8 - International investment

Summary

The need to utilize social criteria for investment in developing countries is vitally clear. The singular use of economic criteria in world banking has been an abysmal failure in solving the basic problems of the Third World. The sum of money invested in developing nations is enormous, but extreme hunger and poverty continue unabated. One reason is that international investors continue to base their decisions on financial and economic criteria, while the problems are increasingly recognized as social and political. If it is true that the real barriers to doing away with world poverty are in the way people organize in society, investment requires a sociological perspective to provide the information needed for decisions that will be effective in overcoming poverty and hunger in the world today.

When Robert McNamara became president of the World Bank in 1967, he began to see the serious gap between the amount of money invested by the bank and its ameliorative effect on poverty. In 1973 he took major steps to alter the situation. He changed bank priorities to attack poverty directly, brought in staff to deal with the changes he needed, and increased the bank's research budget for the poverty problem. During the McNamara years, the amount loaned annually to developing countries rose from less than $1 billion to $12 billion, yet the high levels of poverty continued. McNamara's limited success is illustrative of the complexity and depth of the problem. The World Bank is only one of many institutions investing in the Third World with some purpose in attacking poverty, but their efforts seem unavailing.