The World Bank was established in 1944. To date, it has lent nearly $390 billion, mostly to poor nations. However, its accomplishments have been questioned. For example, since 1951, India has received more than $58 billion – more foreign aid than any other country on earth – yet more than 40 percent of India’s population still lives in poverty. In Sub-Saharan Africa, massive amounts of money have gone into development planning, yet that region has a lower per capita income than it did before receiving aid.

Another criticism of the World Bank is that its lending policies have encouraged large-scale, capital-intensive technology, which help governments plunder their natural resources. Significant environmental damage and dislocation of people has been caused by large projects, such as dams. A 2001 report indicated that nearly one-half of the World Bank’s private sector divisions lending was in environmentally harmful sectors.

The major problem with the World Bank’s lending activities is that they help government bureaucracies flourish with funds that could be used to help individuals in host countries.

How does lending to governments in less-developed countries hinder market reforms?