World Bank Lending: A Catholic Social Teaching’s Perspective World Bank Lending: A Catholic Social Teaching’s Perspective Stefan A. Perun Liberal Studies Introduction Catholic Social Teaching (CST), which frames morality in terms of promoting the common good, offers moral guidance on a wide range of issues. One such issue is development in the global economy. By its own account, the World Bank plays an important role in facilitating global economic development for the global good (About Us, 2007). As such, CST provides a lens through which one can evaluate both the morality and effectiveness of World Bank lending practices. After evaluating the empirical results of World Bank lending to Latin American countries during the 1990s by the standards established by CST, this essay argues that World Bank lending practices are immoral. Additionally, it is argued that sound economic policies are actually congruent with a moral approach to World Bank lending. In addition, I argue that CST offers an opportunity to bring about both human flourishing and sound economic policy for the benefit of the entire global community. The Globalization Debate There is much debate in the public arena about whether or not globalization is a beneficial phenomenon, particularly for emerging economies. The scope of the phenomenon called globalization makes it difficult to assess outcomes from either subjective or empirical points of view with precision. Many current arguments in the globalization debate would at least acknowledge that globalization has the potential to impact the global community in very positive ways. One such piece of research is the socioeconomic matrix reporting on 1997 outcomes of globalization among poor nations (World Bank as cited in Wolf 143). After controlling for population differences, the results suggest that more globalized countries were better developed then their less globalized counterparts, based on indicators such as Gross Domestic Product (GDP), growth rate per capita, Stefan Perun primary education, and rule of law. Additionally, some rise in the overall life expectancy and a reduction in global malnourishment has been an effect of globalization (Singer 85-87). The enormous potential benefit of globalization to universally increase the standard of living seems to outweigh the costs. Based on the empirical evidence of improved economic conditions throughout the world, particularly in countries like China and India, it seems possible for countries to “take advantage of globalization, without being taken advantage of by globalization” (Stiglitz 23-43). However, many of these same arguments are also critical of the ways in which developed countries exercise an upper hand in deciding the terms of globalization, particularly in negotiating multinational trade arrangements. In addition, some argue more generally that globalization exploits workers in poorer countries, while richer countries capitalize on the resulting human suffering (Daly as cited in Gehring 73-80). At the heart of such arguments is the critique that wealthy countries continue to repress the exploited countries in order to maintain a favorable power balance. Rather than engage in dichotomous debate—i.e., one that seeks to defend a strictly pro- or anti- globalization stance—a more meaningful approach is to assess globalization based on its effects in the global community. How is one to discern the impact of policies of nation-states, international trade organizations, international courts of law, and treaties between countries that facilitate globalization? I argue that evaluating empirical evidence resulting from previous multilateral loan arrangements through the World Bank is one place to start. The numbers and outcomes of loans made to Latin American countries during the early 1990s and the regions’ 0% GDP that ensued provides compelling evidence about the effects of World Bank lending policies in practice. In this case, the risk of development fell on the shoulders of the region, and currency fluctuations resulted in an enormous, unpayable debt burden that stifled Latin America’s economic growth. While western banks were bailed out of this crisis, Latin American countries were left to sort out the resulting defaults (Stiglitz 211-244). Unfortunately, the case of Latin America (evaluated in detail below) is not the exception. Eastern Europe’s poverty grew ten-fold in the years after the fall of communism as World Bank policies acted to “ease” the transition to capitalism (Stiglitz 39). In another example, debt from World Bank lending, coupled with poor regulatory oversight, doubled Africa’s poverty over the last twenty years, while Western investors have extracted many of the region’s abundant natural resources (Stiglitz 41). The empirical evidence speaks for itself. As this essay will explore, the structure of World Bank lending practices are economically and morally amiss. Certainly there must 2 World Bank Lending be some moral obligation for the wealthy nations to not only enjoy the economic and material rewards of growth in developing countries, but also to bear some risk associated with their development. Catholic Social Teaching There are many tools one could use to evaluate World Bank lending practices. For instance, one might rely solely on rationality, a certain religious tradition, a particular philosophy of ethics, or even popular opinion. It seems most reasonable to use a tool that combines elements of each. CST draws on a rich intellectual tradition, the experience of the Catholic Church, and standing traditions. More specifically, using CST offers a rich tradition informed by centuries of the Catholic Church’s work toward “humanization” (Verstraeten as cited in Coleman & Ryan 28). Utilizing a dogma from one religious tradition may be perceived as problematic. However, CST offers, particularly through papal encyclicals, ideals of moral responsibility that are relevant to understanding the moral responsibility of richer nations to poorer ones. Despite its complexity, the basic theme of CST is the promotion of the common good. The “common good” refers to the ability of all in a community to have the necessary conditions to “perfect their humanity,” or conditions that provide for “human flourishing” (Land 64; Rowntree 596). The common good from a CST perspective is nuanced. It could be argued that at its roots lies Aristotle’s idea of law-abidingness, or the collective of all virtues necessary for a moral life (Novak 69). Aristotle referred to this as legal justice. Aquinas, who saw law-abidingness as a “general justice,” or social justice, believed that this was a virtue in and of itself, thereby advancing Aristotle’s idea of legal justice. Aquinas reasoned that it was the common good that supported the good of individuals (Novak 70; Land 65). Accordingly, drawing on the Biblical tradition, CST has a strong bias in favor of the poor (Coleman & Ryan 17). As such, the common good does not favor one or a few privileged groups (Land 65-66). Modern CST has it roots in the encyclical tradition founded in 1891 by Pope Leo XIII (Coleman & Ryan 15; McCann 57). The first papal encyclical, Rerum Novarum, contained guidance on international trade and affirmed the natural right to private property. In 1991, Pope John Paul II issued Centesimus Annus (CA) celebrating one-hundred years since the first papal encyclical. In it the Pope writes, “…the free market is the most efficient instrument for utilizing resources and effectively responding to needs” (CA 34). More importantly, CA explains that there are many people 3 Stefan Perun who are not able to participate in the free market because of inequality between countries, and thus stronger nations have a moral responsibility “…to provide all individuals and nations with the basic conditions which will enable them to share in development” (CA 35). This idea of “distributive justice” as a morally binding principle supports the common good by asserting that God’s intention for every human is to be given the conditions to flourish (Rowntree 598; Colman & Ryan 17-18). Advancing the idea further, the encyclical Sollicitudo Rei Socialis (SRS) defines this moral binding to distributive justice as a virtue, as solidarity. Solidarity as a “virtue” calls for developed countries to fully acknowledge their relationship of interdependence with developing ones, and also asserts that developed countries have a moral responsibility to enable developing countries to share in the benefits of development (SRS 38). SRS suggests that this solidarity “demands… sacrifices necessary for the good of the whole world community” (SRS 45). These sacrifices in solidarity are what Coleman and Ryan would refer to as the “fair allocation of burdens and benefits in society, [which] guarantees [that] parties… have relatively equal weight as moral agents” (Coleman & Ryan 17). An evaluation of lending practices, analyzed through the lens of CST’s concept of the common good in general and of distributive justice in particular, would dictate that the World Bank lending practices must seek the common good through relatively equal sharing of burdens as well as benefits among bargaining parties. The members of the World Bank have a moral duty, according to CST, to share risk associated with development lending. World Bank The World Bank was founded in 1944 in New England for the purpose of post-World War II reconstruction. In recent decades, the World Bank has shifted its mission to “…global poverty reduction and improve[ment] of living standards…” (About Us 2007). The World Bank is comprised of five separate institutions. They are the International Finance Corporation (IFC), the Multilateral Investment Guarantee Agency (MIGA), the International Centre for Settlement of Investment Disputes (ICSID), the International Bank for Reconstruction and Development (IBRD), and the International Development Association (IDA). The primary two development institutions are the IBRD and the IDA. The IBRD works solely with middle-income countries (MICs). These countries account for a little under half of the world’s population and 4 World Bank Lending represent 70% of people living on less then two dollars per day (Projects & Operations 2007). According to the World Bank, the IBRD seeks to meet the unique needs of MICs by raising capital in the world markets and making loans with favorable terms. The World Bank states that MICs are important in the global community because of their ability (or inability) to “provide global public goods such as clean energy, trade integration, environmental protection, international financial stability, and the fight against communicable diseases” (Projects & Operations 2007). As such, the work of the IBRD is to provide needed financing for infrastructure and other societal needs, such as education and healthcare (Projects & Operations 2007). The World Bank claims that the IBRD plays an important role in developing MICs because favorable loan terms facilitate access to capital. Without this developmental institution, MICs would be forced to borrow on world markets, which are subject to various credit- worthiness requirements, fluctuations in repayment terms, and interest rates. Based on various political, economic, and market conditions, MICs may not otherwise have access to needed funding. The other major development institution of the World Bank, the IDA, stands in contrast to the IBRD by focusing on the world’s poorest countries. These countries are defined as those with a Gross National Income (GNI) per capita of $1,065 or less per year (IDA 2007). Primary concerns in these countries are access to clean water, basic healthcare, and basic education. Funding makes its way to these destitute countries through grants or interest- free loans, called credits. The repayment terms of these loans are often spread over thirty-five or forty years with an initial ten-year grace period (IDA 2007). The money used in these societal investment projects comes from donor nations such as the United States, the United Kingdom, Japan, Germany, France, Sweden, Italy and Canada. These and other countries contributed $33 billion in 2005 to the IDA (for a complete list of donors and amounts, see Contributions to the 14th Replenishment 2007). IBRD Lending Practices: An Empirical Look The essential practice of the IBRD is to raise capital in the world markets and to make loans to MICs for the purpose of funding public goods including infrastructure, energy, education, and healthcare. These public goods allow the borrowing nation to better participate in the global economy by providing the basic conditions necessary to produce goods and to trade with other nations. Monies used to build roads and the like are supposed to provide necessary conditions to expand GDP growth, primarily through an 5 Stefan Perun increase in exported commodities, goods, and to a lesser extent, services. It would not be reasonable to expect lending outcomes to always be ideal or the aims to be achieved perfectly. It is true that IBRD lending has the potential to successfully provide the necessary infrastructure to participate in the global economy (Wolf xii-xv). However, IBRD loans can also frustrate development. This is particularly true when loans by the World Bank are lent in dollar or euro denominations. Countries who are major “donors” to the World Bank also set the policies for lending programs. From 1984 to 1993, debt service payments from Latin American countries to developed lending nations totaled $116 billion in net outflows, resulting in a dismal annual economic growth of less than one percent (Arista 30). Known as the “lost decade,” the effects of this ten-year period on the world economy prompted a closer look at international lending policies (Arista 27). Policy makers from the World Bank, along with representatives from ten Latin American countries, met in Washington, D.C., to develop policies that would provide sustainable capital inflows for development. The so-called Washington Consensus was structured to ease capital flow restrictions with the idea that rapid privatization was the best way to facilitate development (Stiglitz 17). Unfortunately, the adoption of the Washington Consensus policies did not result in mass inflows of capital from private investors into the region. Instead, it exposed Latin American countries to volatility in global capital markets. One such example of exposure occurred during the East Asia crisis in 1997, when investors panicked to extract capital out of the region due to potentially threatening currency fluctuations (Stiglitz 34). The capital contraction in East Asia forced interest rates to rise throughout the global economy. Argentina’s exposure to dollar-denominated debt payments in the context of rising interest rates increased their debt payments by almost 50% (Stiglitz 221). This happened to coincide with favorable shorter-term lending practices, which encouraged Latin American countries to borrow, effectively restructuring their external debt obligations (Arista 26). The favorable lending terms resulted in Intergovernmental Organizations (IGO), lead by the World Bank, to make loans accounting for 81% of the region’s net capital inflows (Arista 26). Unlike the other 19% of inflows from foreign direct investment (FDI), these loans issued by public sector creditors placed the bulk of the development risk on the borrower. Moreover, since the collective debt restructuring across Latin American countries was mainly conducted in short-term instruments, outstanding debt obligations rose to 114% of reserves by the summer of 2002 (Arista 28). As Stiglitz argues, this short-term lending “exports” the risk associated with lending to the 6 World Bank Lending borrowing country by effectively allowing for the recall (net outflows of capital) at the first sign of economic instability (237). Furthermore, the debt- to-service ratio placed downward pressure on domestic currency, resulting in local inflation and compounding capital outflows. The 2002 presidential elections in Brazil and the impending Iraq war created additional uncertainty in currency markets. By 2002, Argentina defaulted on its massive debt and the Latin American currencies fell dramatically against the dollar. The lasting effects continue to be evident in Latin America as the resulting currency crisis smashed any hope of sustainable growth or reasonable inflation expectations (Arista 26-30). The debt service of Latin American countries to public credit institutions, including the World Bank, resulted in a disheartening 0% per capita GDP growth rate between 1997 and 2002 (Ocampo as citied in Arista 30). There is little doubt that there can be much GDP growth when net capital movement is negative, as was the case when the Latin American MICs tried to service their dollar or euro-denominated debt with their relatively worthless currency. The case of Latin America demonstrates how most of the development risk was placed squarely on the shoulders of the citizens and governments in borrowing countries. Crisis after crisis has, and will continue, to retard economic growth in the region until the developed countries decide to share in the risk (as well as the rewards) of economic prosperity. Taken at face value, the premise of World Bank loans, particularly through the IBRD, look very promising in its endeavor to “[reduce] global poverty… and improve… living standards” (About Us 2007). However, policies in practice prove to be antithetical to the World Bank’s altruistic aim, and demonstrate the potential to create and prolong economic crises. Policy Concerns Since loans are denominated in dollars or euros, the main risk countries bear when borrowing through the World Bank is currency fluctuation. This currency fluctuation risk has real consequences that ultimately keep Latin America and other countries impoverished. Borrowers, like the Latin American countries in the late 1990s, are subject to a devaluation of their currency in relation to the currency in which the loan is to be repaid. There is research that indicates loans made to MICs with “good democracies” produce outcomes that are much more positive than the Latin America example above (Butkiewicz, & Yanikkaya 379). Here, capital inflows by way of IDA aid or a loan from the IBRD seem to correlate to GDP growth only in as much as the economic and monetary policies of the borrowing 7 Stefan Perun nation-states are sound (Butkiewicz, & Yanikkaya 378-383). Governments having sound policies generally enjoy rule of law, open economies, stable “general fund” accounts, and low inflation. As such, these countries are presumably better able to service their debt. More importantly, the capital inflows are more likely to make their way to needed infrastructure, education, and healthcare needs. In recent years, the World Bank has made their loans conditional with the aim of promoting democratic political systems. This could have two counterproductive results. First, imposing external conditions on a country has the potential to weaken its political institutions and can impede democratization, as the borrowing country’s citizens may perceive its government as “giving into international institutions… run by the U. S.” (Stiglitz 12). In cases where a country’s citizens feel betrayed by their government, citizens and the members of government could be discouraged from working together to establish policies, especially economic ones, that enjoy widespread support. The World Bank has no real post-loan policing abilities in any case. As such, there is little evidence that loan policy conditions have any actual impact on the development outcomes themselves (Dollar & Stevens as cited in Bird & Rowlands 88). This means that the sources of power for influencing policy reforms lies not with the World Bank, but with the country whose monetary denomination the loan is made in. Currency adjustments in the General Account appear to wield greater influence over policy reforms in borrowing nations (Bird & Rowlands 87- 89). Second, as evidenced by the failure of the Washington Consensus, enforcing economic policies that work for developed countries prove disastrous for developing ones. Many developing countries thought (or were told) that adopting the Washington Consensus would somehow make themselves appear more investment or credit-worthy in world markets, thus attracting FDI. This was just not the case. Some research has shown that adoption of the loan conditions have little if any impact on FDI, and in some cases there is evidence to suggest that World Bank lending actually deters FDI (Bird, & Rowlands 98). Applying CST A survey of World Bank lending practices to Latin America over the last decade exposes some of the ways in which developed countries do in fact exploit developing countries under the auspice of “global poverty reduction” (About Us 2007). These words rang empty during the lost decade and in 8 World Bank Lending 2002 when the Latin American countries needed capital inflows to stabilize their economy. Instead, the developed countries, operating through the World Bank, retracted capital and let the borrowing countries default, which further compounded the problem. Certainly, it is reasonable to have some moral expectation for developed countries to cease exploiting other countries through the World Bank. It also seems reasonable to construct World Bank policies that are congruent with its mission. CST offers just such a moral critique by asking the question, in the economic relationships facilitated by the World Bank, is the common good served through an equitable distribution of burdens and benefits? As this essay has proven thus far, the answer is definitively no. As evidenced by lending to Latin America, the World Bank (and thereby its members) does not share equally in the burdens of development in the global economy on at least three accounts. First, in the interest of its developed members, the World Bank denominates loans in dollars or euros to protect the lenders from currency fluctuations and regional politics. Secondly, policies such as the Washington Consensus protect investors and private lenders by allowing them to withdraw their capital at the first sign of economic instability. Thirdly, lenders profit from short-term and cyclical lending that provides economic rewards in times of economic growth, but exposes the borrowing nation to instability and subsequent net outflows precisely at the time when inflows are most needed. In these ways, World Bank lending practices are at least partially predatory. That is, instead of lifting up developing countries so all member of the global community can enjoy the fruits of economic prosperity, these loans serve to suppress economic growth for those who need it most. And, while the dollar was affected slightly by the currency fluctuations in the Latin American example, the brunt of the burden is left on the borrowing region. The 0% GDP growth resulting from net capital outflows to service the dollar-denominated debt is disharmonious with CST. The idea of solidarity in SRS calls us to make sacrifices for the good of the global community (SRS 45). While there is a great responsibility for poorer nation- states to adopt policies that give their citizenry an opportunity to partake in the wealth generated by trade, the wealthier nations have a moral responsibility to bear some of the burden of development in poorer countries (Galston, as cited in Gehring 3). The basic criticism leveled against globalization is that it excludes the participation of the majority of the global community (Held & McGrew, as cited in Coleman & Ryan 14). This principle was well understood by Thomas Aquinas, who would benchmark the flourishing of the few to the flourishing of the entire global community 9 Stefan Perun (Land 65-66). The World Bank practices favor the few and privileged and require little or no sacrifice on the behalf of the developed nations; therefore, World Bank policies, when put into practice, do not produce human flourishing. The idea of the common good as developed through CST, particularly from a standpoint of distributive justice, requires more moral responsibility than World Bank lending practices demonstrate. CST Ideals and Good Economic Sense: Dollar Denominations and Interdependence In addition to using CST as a moral guidepost, ideals of the common good and distributive justice provide some basis for sound economic policy as well. Take, for instance, the example of what it might look like for the World Bank to lend money denominated in pesos. Stiglitz suggests that this “sound macro-economic policy” would reduce the borrowing countries’ risk because it would lead to low inflation and more consistent exchange rates (237). Certainly lenders would have a more vested interest in the success of projects funded in local currencies. If the development project enabled participation in the global economy, then success will be directly linked to repayment as well as the stability of the international monetary system. In this way, borrowing countries’ economic flourishing, and presumably general human flourishing, would truly be in the (economic) interest of all members of the World Bank. Consider the benefits of additional markets for U.S. goods and services or less expensive and higher quality agrarian imports. Economically, it makes sense for the U.S. to have a vested interest in the prosperity of all nations of the globe, particularly our neighbors to the south. As CST suggests, developed countries should “acknowledge fully their interdependence,” including currency exchange rates. Here the moral responsibility is to share the risk associated with development lending so that MIC might achieve sustained economic growth. If currency fluctuation risk in the Latin American example was more equally shared, the U.S. might have had more of a vested interest in helping the Latin American countries succeed in their attempts to achieve sustained growth. A growing economy to the U.S.’s south has the potential to alleviate some of the immigration issues the country currently faces, to create open markets for American exports, and to provide a steady supply of low-cost imports for consumption. 10 World Bank Lending Long-Term Commitment Solidarity implies a long-term commitment and a vested interest in a relationship. CST offers guidance into how our common thread as members of the human race ought to guide our actions and polices. This idea of solidarity and sharing in burdens and benefits suggest unifying with members of the global community for the flourishing of all. It also makes sense from an economic perspective. Consider the lending that takes place on a short-term basis during periods of boom for developing countries. The World Bank and private lenders make these loans because they are profitable. The Bank hopes to return the profits to other developing countries in the way of loans or credits. The private lenders will report the profits in their bottom line. Even if profits gained through predatory lending was morally acceptable, the eventual default proves less than profitable in the long run. Again, consider the Latin American example. After defaulting on their loans, Argentina, one of the major borrowing countries, was only able to repay lenders a fraction of the original loan amount (Stiglitz 223). Had the World Bank structured the loans in a way that promoted a long-term commitment to the region, the resulting sustained growth would have been profitable for all involved. For the World Bank, it also would have been a demonstration of its members’ commitment to its mission. Short-Term Cyclical Lending It seems particularly obvious that solidarity in the international community would require that help be provided in a time of need. Unfortunately, the global economic system and the lending practices of the World Bank run seemingly counterintuitive. The conditionality of World Bank loan terms oftentimes requires borrowing countries to liberalize their markets so that capital can easily flow in and out of the country. These supposed economic integration policies (e.g., the Washington Consensus), which provide lenders the right to pull their capital at the first sign of economic instability, result in what amounts to a flight of capital at the precise time when capital is needed. The resulting instability in exchange rates, inflation, and the economic loss to the lending institutions endangers the global economic system (Wolf 32, 61). Instead, the World Bank should lend counter-cyclically, not only because it would provide resources to people in desperate need, but because it is sound economic policy that will perpetuate stability in the global economy (Stiglitz 236). 11 Stefan Perun The idea of shared burdens and benefits for the pursuit of the common good suggest that it is the lenders, rather than the borrowing nations, who need policy reform. As Stiglitz argues, oftentimes default is not the result of poor economic policies in borrowing countries, but rather a failure of markets to share in the risk (231-244). Though not based in economic theory, CST offers relevant guidance on moral responsibilities in the economic sphere. These moral responsibilities are both market friendly and congruent with sound economic policy. It seems easy for members of the World Bank from developed nations to point the finger outward and not take responsibility for all the human suffering that exists. However, policies in practice matter. The reality is that the World Bank and its wealthy nation members have more power than they care to exercise. Conclusion In conclusion, the globalization debate is often marked by contention over how globalization impacts the global community. There is much evidence to suggest that countries that participate in globalization, on the whole, enjoy increased GDP rates per capita, more primary education, and more rule of law then their less globalized counterparts. There is little doubt that globalization and the free market system have enormous potential to relieve human suffering and universally raise the global standard of living. However, those critical of globalization argue that in the current power structure, developed countries repress and exploit countries in order to preserve their position at the top. These critics are not necessarily anti-globalization, but they are certainly anti-human suffering at the hands of wealthy nation-states. Taking Latin America as an example, this essay has argued that one starting place to evaluate the phenomena of globalization is to look at World Bank lending practices. Developed nations set the agenda and polices of the World Bank and thus the development scheme in the global economy. By crafting policies, trade agreements, and loan terms that are favorable to them, members of the World Bank from developed countries do not meet reasonable moral standards suggested by CST. CST offers moral guidance grounded in centuries of experience of the Catholic Church in human development. The basic theme in CST is the idea of the common good. Since the World Bank is chartered for the purpose of the common global good, CST seems particularly relevant for a moral analysis. Using some historical roots of CST and more recent papal encyclicals, we see that the idea of equal distributions of burdens and 12 World Bank Lending benefits associated with being members of the global community is morally binding. Advancing this idea of moral responsibility, solidarity calls upon nations to acknowledge their interdependence and to make sacrifices for the common good. Having CST as a frame of reference, one can ask the question—how do World Bank lending practices stand up? The World Bank is made up of five institutions and in recent years has claimed to serve the purpose of “global poverty reduction and improve[ing] living standards” (About Us 2007). Its activities on the world markets, designed to raise funds for MICs, give the Bank the capital it needs to make loans with favorable terms to countries that otherwise would not receive enough FDI to sustain development. However, in practice, lending terms favor the developed nations more than the developing ones. As was the case with the Latin American example, the World Bank forces policies like the Washington Consensus upon poorer countries, which exposes them to volatility that their fledgling economies cannot handle. Additionally, loans denominated in dollars and euros expose the borrowing regions to major currency fluctuation risk. These lending practices oftentimes result in developed countries and their banks extracting their capital unharmed while the borrowing countries are left to default on their debt, or worse use large percentages of the their GDP to service loans. This is often money that could be used to invest in infrastructure, education, health, and other public goods needed for development. Applying the basic principle of the common good taught by CST to this case analysis suggests that World Bank lending practices are immoral. Developed countries have a responsibility to share equally in the burdens of development lending. On all accounts discussed in this essay, developed countries do not share in any of the burdens because they do not share any of the risk. Denominating loans in dollars, lending for the short-term, and withdrawing capital in times of crisis, leaves many poorer nations left to suffer. CST’s morality is not so pious as to be unattainable. Rather, the moral responsibility that CST proposes is also grounded in sound economic policy. Sharing risk has the potential to create sustainable growth for the world’s population. This, in turn, will create more public goods, more consumable goods, and more markets for exports. Most importantly, it would fulfill the wealthy nations’ moral obligation to the global community by providing the poorer nations with an opportunity to share in the benefits of globalization. 13 Stefan Perun Works Cited About Us. The World Bank Web site. Oct. 2007 . Arista, J. D. “Moving Beyond the Washington Consensus.” Int’l Journal of Political Economy 32.4 (2002-2003): 22-34. Bird, G. & Rowlands, D. “World Bank Lending and Other Financial Flows: Is There a Connection?” The Journal of Development Studies 37.5 (2001): 83-103. Butkiewicz, J. L. & Yanikkaya, H. “The Effects Of IMF And World Bank Lending On Long-Run Economic Growth: An Empirical Analysis.” World Development 33.3 (2005): 371-391. Centesimus-annus. 5 January 1991. Encyclical. John Paul II. Vatican website. 27 Nov. 2007 . Coleman, J. A. & Ryan, W. F., eds. Globalization and Catholic Social Thought: Present Crisis, Future Hope. Ottawa, Canada: Novalis, 2005. Contributions to the 14th Replenishment. The World Bank website. Oct. 2007 . Gehring, V. V., ed. The Ethical Dimensions Of Global Development. New York: Rowman & Littlefield Publishers, 2007. International Development Association. The World Bank website. Oct. 2007 . Land, P. S. Catholic Social Teaching: As I Have Lived, Loathed, and Love It. Chicago, IL: Loyola University Press, 1994. McCann, D. P. “Catholic Social Teaching In An Era Of Economic Globalization:A Resource For Business Ethics.” Business Ethics Quarterly 7.2 (1997): 57-70. Novak, M. The Catholic Ethic and the Spirit of Capitalism. New York: The Free Press, 1993. 14 World Bank Lending Projects & Operations: Middle Income Countries. The World Bank website. Oct. 2007 . Rowntree, S. C. “The Ethics of Trade Policy in Catholic Political Economy.” Theological Studies 65 (2004): 596-622. Singer, P. One world: The ethics of globalization. 2nd ed. New Haven, CT: Yale University Press, 2002. Sollicitudo-rei-socialis. 30 December 1987. Encyclical. John Paul II. Vatican website. 27 Nov. 2007 . Stiglitz, J. E. Making Globalization Work. New York, NY: W. W. Norton & Co., 2007. Wolf, M. Why Globalization Works. New Haven, CT: Yale University Press, 2004. 15 Stefan A. Perun Liberal Studies The Globalization Debate World Bank IBRD Lending Practices: An Empirical Look Applying CST Long-Term Commitment Conclusion