crisis highlighted difficulties in achieving the MDGs, in collecting the
necessary sources and in moving forward with the policies of economic growth.
The World Bank MDGs goals have to be reached by year 2015 including the
major efforts in reducing the poverty worldwide. The global economic crisis has
distinct the poverty reduction as a core mission.

Realizing the sustainable growth of the poorest countries represents a

challenge for it. The World Bank on its future reforms evaluated an increase of
global output being higher by almost USD 4 trillion bringing to new work
places. The global growth is strictly connected with the growth in the
developing countries. Their economic donation includes the rise of the import
demand on the other hand the fast growing economic developments boost the
investments bringing high returns.

1.2. Analysis of the World Bank's activities

Since its inception in the forties, the World Bank has been one of the
main and most influential centers for the theoretical development of economic
development in the Third World. Although the Bank focused its efforts on
reconstruction projects in developed countries immediately after World War II,
since the fifties the Bank has been financing infrastructure, agricultural and
educational programs in poor countries. This practical activity immediately led
to theoretical approaches to development strategies (Payer, 1984).
The World Bank's aid in the Balkans has been invested to support
regional development. Its main activity is based on poverty reduction, achieving
sustainable economic growth and achieving macroeconomic stability.
Throughout this panorama it can be distinguished that the region is quite
heterogeneous both in population and in income level. Within the dedicated
discussions together with the European Commission, the nations of the Western
Balkans are a topic of great importance, especially on their way to EU
integration.
The main objectives of the strategies in the Western Balkans include
poverty reduction, stability and development, increasing wealth and harmony.
As also noted in Svejnar, J. (2002), in order to provide a solid foundation of
support for growth, deeper and more constant realization of internal reform
plans, strong institutional authority and more improved infrastructure are
considered necessary. Compared to other international organizations, the World
Bank offers long-term support with a universal perspective. The World Bank's
assistance to countries is a work designed by the World Bank Group to help
each country in particular. As a starting point, it identifies the country's
economic problems, estimates government policies and previous banking
support, analyzes the region of greatest concern for future banking actions,
it suggests specific products for Bank assistance and finally offers a
scheme to monitor the performance of the Bank and the recipient. The World
Bank's assistance to countries is the product of a practical discussion with
partner nations, civil society councils and collaborating organizations such as
the European Commission, the EBRD and the EIB. In this region people live on
half income level of five central European nations. From the social perspective,
there are minorities and population groups who could contrast more the ethnic
conflicts and the poverty could generate tensions leading to a fragmentation of
the society. The Kosovo crisis has influenced in the regional economies
negatively by lowering the total output by two percent for countries like
Albania, Bosnia and Herzegovina, FYROM, Croatia and Romania. This brought
to an increase of the current account deficit for the region.
Characterized of small economies, their growth and progress is greatly
conditional upon international organizations as well as European markets trade.
Integration with foreign structures will imply a stronger public sector, a lower
corruption level and stability impact. Countries like Albania, Bosnia and
Herzegovina, Macedonia, and Serbia live at the half income compared to
the Central European countries (nearly about USD 2,200 per capita). Through
the transitory process these economies managed to recover the income levels at
only 75 percent, therefore there is a high inequality and declining living
standards. There are four key factors that have affected in this: the first aspect
includes the industrial structural imbalances in this region due to the weak role
of the institutions. Secondly, being a war and ethnic conflict region, the
economic activity was restricted, and the institutional strength of the civil
societies very limited. The macroeconomic climate was not favorable to the
business investments standing as the third factor.
The major strategy for reducing the poverty in the South Eastern region requires
specific policies and governmental support. The past ten years represent a phase
of transition for these countries characterized by ethnic conflicts and income
inequalities. Political obstacles and the low institutional governance have
prevented these countries to reach the full functioning of the market. Therefore,
the rising conflicts worsened their overall performance and declined the living
standards experiencing an inferior economic performance.
After the end of the Kosovo conflict and Dayton Agreement, the Balkans
display social issues
 regarding their separation from the homes and properties. Bosnia and
Herzegovina citizens that were displaced reached more than the third of it, and
the Kosovo Albanians experience the same social and economic uncertainties.
The political and economic costs of the region are generally highlighted by the
living standards decline and a social perspective which has to be improved.
Accelerating the steadfast economic reforms could support these economies to
come out of the transitory phase.
The South Eastern countries commitments on an intra-regional
cooperation could support the further developments of the strategies, increasing
the major chances of their effectiveness. The reduction of poverty would come
with the integration with the European Union, since the production and import
export opportunities would be higher bringing to the goal fulfillment. Specific
economic reforms have to be undertaken reassuring the cooperation with the
European structures. Moreover, building a new economic face the region
countries were provided with the certain financial and experience consulting in
managing technically the reforms. The independence of the private sector
remains a priority for an eventual World Bank focus.
Investing in strengthening this sector aims business climate improvements
therefore generation of employment.
The challenges mentioned above lead towards the aid motivations. The first is
that the World Bank should play the role of the stability factor for the region.
Improvements in infrastructure through investments will help to achieve the
prosperity and sustain the economic growth as well as the environmental
safeguard. The combining of the local efforts with the regional development
policies of the World Bank are the key strategic approach for assuring stability
throughout the Balkan zone.
The World Bank role is essential in promoting the initiatives to overpass the
fractures of transitory phase. The free flow of trade, people and ideas would
bring the stability to a very good macroeconomic level. Furthermore, the
economic growth objectives fulfillment reduces the poverty level and the
political tensions. The World Bank has a clear vision on reducing the
imbalances for the Balkans through main investments in restructuring the
infrastructure, healthcare system and high improvements of the administrative
governance.
The poverty reduction initiatives of the World Bank involve the economic
reforms that are being promoted and monitored by this authority alternating the
indispensable role of the local government. Strengthening of the institutional
role would be a parallel initiative in competing with the global community and a
part of every investing approach.The World Bank’s vision aims the social
developments, open opportunities for a stable prosperous region in which the
governments implement policies on the law strengthening and lowering the
corruption level. The institutions and the state execution of power have to
include a greater dedication of the civil society and financial management.
Lastly, there was a clear need for the enhancing investment policies
alternated with overall political reforms undertaken by the local governments.
The World Bank’s core mission was based on the crucial processes such as the
liberalization of trade, the restructuring of the financial system and the
privatization of enterprises. The role of institutions is very crucial towards
poverty mitigation, especially to create the guarantee that public services are
distributed to all the categories of population, as well as the poor citizens. Good
governance covers a group of solid institutions that construct political and
economic environment. For this, domestic institutions should efficiently apply
regional guiding principles. Regional policies are required to be set up
throughout domestic institutions.
Despite of economic basis, political and historical reasons are very
important to understand impacts of aid in each country. Alesina A. (2000),
managed to find a theoretical and empirical approach of the implication that
foreign aid flows are determined mainly by the political and strategic variables
in the host country, rather than the economic demand and policy indicators.
Bräutigam D. (2004) on her study of aid and governance relationship in
Sub-Africa, found out that aid can reinforce domestic institutions, liberate
governments from compelling revenue restrictions, and pay more salary to civil
retainers especially in poor countries. On the other hand, the study was
criticized from a different approach of Moss T. and Pettersson G. (2005)
regarding the impending negative impacts of aid dependence on government
institutions, simply because political institutions might be harmfully influenced.
Authors came into the conclusion that those countries which obtain extensive
proportion of the foreign aid, in fact tend to have a less developed popular
legitimacy and institutional effectiveness, because they do not generate enough
revenues for the national community. They brought a closer view of the fact that
the low incomes nations which are embattled for significant enhancement in aid,
traditionally receive unprecedented flows. Western Balkan countries have
notable drawbacks in public sector services, institution rules and infrastructure
for private sector improvement. Dominant obstacles to growth and progress
particularly challenging across the area, comprise taxes and regulation as well
as company licensing.
The ongoing wide participation of the state into the productive sector is
improper and averts public sector capital towards a bad intrusion. An operative
financial sector plays a vital role in the economy, by means of savings and
investment.
There is a considerable distinction of expenditures structure across the
region and the South-East Europe counties. Every nation has organized the
structure of spending differently. The share of wages is higher in Moldova,
Bulgaria, Macedonia as well as Kosovo, but on the other hand the investment
share resides in high percentages for the same countries. The financial sector of
the region stands relatively untrained and not improved in the process of
distribution of services to the financial intermediation towards the economy.
Such malfunction implies backwardness on statistical indicators, especially
compared to the European standards.
Loaning to private sector is limited in most of the countries of the region,
and banking system is characterized by competitiveness deficits as well as bad
credit holdings from banks. Weak public sector institutions represent a barrier
for private sector improvements. As a consequence, corruption and a bad
quality service may rise. Reforms are based in three chief bases like budget
reform, public sector and civil service improvements, and legal and judicial
system development. Moreover, South Eastern Europe nations have difficulties
in budget implementation because of transparency.
Those governments that substitute the local resources with the foreign aid
could not generate
efficient revenues and simply lead to the reduction of the developing
investments.
The relation between the aid and the governance quality is empirically negative,
showing the aid dependence (Brautigam and Knack, 2004). The aid impacts
negatively in incentive reduction and in institutional reforms by creating a
moral hazard. In this case the governmental performance in good developing
policies weakens based on Heller and Gupta (2002).
The following plots show the all five governance indicators of the region
namely voice and accountability, political stability, government effectiveness,
regulatory quality, rule of law and control of corruption. Statistical data show
that approximately in all indicators, Bosnia and Herzegovina has the lowest
rank for the region; followed by Kosovo and Albania. Corruption and poverty
are in positive relationship as of Gupta, Sanjeev, Davoodi H. and Alonso-Terme
R, (2008 )13, implying an unequal instant effect whenever the poor should pay
for social registrations, education and health care. Thus, they undergo the
incapacity to pay the required inducement (Mauro, (1998))14.
In January 1998, the Commission against Corruption was subjected to
implement a program plan against corruption, to execute an efficient anti
corruption supervision towards governmental institutions, and to insure the
collaboration between global financial institutions and the anti corruption
legislation premises. The World Bank in cooperation with USAID applied a
study of enterprises and households, as well as the survey of the non-
governmental organization of Albanian Center for Economic Research to public
executives.
As pointed out by the results, roughly two-thirds of public executives
reported bribery where almost three-quarters of production firms declare to pay
bribes; one-half of the businesses state that they pay inducements to public
representatives implying a 7 percent cost of corruption.
The Council of Europe and the OECD supported by the Special
Coordinator of the Stability Pact, planed a program for all the Western Balkans
countries in order to achieve concrete actions and changes, endorse
transparency, intensification of the rule of law (accurate separation of the
executive, legislative and judiciary powers) and authorizing an active civil
society. CPI captures only the wide trend with a lag in time, excluding the
unofficial payments. Albania was ranked 95th out of 178 nations on the index,
yet, far from its neighbor countries. In a rank from one to ten, zero score
indicates strong corruption and 10 very clean (Tab.4.1).
As of Alesina et al (2007), the connection between foreign aid and
government clearly shows that corrupted governments tend to get more aid.
Controlling the corruption level in various sectors of the countries, the World
Bank in cooperation with other international authorities like the European
Commission and the United Nations Convention against Corruption, supplied
the countries by following an extensive surveys.15 The main purpose of the
surveys was to achieve information regarding corruption in administrative
levels on each specific country. To combat corruption in the western Balkans is
a very complex issue, as long as there are no understandings like how the
phenomenon is developed. The results concluded that one of the most common
occurrences for the region is the development of bribery.
According to the types of bribe payments there is a notable distinction across
countries in terms of variability. The following plot indicates the proportion
division for each nation in terms of bribe forms of payment.
Interestingly, as the chart indicates, the prevalence and the frequency of
bribery are in disparity. As there are intense variations across countries, Kosovo
has the highest average for bribes paid (20.3%) and prevalence (11.1 %,)
whereas in Albania, the prevalence rate is high compared to the average,
indicating that bribes are paid less frequently.17
The high level of corruption in receiving countries is correlated positively with
the aid flows for the period of 1990s based on references Alesina and Weber
(2002). According to Easterly (2003) the incentives on improving the aid
effectiveness within the donor organizations appear not very much important
compared to the aid agencies which have a bureaucratic aspect and to the
mostly crucial commercial and foreign policy objectives of the governmental
donors.
Supporting infrastructure is a crucial key towards economical development.
Infrastructure services like energy, transport and transport make trade
achievable not only in connecting nations with each other, but also making trade
operations easier. On the other hand, infrastructure nurtures social unity among
the countries, developing both physical and cultural interaction.
On its way of progress, infrastructure may be a potential tool against
poverty. Impacts may be resultant mostly important towards the non-income
features of poverty like education, healthiness and social solidity. The scheme
depicts the process of contribution among infrastructure and its impact on
growth and poverty level, merely because it creates a helpful materialization of
the MDGs. An uphold system of infrastructure form deliberate advantages in
reducing transport costs and increases expectations for healthier business
prospects.
The South-East Europe region has soaring needs for infrastructure. With
approximately 4 percent of GDP, infrastructure seizes one half of the public
investments of the region, thus it is hard to increase sufficient finances from
traditional sources. In Qerimi (2002), the author studied the investments of the
World Bank could create a safe base of peaceful co-existence between the
country region fulfilling this way the reaching of tolerance and openness. The
good political and economic relations form a basic EU requirement. Once the
infrastructure is improved the economic developments the Western Balkan
countries would be increased and would reach the good neighborly relations.
The author concluded that both institutional and technical infrastructure may
lead the Balkans to a supplementary financial improvement by integrating the
regional collaboration.
Western Balkan countries have always been characterized by
heterogeneous economic trials. The historical factors of this region have defined
closely the further political and economical levels. The distribution of the aid
shares is made on the basis of a country’s development. The war in Bosnia and
Herzegovina was an international armed conflict from 1992 to 1995 that
allocated many aids in the country’s economic recovery. Another example is the
ODA share for Serbia and Montenegro which changed in two different ways,
after Montenegro was transformed into an independent state on 26 May 2006.
Historical events defining political and economical aspects shaped the further
nature of aid performance which is characterized by an assorted turmoil. Thus,
the local governments become addicted to foreign aid.
A World Bank study in 1998 showed that the Balkan countries profited
greatly from the ODA aid, especially in the post-war period, and this was not
related to the quality of economic management of the country and achievement
of development goals. Both good and bad economic management regimes
received roughly the same amount of assistance measured as a percentage of
their GDP.
Montenegro and Serbia are listed as upper middle income countries and
territories21, whereas Albania, Bosnia and Herzegovina and FYR of Macedonia
are lower middle income countries.22 The amount of aid to low income
countries is the core contest of public policy.
In 2009 Albania had a 28.19% increase in aid from the previous year,
making it the uppermost receiving country among region, followed by Bosnia
and Herzegovina in 2010 of more than 79% increase of aid from USD 18.02
Millions in 2009, to USD 97.19 Millions for 2010. (Fig.4.9)
As shown in the figure the ODA aid trends reflect the impulses that the Balkan
countries obtained through the last ten years. In general the trends are falling
ones. The case of Macedonia, FYR is the only country which aid resulted in
negative numbers. The reason lies in the fact that with the upcoming years the
percentage of aid was decreasing and the flows are represented negative. From
year 2007 the share of ODA aid for this country has diminished every year.
Among the other European receiver countries the western Balkan
countries, represent a substantial amount of aid. In annual average measures,
both Albania and Bosnia Herzegovina exceed the USD amount aid compared to
regional Europe; respectively 38.5 % and 70% for the period 1990-1999 and
72% and 4.6% for the period 2000-2010. In terms of ODA shares, Serbia is the
overriding country among the Balkan region, with approximately 54.41% more
than Europe regionally.
The World Bank aid for the Western Balkans is shown as above. Between
years 2007 and 2009 countries like Albania, Bosnia and Herzegovina, Croatia,
Kosovo, FYROM, Serbia and Montenegro profited of overall number of 45
World Bank projects. The total value is of 1348 millions of Euro invested in
sectors as presented above like transport, energy, water& environment etc. The
highest number of projects was reached in water & environment sector,
followed by social sector. Results of the analysis display that the World Bank
has an active role in this region through a very sustainable financing in key
economic sectors. Serbia is the most financed country for 2007-2009 period
achieving loans of 479 millions of Euro. The World Bank policies are focused
in improving the social sector as well as in quality of life. The aid is essential
for the region after hard conflicts and wars it could reorganize these economies.
In an upward growth rate of six percent for the past ten years, Albania is
the most rapid developing economy in the region, marked from IDA in 2008.
Together with quick social changes, it preserved an established inflation,
exchange rates and interest rates. The country had a thriving evidence of
continuous growth especially under the World Bank Group Country Partnership
Strategy (CPS) support. Even though unemployment is still inactively
developed, the monetary and fiscal policies were favorable in order to develop
macro economical growth among the region. The main reason of a progressive
economic environment was the role of IDA and other active actors of
development partners. The quick boost of the GDP is due to the notable decline
in poverty. The poverty headcount ratio declined with approximately 13 percent
from 2002 till 2008 marking a range of roughly half of Albania’s poor citizens.
Unfortunately, although being a fast developing country, Albania remains an
outlier for most of its European neighbors.
Its position on Human Development Index24 performed higher year by
year from its 74th place in 2005, still in line among the Balkan region, but far
away from the European Union countries. Albania performed well on achieving
the MDGs, by distinguishing enhancements of social indicators (like education
level). Yet, as the table indicates, the country still has to face considerable
challenges in order to meet with regional principles.
The World Bank dynamic agenda of almost twenty years included chief
areas like the implementation of the current portfolio and progress from
partnership participations. Challenges included a healthier balance of risks and
growth returns through the portfolio, development of disbursement rates (still
particularly poorer compared to the Bank averages), and abridge the large
portfolio in order to make it more convenient.
The World Bank main strategic objective for Albania remains the
acceleration of the economic growth through stimulating the competitiveness.
To attract foreign investments Albania has to improve the private enterprise.
Key obstacles like corruption and inappropriate property administration would
eventually undermine the investments. The World Bank interferes through
training on regulatory techniques and reforms in land management and business
facilities. (See the detailed table Appendix A.1.).
Both energetic and infrastructure sectors remain a major priority for
Albania. Boosting their efficiency and improving the actual conditions will be
undertaken by the sustainable investment programs. Loans, local road projects
and energy efficiency programs could be fulfilled as they prove to stimulate the
economic growth. Improving the life quality standards embraces sustainable
investments in public health primary. The main obstacles like access and
ineffective facility distribution stand as a challenge. The World Bank intends to
focus at the health system modernization through legal ways of healthcare
unification and implementing a rationalization plan. The strategic objective is
increasing the public efficiency.

1.3. The place of the World Bank in the global financial system in the 21st
century and its role in the system of global institutions

Various factors contribute to the distrust of the World Bank. At Danaher,

K. (1994) the World Bank is criticized on meddling loan conditions, which
resulted risky to the local political sovereignty of the countries. J. E. Stiglitz,
(2002) emphasizes the conditionality of these criteria as powerful enough to
turn the loan into a policy instrument.
 The World Bank was criticized by Wolfensohn in 1995 that its initiatives
affected in a further poverty broadening globally. The World Bank undertook
the CDF in promoting these adjustment programs by supporting the local
governments in facing the foreign corporate interests. The PRSP required from
the poor countries to become a part of the debt relief scheme while searching for
a multilateral debt reduction.28

The World Bank experience in choosing to protect the interest of the

powerful members can be attached to the new image under a same old reality.
The civil society has an obligation to focus at the economic and juridical justice
of the governments. Peet, R. (2003) on his closer view to the Bank operations
towards poverty, concluded that ‘If the Bank aspires to end poverty; then the
poor should not be sentimentalized, but included in the process of planning their
own development. This means democratizing the Bank and separating from the
Fund’29. Whereas on its critical opinions Stiglitz blamed the governmental
regulation strategies as too “deep down into society”30 Stiglitz argued that
ownership is being promoted by the donors in both theoretical and empirical
ways because the investing strategies should result accomplished. On the other
hand, if the local countries develop the persuasion policies, the ownership
degree would be greater.

At Yusuf, Sh., (2008), the World Bank was heavily criticized by Stiglitz,
straightening dozens of arguments against the functioning of its policies. Stiglitz
argued that a relevant approach of the Bank was the role of the outside advisers
on sharing practice and experiences. The democratic improvements found
essential for every nation to take their own decisions, whereas the Bank
function was to help them throughout this process. According to Stiglitz, the
WDR should have provided international democratic discussions to help the
developing countries in decision making process. As the Washington Consensus
doctrines brought an imperfect approach for several countries, Stiglitz’s work
on information asymmetry and imperfect markets resulted in a practical gap
within various policy makers. The World Bank was a global civil servant to the
developing countries welfare. Unavoidably, its position was at times oppositely
from the U.S Treasury.

The comprehensive gap created among developing countries and

developed countries was due to the gap in knowledge. On one side, the detached
gap situation in developed countries was blocked by means of investments in
education and technology. On the other hand, for developing countries the Bank
called for in mounting needs for reform and “objective analysis of property
rights”. 31 Stiglitz’s report strictly provoked a political controversy as well
evoking corruption.

He helped to strongly construct the government role towards well-built

involvement, but yet the markets failed to become effective. By believing that
the government had a huge impact on society and consequently corruption level,
Stiglitz found deep traces of corruption in developing countries.32 In such
nations, corruption was blocking the public sector slowing down its efficiency.
The World Bank’s charter prohibited the Bank to get committed in political
issues, whereas the Board observed corruption as a non-economic issue but
rather political one. Further studies demonstrated that corruption influenced the
economic escalation and reforms, where such effects extended. Corporate
Governance of the Bank started to create limitations among the financed
countries.

An additional political criticism relates to the poverty issue. While the

poor were suffering the lack of income, a following debate sparked between the
director and the U.S. treasury, arousing a growth controversy. Their perspective
relied in an expanded growth of each country that could potentially decrease the
level of poverty, nonetheless the evidence showed the contrary. If growth was
imposed by rising inequality, poverty could actually boost, particularly valid in
capital market liberalization policy. (Ocampo, J.A., and Stiglitz, J.E., (2008)).
At this point, the poverty reduction strategies were reformed with significant
complementarities which have been neglect in the precedent periods.
Consequently, new problematiques followed when the Washington Consensus
strategy suggested the privatization of social security, which unfortunately
ended in a market crash in 2008 at accumulated market inflation risks.

Even though the growth and stability policies were equivocal (Easterly,
W., Islam, R., and Stiglitz, J.E., (2001)), they created a supplementary poverty
at a general level. Stiglitz criticism on the WB at this point was that the
destabilized democratic practices happened to be contributory for poverty. At
Stiglitz, J.E., (2003), it was argued that the institutional flaws are related to
stock options, which motivated the bad accounting. Information asymmetries
were intensified by securitization, which declined the quality value. Lack of
regulation implied a real critical perception, whether the institutions generated
inequalities, from the attempt to preserve them. At the 2000/2001 WDR, it was
showed that in order to improve equality and lessen poverty, growth policies
were necessary.

The structural adjustment loans affect the developing countries in

undertaking cut public spending. Therefore, the World Bank financing
instruments influence on the political unrest of the receiving countries. An
estimation of average USD 180 million resulted as unsuccessful loans from year
1980 to 2003 at a worldwide scale. Main causes were the political factors like
instability, governmental conflicts which decrease the economic growth as
analyzed at Hsieh, A., (2009), the political instability as well as the ownership
lack and insufficient institutional quality affect in the World Bank’s poor
economic performance. Income inequalities on the other hand contribute to the
political turmoil. A political outcome of the WB on the receiving country is that
the foreign aid undermines the appropriate budgeting.

Criticism of the World Bank was displayed in Moss T. and Pettersson G.,
(2005), like a very controversial aspect of improving the life standards on one
hand and distorted effects on policy and institutional development obtained on
the other. The mission of the World Bank is that of considering the aid as a
subsidy for achieving long- term effects in governmental development,
economic growth and human capital. The negative aspect stands in discouraging
the local revenue collection and created a dependent decision making at the
stale level. The consequences are the delay of the institutional development.

The World Bank allocation of large volumes of aid is reflected in political

and economic outcomes. The ODA inflow negatively influences in real
exchange rate and in export competitiveness decrease. The Dutch disease is the
definition on these situations where the Central Banks interfere to maintain the
exchange rate; despite this the competitiveness is undermined. As identified at
Cammack, P., (2004), poverty does not increase corruption, because the
development itself produces prominent motivation for corruption. Efforts to
achieve corruption- free and responsible governance coordination could help to
understand the structure of the interventions to be taken. The Bank still
nowadays uses programs against corruption like liberalization, decentralization
and democratization (especially used in developing countries).

A data assessment on corruption in poor countries, not only offered a

diverse recommendation of anti corruption strategies, but also implied that none
of these Bank’s policies helps to realize the political resolution, likely as in
developed countries. Undeniably, new policies can potentially create new
transition phases. In 1996, Wolfensohn, the WB President mentioned the
“cancer of corruption” as unfavorable for the economic development. This
represented a new development in WB governance as referenced at Winters, M.,
(2010). The criticism of the WB development projects lies in the local
implementation quality. Different qualities would be associated with different
results. Well governed Balkan countries assimilate the aid deliveries in a more
efficient way rather than poorly governed ones. The programmatic aid is the
right pattern for the well governed countries since this support can flow
appropriately at the oriented destinations. To avoid the corruption in poor-
governed states the non-governmental organizations may receive the short term
aid. According to Easterly, W., (2006), the adjustment lending activity increases
fragmentation between Balkan countries on the technical assistance basis and
represents no differences in regional balance policy.
Chapter 2: The Role of the World Bank in the Socio-Economic
Development of Argentina and Brazil

2.1. Analysis of the state of the economy of Argentina and Brazil in 2013-
2023, problems and trends

As part of this study, we will be providing a description of the current

economic situation in Latin American countries, such as Argentina and Brazil.
By the end of this section, we will have formed a conclusion about the main
issues and trends, in order to better assess the World Bank's involvement in this
matter.
2.1.1. Economy of Argentina

Having occupied the post of the most developed country in Latin America,
Argentina in the last decade of the last century experienced a degenerative
process in its economy, which led the country to financial collapse and the
destruction of its production structure, starting the XXI century, unlike what it
was at the beginning of the XX century. The long recessive process in its
economy, with price deflation, deep financial problems and growing monetary
constraints, began to gain momentum in 1998 and eventually led the country to
the collapse of its monetary and financial systems. Despite a certain time period
of the study, in the context of the Argentine crisis, it is necessary to touch on
earlier periods.
The exchange rate, introduced in the first months of 2002, officially put an
end to convertibility amid a crisis that called into question the main aspects of
the country's economic organization.
Unlike Brazil, this country has not undergone a process of heavy
industrialization that would allow it to replace its imports. His strategy has
always been to remain an exporter of agricultural products and an importer of
products with higher added value. After Peron's second rule, the country began
to weaken economically, and the situation with Agra worsened during the six
years of military dictatorship that replaced the Peron/Lsabelita governments.
In 1983, when the military dictatorship in Argentina ended, its economic
base was almost the same as in the 19th century.Also, little has been done since
the country's redemocratization. Alfonsin tried to control inflation with the
Austral plan - the precursor to the Crusader plan introduced in Brazil in 1986 —
but this was also unsuccessful, and in 1989 the country faced hyperinflation. At
the same time, his industry remained backward, with low productivity and little
diversification.
With the convertibility plan, the country showed some growth until 1998,
but there was also no industrialization process in which industry significantly
increased its share of the country's GDP, as can be seen from the behavior of
GDP by sector.
In addition, social inequality continued to grow, and since 1998, the country has
begun to decline rapidly in terms of the use of installed capacities in the
country. In 2002, after a sharp currency devaluation, almost on the eve of the
end of its second century as an independent country, Argentina represents about
10% of GDP in Latin American dollars. And if this downward trend in income
continues, the country should end its 200th anniversary in 2010 with a share of
about 5% of Latin America's GDP (Fraga, 2002).
The Argentine crisis has not started in recent months. For at least ten years,
the development of the economy of the neighboring country has been criticized
by many economists. Although Argentina's economic policy has been approved,
encouraged, and monitored by the International Monetary Fund, there has been
much discussion about its effectiveness, and the controversy over its stumbles is
not relevant today.
Going back in time a little more than ten years, it is possible to identify some of
the reasons that prompted Argentina to choose to fix foreign currency and
abandon an active monetary policy, not allowing the Central Bank to act on
economic variables.
In a convertibility system similar to the one created in Argentina, the presence
of a well-defined anchor has contributed to an increase in debt and dollar
lending to the population, underestimating the risks that may arise from this,
such as changes in the real value of payments in the face of exchange rate
changes, and focusing only on the "inflationary risk". That is, the biggest fear
was not in the devaluation of foreign currency, but in the resumption of
inflation. And the dollarization of assets was a guarantee against this risk.
At the same time, since 1991, the International Financial System has
directed the flow of external resources to developing countries. This was partly
due to the recession, which affected the global economy, depriving alternatives
of application in developed countries and increasing international liquidity. This
increase in liquidity prompted many foreign applicants to seek to counter bids in
markets that offered higher compensation, albeit with higher risks. Thus,
countries such as Brazil and Argentina that. For many years, they experienced a
huge shortage of currency; in the 90s, they saw dollar flows resume. Thus,
during the last decade, when a large influx of external resources to Argentina
persisted, the system of free convertibility between the peso and the dollar was
maintained. The abundance of dollars allowed the peso to multiply, while
maintaining a reasonable money supply in the country, despite the fact that
Argentina retreated.

The crisis even went so far as to force the Argentine government to

choose the corralito (restriction of withdrawals and banking operations), which
stopped the entire financial system of the country, and then the devaluation of
currencies, the consequences of which caused damage to a significant part of
the population with dollar debt. After the breakout of the currency anchor in
January 2002, the discrepancy between the level of reserves and the amount of
currency in circulation became apparent.

Some of the mistakes made by Argentina's economic team can be called

fueling the crisis in which the neighboring country is plunged. The first of these
is the maintenance of a fixed currency for more than ten years, which has
destroyed the country's ability to export and, consequently, produce foreign
currency at the expense of its own resources. All this time, when the Argentine
peso was pegged to the dollar, it caused a price distortion. The overvalued peso
made imported goods cheaper and raised the dollar price of exported ones.
Thus, Argentina exported and imported little. At the same time, the
convertibility law provided that the number of pesos in circulation could only
grow if more dollars entered the country, that is, in the face of dollar evasion,
the money supply was limited. This reduction in the money supply has the same
effect as accumulation, existence. thus, it can lead to a crisis of the real side of
the economy, as Keynes demonstrated in his studies of currency. In addition,
fixed exchange rates are more pronounced than flexible ones when the main
source of shocks is the demand for currency (Fanelli; Heymann, 2002).

The second mistake was to ignore social problems, giving priority to the
application of price stabilization policies that led to recession and
unemployment. This aspect will be discussed in this chapter.

The third mistake was the denationalization of banks, which mostly

passed into the hands of foreign capital, which practically made it impossible to
finance domestic small and medium-sized enterprises. Faced with the economic
differences and illiquidity of the Argentine economy, banks have become
particularly selective in providing loans to small and medium-sized enterprises
in the country (Steinbruch, 2002).

The fourth mistake was to maintain a policy of high interest rates aimed
at controlling prices and attracting external capital, but this increased the
national debt, as can be seen from table 3. Domestic interest rates — not only in
pesos, but also in dollars — were much higher than those paid in the United
States, taking into account country risk, although both countries (Argentina and
the United States) used their savings in dollars.

To further aggravate the situation in the Argentine economy, it is

necessary to emphasize the country's small strategic importance in a global
context, as well as its relatively limited ability to export its crisis to neighboring
countries. Another aspect is what distinguishes the Argentine crisis from the
crisis faced by Mexico (December 1994) and Brazil (January 1999). In the
latter, currency devaluation had a preventive connotation, that is, it was carried
out to prevent financial collapse and default, while in the neighboring country
the devaluation of the peso was the consequence of these situations. Thus, the
situation in Argentina is more similar to the situation in Indonesia (1997), which
devalued the currency only after the established chaos, than in Mexico and
Brazil, although many analysts do. We tried to compare the situation in
Argentina with the Mexican and Brazilian ones, perhaps because they are all
Latin American countries and have a certain cultural identity. It is also worth
noting that all major crises in Latin American countries in recent years have
been associated with the collapse of formally fixed or almost fixed exchange
rate systems.

However, the big difference between the crises of Argentina, Brazil and
Mexico is that Argentina, after the international financial community pointed to
the example that other developing countries are imitating, became the first
victim of the end of the era of large financial packages. The country has turned
as a guinea pig to a new approach provided by the international financial
community to non-strategic peripheral countries with financing problems.

Moreover, if Argentina is responsible for the situation in which it finds

itself - and indeed is — then its creditors also have a significant share of
responsibility, since both they and international agencies such as the World
Bank and others supported and encouraged the monetary council, ignoring that
in the long run such a policy would create serious difficulties for the country. If
it's easy to get into this type of regime, it's very difficult to get out of it without
injury to the economy that accepts it. One of them is the inability to pay
obligations, since a fixed exchange tends to cause an increase in external costs.
And the perception of currency instability in the country on the part of
applicants leads to the fact that the latter sharply reduce the volume of financial
transactions and the duration of contracts. Financial markets are shrinking as
agents refuse to bear the high risks of future defaults.

If external credit markets are shrinking, economic theory argues that one
alternative to limiting external resources may be to increase the exchange rate in
order to create a trade surplus in order to overcome external constraints.
Currency devaluation in this case can be considered as the behavior of a firm
that decides to liquidate stocks at prices below cost to fulfill bank obligations,
while maintaining its reputation. However, in some cases, this strategy of
maintaining external reputation may clash with monetary policy, in which its
credibility is at stake to maintain low inflation and which undermines a heavily
dollarized financial sector. This was the case with Argentina, where the problem
arose only when capital flows to the country began to decrease.

The reduction of resources in circulation due to capital flight and a

reduction in the inflow of foreign currency has become fatal for the Argentine
economy, according to a number of researchers. In the first quarter of 2002,
Argentina's GDP fell by 16.3% compared to the first quarter of 2001. Industrial
production also declined, and real wages decreased by 9.7% year-on-year.
Lacking a market, companies stopped paying bills on time, and many reduced
the number of Salah rivers. On the other hand, until May 2002, prices showed
an annual increase of 23%, while wholesale prices increased by 72.3%. The
stock market index in June 2002 showed an annual drop in real values of about
29.8%. By May, exports and imports had already decreased by 8.7% and 59%,
respectively, compared to the same period last year.
However, since 2013, it has been repeated and a number of researchers
believe. That this situation is a historical gratification of the previously
described causes of the crisis. A large fiscal imbalance led Argentina to a new
economic crisis with a severe loss of the purchasing power of the population
and the devaluation of the Argentine peso.
This is clearly evident in the currency ratio. So in 2019, for 1 dollar it was
14.9 pesos. At the time of 2023, this corresponds to 25.1 pesos. The country's
currency has weakened compared to the real currency, which has also devalued
against the dollar in recent years. For example, eating meat in Argentina can
cost half as much as in Brazil.
The country's Government is also experiencing political upheaval. Besides
the fact that Alberto Fernandez and Cristina Kirchner faced street pressure, they
have already publicly disagreed with ways out to solve economic problems.
Vice advocates for broader intervention in the economy to mitigate the effects
of the crisis on lower-income populations. Fernandez disagrees.
The economic situation has forced the population to hold protests, as well
as rural producers, who also face shortages of diesel fuel and problems in
Argentina's supply chains. Thousands of Argentine protesters gathered on the
streets of the capital Buenos Aires at this 5th fair to demand universal basic
wages and the universalization of social programs.
Argentina's gross debt, according to the Ministry of Economy, for the 1st
quarter of 2022 amounted to 80.1% of GDP (gross domestic product). Brazil
has a similar percentage -78.5% of GDP. But what worries Argentina is that
55.5% of debt reserves are in foreign currency, and international reserves are
low, close to $39.5 billion, compared with Brazil's ($378.4 billion).
Thus, we can draw an intermediate conclusion in terms of the fact that
today the Argentine leadership does not take into account the experience of
previous years and continues to rely largely on external lending and financing
from international organizations, while the level of import and export
development, as it was statistically justified, hinders the once advanced
economy of Latin America. Within the framework of this part of the study,
Brazil was partially touched upon as a correlative comparison, but this
information is not enough to form an overall picture of the economic situation
of this country, this investigative part of the study will be devoted to it.

2.1.1. Economy of Brasil (пока читаю, к четвергу будет)

2.2 Activities of the World Bank in the Latin American region in 2013-
2023, its role in ensuring the economic stability of the region

In general, the World Bank's approach to social policy focuses on sectoral

policy guidelines and various flagships aimed at combating poverty through
social protection mechanisms, as we saw in the previous chapter. Little or no
attention is paid to information about projects that implement these views,
which leads to a certain absence in relation to projects and countries that
actually receive resources and implement programs and policies that correspond
to the Bank's views. If the Bank's official reports express its official view of
social policy, then it is the allocation of resources that allows us to trace the
pattern of how this point of view is translated in practice. For this reason, this
analysis focuses on the allocation of the amount of resources contributed by the
bank to projects.
 Between 2013 and 2023, the World Bank allocated US$ 30,493,860,000.00
for 231 projects related to the topic of social policy in Latin America and the
Caribbean.
Of the total resources provided to the region, 41% were directed to the
formation of human capital, that is, in the fields of education, health, nutrition
and population. The largest number of projects (26%) and resources (48%) on
this topic were allocated to the subgroup of health system efficiency, which
corresponds to the stimulation of the institutional dimension disseminated by
the bank. In general, incentives for the formation of human capital and activities
in the institutional dimension are largely based on an approach to development
and expansion, which reinforces the influence of this point of view on the bank's
activities in social policy.
It is interesting to note that although income transfer programs (CCTS)
are closely linked to Latin America and are responsible for elevating the bank to
a leading position in this social policy topic, the resources allocated to the topic
of social protection and risk management in which these programs are located
are significantly inferior to those intended for human development
development. With regard to CCT, this may accurately indicate the
predominance of the technical role that the Bank plays in this topic (Hall, 2015,
p.3535). In a broader perspective, this can also be seen as evidence of the
prioritization of investments in key sectors of human capital formation over the
construction of a more reliable social protection policy.
It should be noted that even with the introduction of a new concept of
poverty and, consequently, a new stage in social policy, the orientation of the
bank is mainly consistent with a liberal concept that converges with the
approach of Sen (Evans 2002, P.56).
Within these themes, despite the fact that the 2013 World Bank in Latin
America and the Caribbean report highlights rural poverty (World Bank, 2013),
the specific initiatives that stand out most in terms of knowledge accumulation
and policy prescriptions are related to gender. A number of initiatives are being
implemented in the region to promote gender equality and economic
empowerment of women (World Bank, 2012C, 2014b).
When we make a frequency allocation of resources, we notice that it is not
uniform. At the project level, the first statistical analysis shows that the total
average value of the contributed resources is $131,124,935.10, and the standard
deviation is $215,295,206.29. A high level of standard deviation indicates that
the data points are far from the average, that is, their variance is quite high.
 The resulting values of asymmetry and kurtosis enhance the abnormal
distribution of data. There is a concentration of the number of projects in the
lower ranges of values; on the other hand, projects with very high values occur
with much lower frequency. The histogram below illustrates this information:
The asymmetry in the allocation of resources is also noted when considering
their distribution by country. The diagram below demonstrates this relationship:
a small number of countries concentrate most of the resources, while most of
them share a small proportion of the resources.
It is noted that while Mexico and Brazil jointly concentrate more than 60%
of the total resources coming to the region, the remaining 25 countries share
40% - about 12.5 billion dollars. Mexico, Brazil and Colombia, the three largest
creditors, accumulated more than $20 billion over the period – 9.7, 8.3 and 2.7
billion each, respectively. In the future, we have Argentina and Peru with 2.7
and 1.3 billion, respectively. It is interesting to note that the next country in
terms of resources received is Uruguay, which received about $ 740 million
during this period. Countries such as Chile, Saint Vincent and the Grenadines,
Belize, Saint Lucia, Grenada, Dominica, Guyana and Antigua and Barbuda
received small amounts compared to the rest.
In this first analysis of the distribution of resources by country, it is found
that there is no clear hint that government capacity may be a factor influencing
this distribution. It is noted that among the five largest creditors there is no
country with a serious wealth gap, that is, with low government potential. On
the other hand, among the five countries that received the least amount of
resources, there are both countries with large wealth gaps, such as Antigua and
Barbuda, and countries with moderate (Guyana) and medium gaps (Dominica,
Grenada and Saint Lucia).
As for Haiti, in particular, this case differs from others due to a number of
political and natural factors – the country was the scene of a coup d'etat and an
earthquake in 2004 and 2010, respectively (CIA, 2016) – which contributed to
the deterioration of the economic and social situation in the country, creating a
situation of high demand for humanitarian assistance from various international
organizations and countries. In addition, as noted in the previous chapter, the
contribution of funds to projects of this type is included in the bank's risk
management guidelines, where natural disasters are one of the categories (Hall,
Midgley, 2004; World Bank, 2013b, p. 55).
Returning to the largest borrowers, it is interesting to note that Mexico,
Brazil and Colombia are the destination of the 10 projects with the largest
contribution of resources. Of these three, only Brazil is considered to have a
small wealth gap-Mexico and Colombia, according to the classification of
Cecchini, Filgeira and Robles (2014), have moderate gaps. Of this amount,
Mexico received 61% of the funds in 5 different projects totaling more than $5
billion. It should also be noted that of the 231 completed projects, only five had
a bank contribution of more than $ 1 billion, which is equivalent to the sum of 5
projects implemented by Mexico out of the 10 largest, which strengthens the
central role of this country in the allocation of resources in the region.
It should also be noted that, despite the fact that there is some higher
proportion of countries than Mexico, Brazil and Colombia from year to year, the
cumulative proportion indicates the discrepancy that exists between them – with
different emissions – and others located closer to the median. The 10 largest
projects account for 30% of the total resources contributed to the region
between 2008 and 2014, and their analysis provides important information
about the distribution of the Bank's resources in the region.
In 2017 and 2020, two allocations of funds totaling $2.7 billion and a
project worth $635 million were implemented for the Opportunities program in
Mexico. It is interesting to note that, despite the fact that the topic of social
protection and risk management brought only 26% of the total resources
allocated by the Bank to the region during this period, large amounts of funds
were directed to income transfer programs in accordance with their main
structure (Hall, 2020).
The second trend concerns, in particular, the Brazilian case, where
borrowers are exclusively subnational government bodies, using loans for
policy development (DPL) as financing instruments. It is also interesting to note
that the project created in the prefecture of Rio de Janeiro with the aim of
improving the efficiency and effectiveness of the public sector was the first
DPL signed in the prefecture; This interaction with subnational jurisdictions is
provided for in the Brazilian Country Partnership Strategy (CPS), which makes
municipalities natural partners for the bank (World Bank, 2014C).
Finally, these projects also reflect the current trend in the institutional
dimension, which the bank has championed since the 2000s. A new concern for
the strengthening and development of State institutions, which replaces the
previous disregard for the State institutional structure, can be realized in the
provision of financing using DPL, which provides financial support mainly for
the implementation of institutional and policy measures. This is a trend that can
be verified in general for projects: approximately 35% of the resources that
were sent to the region used DPL as a tool. In addition to Mexico, Brazil and
Colombia, Argentina and Peru make up the top five borrowers.
It is interesting to note that, unlike other countries, Argentina is included
in this list because it has many projects with a number of resources close to the
average (16 projects totaling about $1.2 billion). Mexico is in a more or less
similar position, having almost the same number of projects as Haiti – 25 versus
23, respectively, but concentrating most of the resources, which corresponds to
almost 10 billion dollars. Brazil is the leader in the number of projects, 43 in
total, and ranks second in terms of resources.
This reinforces the considered view that the bank is not just translating
the geopolitical interests of the main donors, emphasizing the specific and joint
negotiating path that projects follow to obtain funding approval.
Thus, in the next section, we conduct specific tests of the relationship
between variables to verify the validity of the hypothesis put forward – there is
a link between government capacity and the allocation of financial resources of
the IPC, in this case the World Bank.
2.3 Prospects for socio-economic development of Argentina and Brazil
under the influence of World Bank initiatives

In the previous section, we looked at how the resources contributed by

the World Bank between 2013 and 2024 were distributed in Latin America and
the Caribbean. This first analysis already highlights the discrepancy between the
amounts received by Mexico and Brazil, compared to other countries such as
Argentina – both concentrate about 60% of the total resources received in the
region during the analyzed period. Both countries are considered large for the
region in terms of population; However, this does not seem to be a factor that
can explain the trend of resource allocation across the sample.
From the literature review, it is noted that the state potential is a factor
with significant explanatory potential for such a distribution. The main
arguments in favor of this are your fault that i) the initial focus, the priority of
the bank during the period and the associated possible desire of the prostate
bank to stream resources with the Lucy Institute, which may be due to a higher
probability of success of projects in this case (MAC; Set; Thuiller, 2012,
Denizer, Kaufmann, Kraay, Diaz, 2016) and ii) the idea that the mere existence
of these institutions is not enough to ensure development should have the state
potential for the success of projects in this area (Hanson, Sigman, 2016). This is
how, in this section, we outline the hypothesis that the state potential has a
positive impact, in this case the World Bank, in Latin America and the
Caribbean in the period from 2013 to 2023.
The first conducted test consisted of a basic descriptive statistical analysis
with the distribution of project frequencies in accordance with the wealth gap of
the country that received the resource among the five established ranges of
resource values. The distribution presented above already indicates the
existence of a relationship between the state potential and the resources that
countries have received. The first category, which focuses on projects with the
lowest cost, is dominated by countries with low government capacity (i.e.
serious gaps in welfare), due to the presence of 13 projects implemented in Haiti
in this range, which is 45% of the total.
Following the trend described above, the last group, which unites projects
with the highest values, does not represent any projects from countries with low
government potential. This latter group also shows a balance between resources
allocated to countries with high and medium levels of government capacity,
which is mainly due to the presence in this group of Mexico, Colombia and
Peru, the three largest borrowers in the region. In order to correctly verify
whether government capacity is a factor influencing the allocation of resources
in the World Bank's social policy, we conducted a Chi-Square test – which
notes the relationship between two categorical variables
As a result, significant indicators can be seen, as evidenced by a
significance level of less than 0.05 (Field, 2009, P.615), demonstrates that there
is a relationship between the amount of resources contributed by the World
Bank to projects and the state potential of client countries, which corresponds to
-2 (1) = 49,869. The likelihood ratio, equally significant at 000, reinforces the
main chi-squared result.
In order to confirm these results and determine the direction of the
association, we analyzed the Pearson correlation coefficient (for the same
variables)
Similar to the Chi-Squared criterion, the Pearson correlation coefficient is
significant (p<0.01). The corresponding value from - to -0.253 indicates that the
smaller the wealth gap, the greater the amount of resources received. Thus,
countries with higher government capacity receive more resources from the
bank. It should be noted that the low coefficient value (close to 1) can be
explained by correlation, considering the variable Welfare gap, which is
represented only as 1, 2 and 3, as continuous, unlike the chi-square criterion.
This result suggests that the ability of the State to implement public
policy, which relates both to the effective role of the bureaucracy in this process
and to the collection of funds for this (Skocpol, 985, Cardenas, 2010), is
important for the decision of the World Bank to provide resources. This is due
to the fact that, in accordance with the project cycle established by the Bank, the
role of implementation is assigned to the local bureaucracy, while the bank
performs a supervisory role (World Bank, 2017r).
With regard to social policy, in Latin America, the socio-economic
conditions of the population affect how much the Government can take care of
the population. The accepted typology of wealth gaps also takes this aspect into
account. In this sense, it is noted that countries with small gaps, although they
have the greatest potential for the development of the welfare State, still face
significant levels of inequality and, in some cases, poverty. In addition, they
represent the need to develop institutions, especially with regard to the quality
and access to services provided (Cecchini, Filfeira, Robles, 2014). This
condition implies a scenario of interest for the receipt of IPC resources, since
there are conditions for implementation while maintaining issues to be resolved
that correspond to the interests of the bank.
An interesting case among the high state capacities is Chile. The country
has a small wealth gap and is recognized in the literature for its long history of
public policy implementation, especially for its innovation in the social sphere –
back in 1970 it had expanded levels of demarcation (Cecchini, Filfeira, Robles,
2014). Despite the high and recognized state potential, the country receives low
contributions to projects from the bank and, in addition, has an organization
directive indicating a preference for investment in the field of knowledge
building (World Bank, 2017A). Such a dissonance with regard to the general
trend observed on the Latin American continent and in the Caribbean may be
due to the fact that throughout Pinochet's reign, the country largely adhered to
the neoliberal recipe, carrying out structural reforms with the support of the
World Bank and the IMF. The privatization of the pension system, among many
other reforms, stood out internationally and was spread by the bank in other
countries. Thus, the strong presence of the World Bank, combined with the
autocratic regime that operated in the country from 1973 to 1990, which turned
it into a laboratory of neoliberal reforms, may justify lower financial obligations
to the country in the period from 2008 to 2014.
Countries with moderate wealth gaps, although they represent an
institutional and socio-economic situation on less favorable terms, receive a
significant amount of resources. Cecchini, Filgueira and Robles (2014, p. 26)
associate a less favorable context with the inability of these States to
simultaneously finance the social safety net and the necessary investments in
education, as well as with the development of institutions that tend to strengthen
the mechanisms of transmission of inequality in society. The case of Mexico,
the destination of most of the resources in the region, fits this scenario with the
benefits associated with increased social spending in recent years (more than
GDP growth itself), while at the same time presenting a relatively ineffective
social protection system that requires institutional reforms (Lomeli; Rodriguez;
Weber, 2012, p. 37-38).
Finally, countries with severe wealth gaps present alarming institutional
and socio-economic levels, including with potential consequences for peace and
social cohesion, as in the case of El Salvador, Guatemala and Honduras
((Lomeli; Rodriguez; Weber, 2012). Not only are the policy implementation
capacities of these countries limited, the lack of stability in these areas may
justify the low allocation of resources to these countries. Haiti stands out in this
group, which, despite its low state potential, is the destination of a significant
part of the Bank's resources in the region. As mentioned earlier, the
deterioration of social conditions in the country, as well as its development
models in connection with the earthquake of 2010 (Lamaut-Brisson, 2013, p. 8),
caused a demand for international humanitarian assistance, including the bank
itself.
Breaking down the correlation coefficient from year to year, we get a
slightly different result: the coefficient obtained is significant in four out of
seven cases. Although its coverage is not complete, its presence in most years
also indicates a correlation.
In this case, the correlation coefficient has a value of less than 0.05
(FIELD, 2009. We have that among the 7 analyzed years, the coefficient is
significant in 2012, 2014, 2017, 2018, 2020, 2021, 2021 years. This change in
the annual analysis indicates that, although government capacity generally
affects the allocation of financial resources during the period, other factors may
have a greater impact in certain years. The study of the causes of this
intermittency and other factors that can influence the allocation of IPC
resources in social policy exceeds the goals of this study, but forms an
interesting agenda for future research.
Thus, statistical tests do not refute the existence of a relationship between
the contribution of the World Bank's financial resources and the ranking of
countries by wealth gaps with a negative direction. That is, countries with lower
wealth gaps, hence higher levels of government capacity, represent the highest
levels of resources in their projects, assuming that government capacity is a
factor that positively influences the allocation of IPC resources to social policy,
in this case the World Bank.
Thus, the scheme of distribution of the nominal amount of World Bank
resources in the field of social policy in lac in the period from 2013 to 2023 is
quite asymmetric: while Brazil and Mexico concentrate about 60% of incoming
resources, the rest of the countries, in particular Argentina, receive amounts
close to the average projected for the project. The main funded projects reflect
the trends in social policy supported by the bank during this period, such as the
focus on CCT and the availability of incentives for institutional reform.
Nevertheless, the predominance of loans for projects that invest in human
capital signals the materialization of the concept of capacity development in the
design and then in the implementation of projects.
Conclusion

Recognizing the growing importance of international actors in global

social policy, this work has focused on the role of the World Bank as a social
policy actor. Among the various modes of action of this organization, the ability
to influence the outlines of internal social policy through the provision of loans
that transfer knowledge and policy guidelines stands out. Thus, the study was
aimed at determining the factors influencing the provision of financial resources
of the World Bank, based on the hypothesis that the state potential affects the
allocation of resources, since the higher the bureaucratic and fiscal potential of
the partner, the higher the chances of success of the funded projects and the
return on realized investments, which contributes to the image of the bank as a
lender and the relevant entity in determining the guiding principles of social
policy.
To account for the proposed analysis, a World Bank case study in Latin
America and the Caribbean (ALC) was conducted from 2013 to 2023, based on
the triangulation of quantum and qualitative analysis strategies. Thus, we
conduct a review of the literature related to the bank and social policy at ALC,
an analysis of various official documents of the bank, including reports, country
strategies, project texts, among others, and finally statistical tests from the
database provided by World Bank and adjusted to reflect the objectives of this
work. The latter turned, first of all, to the verification of the hypothesis put
forward.
The various measures available to implement the concept presented a
separate problem. In order to reflect the emphasized aspects of the concept,
administrative and fiscal, as well as to approach the proposed thematic cut-off,
the typology of the social gap was adopted as an indicator of state potential in
statistical tests, which indicates welfare from the point of view of the state,
given its level of effort and the socio-economic context in which it operates
(Cechini, Robles, Fugeira). This decision preceded a wide-ranging review of
specialized literature on Latin American social security regimes, while
simultaneously conducting a review of social policy in the region.
Before statistical analysis, we contextualize the World Bank's activities in
the field of social policy, presenting the fundamental issues of its activities on
this topic, such as its structure, management, financing tools and approximation
to the goal of combating poverty.
 To analyze the bank's social policy, we examined some projects in which
it invests, which cover such areas as human development, rural development,
social development, gender and inclusivity, social protection and risk
management, as well as urban development.
The conducted statistical analysis reviewed the projects implemented in
the period from 2014 to 2022 in the region, understanding this period as the
consolidation of this new stage of activity in the Bank's social policy. The
database used is available for download on the World Bank's website (World
Bank, 2022) and was adequate to take into account the period, the above-
mentioned social policy topics, the borrowing countries (projects with several
countries were excluded) and the sources of resources limited by payments
provided by the IBRD and Ida. In addition, two variables were added: the first
combines the amounts contributed by the bank to each project into ranges of
values; and the second corresponds to the selected proxy for the state capacity.
As for the project topics, of the approximately $30.5 billion that the bank
invested in ALC projects during the specified period, 41% was directed to the
topic of human development, including education, health, nutrition, and
population, which corresponds to the political and financial importance that this
topic has in the bank. The topic of social protection and risk management
reflected, from the point of view of projects, the emphasis that the Bank pays to
it in terms of content, being the second largest volume of incoming funds.
However, of the 10 largest projects implemented during this period that behave
like outliers compared to other projects in the sample, four relate to this topic,
and three specifically relate to CCT.
The institutional issue observed in documentary and literary analysis is also
present in statistical analysis. Policy Development Loans (DPL), which provide
financial support for the implementation of institutional and policy action
programs, were a tool used to provide 30% of the total resources in the region.
Although hints of the relationship between government capacity and the
allocation of World Bank funds in social policy were not clear at the moment,
the tests of correlation of variables showed that there is a positive relationship
between government capacity and the distribution of World Bank funding in
social policy in Latin America and the Caribbean, demonstrating that the
hypothesis presented in the work is not it can be refuted. The correlation found
is negative, which means that the smaller the wealth gap, the greater the amount
of resources received.