I really enjoyed the World Bank presentation on Wednesday as it was able to contribute to our class discussion on structural inequality and the development of countries. During our class discussion the question of why the United States or the World Bank chooses to allocate money to developing countries was touched upon in our discussion. Several ideas were suggested that it is our duty with the United States as the global hegemony and world power to provide aid to struggling countries to boost our international presence and power in the world. While aid is very important to developing countries or countries that have faced a natural disaster, the United States and institutions like the World Bank should establish guidelines to teach the countries how to use the economic aid most efficiently before they receive it. It is very important countries who receive aid are taught how to best allocate the money so that they can prevent their country from falling into a financial trap of being continually dependent upon outside help. An example of this method that we briefly discussed in class is the use of microcredit to provide small loans given to poor people to help them start or expand businesses.
According to the Microcredit Summit Campaign, the idea of micro finance was started in the 1970’s by Muhammad Yunus, a Bangladesh economist, who thought by giving those people that were too poor to establish businesses credit, it would help give them encouragement to improve their lives. Borrowers of microcredit have the opportunity to use the funds they receive to start small businesses, trade activities, or any area of expertise they can specialize in to make a profit and provide for their family.
Many large financial institutions, such as commercial banks, typically look down upon lending money to the lower class because the amount of money they want to borrow is too small or they struggle to pay off their loan.
What makes microcredit unique is that if an individual to whom the money was lent cannot pay back the loan, a group of people (related to the individual person) is required to be arranged before the loan is funded who guaranties that they will pay back the loan if the person cannot. According to the report, in Bangladesh alone, 90% of microcredit borrowers are women. With a large portion of the borrowers (not just in Bangladesh) but worldwide being women, these women have the opportunity to raise themselves to new positions of financial autonomy because of their ability to be fiscally responsible for their loans, ensure repayment of the money, and maintain and develop a savings account for future investment.
Microcredit is just an example of similar methods which international organizations, like the World Bank or countries as powerful as the United States, should view as models to help develop an aid program that provides a form of a monetary loan to assist the developing countries in financial stability for their future.
Thus, in reference to the question of why should economically powerful countries or other agencies lend money to developing countries, it is my opinion that because people today believe in the human right for individuals to have the opportunity to create a standard healthy and safe living condition for all people, this could be achieved most efficiently by improving their economic and social conditions. However, arguably what is more important is creating a sustainable development that meets the needs of struggling countries without creating a dependency of aid for future generations.
Currently, there are 6.7 million people alive in the world today and 1.2 billion live in developed countries. The other 5.5 billion live in developing countries where many people can barely survive day today on less than $1. When reflecting on the World Bank presentation and our class discussions, it should be noted that developing countries do not just affect themselves, but will inevitably damage other neighboring countries in the future either through trade, disease, or crime. The world population is severely disadvantaged and struggling, and it is our responsibility and prudent opportunity as advanced societies to assist them in breaking out of their economic and social barriers for the benefit of the entire world.
http://www.forbes.com/forbes/2008/0107/050.html
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