April 15, 2010, 5:51pm
WASHINGTON, April 15 (Reuters) – The old concept of ”Third World” no longer applies and rich countries cannot impose their will on developing nations that are now major sources of global growth, World Bank chief Robert Zoellick said on Wednesday.
In a speech setting the stage for World Bank and IMF meetings in Washington next week, where emerging economies will play a bigger role, Zoellick cautioned against falling back into patterns of self-interest.
He said economic progress in developing countries had profound implications for global cooperation, multi-lateralism and the work of institutions such as the World Bank.
”Economic and political tectonic plates are shifting,” Zoellick told an audience at the Woodrow Wilson Center. ”We can shift with them, or we can continue to see a new world through the prism of the old.
The meetings next week are expected to approve the first capital increase for the World Bank in 20 years. While rich industrial countries have been the biggest contributors to the World Bank and long dictated how the money is spent, emerging market countries will have a bigger role.
”Shareholders face a decision to strengthen the bank group, or allow it to wane in influence … leaving it poorly resourced to cope with whatever comes next,” he noted.
The Bank’s resources have been stretched by record borrowing from developing countries during the financial crisis, as global demand dropped and credit markets dried up.
Since the crisis hit in mid-2008, the World Bank has committed more than $100 billion in loans and grants to developing countries. When it comes to total disbursements, the World Bank overtook the IMF’s crisis payments.
Records show total disbursements between July 2008 and March 2010 was $67.7 billion for the World Bank and $56.9 billion for the IMF.
As the crisis spread across the globe, rich and emerging economies synchronized their responses to find a way out.
But with signs of global economic recovery now underway, Zoellick said he worried that the incentive to cooperate will fade as the recovery gives way to a fast-evolving multipolar world economy.
”Already we feel gravitational forces pulling a world of nation-states back to the pursuit of narrower interests,” he said.
The shifts in the world are not only in China and India, he said. Sub-Saharan Africa is set to grow by an average of over 6 percent to 2015 while South Asia, where half the world’s poor live, could grow by as much as 7 percent over the same period.