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THE WORLD BANK AND THE GLOBAL GOVERNANCE OF EDUCATION IN A CHANGING WORLD ORDER Karen Mundy and Antoni Verger How to cite: Mundy, K. and A. Verger. 2015. The World Bank and the global governance of education in a changing world order. International Journal of Educational Development. 40: 9–18 Abstract The World Bank’s involvement in education policy and reform has grown substantially since the 1960s. For an organization that originally had no mandate to work on education, the Bank has become perhaps the most powerful and hegemonic of the international organizations operating in the education for development field. The Bank is the largest single international funder of education for development in low‐income countries, and its technical and knowledge‐based resources tower over those of other international institutions. This article develops a heuristic framework for understanding agenda‐setting processes in international organizations (IOs), and applies it to analyze how the World Bank work in education has evolved with the passage of time. The framework focuses on three dynamics as keys to understanding the Bank and education: the political opportunities created by geo‐political and ideological shifts among the most powerful member governments; the IOs relationships with borrowing (or “client”) countries; and finally the internal dynamics and organizational culture of the IOs own bureaucracy as it aims to reproduce itself and manage shifts in the previous two dynamics. These three dynamics and their interaction are explored over four key periods: from the 1960s to the beginning of the 1980s, when the debt crisis exploded in many developing nations; from 1981 to mid‐nineties, a period marked by structural adjustment lending and the reorganization of the Bank’s education sector activities around basic education; from the mid‐nineties to 2008, when the Post‐Washington consensus emerged; and from 2008 to present, a period characterized by significant shifts in power in the world system and an accompanying rise of strategic uncertainty at different levels within the Bank. Introduction Over the past 50 years, the World Bank has arguably become the epicenter for the global governance of social policy within emerging economies and low‐income societies. The Bank is the largest single international provider of development finance to governments. Its staffing and internal resources tower over those of other international institutions, and it is regarded by other providers of international development assistance as a key source of policy evidence and policy advice. For these reasons, the World Bank has often been viewed as holding “a near monopoly on the business of development” (Marshall, 2008, p. xv). Yet like all international institutions, the Bank is both a global governor in its own right, and a member of a larger system of interstate and trans‐ national relationships. In this article, we explore the evolution of the World Bank’s policies and practices in the field of education to 1 understand how the Bank has come to exert authority in the settlement of global education agendas. Education has long been a significant sectoral focus for the Bank’s lending portfolio (smaller but comparable in volume to its efforts in health). Globally, the Bank is the largest single international source of education finance, with a multi‐ billion dollar budget for education operations. It is also host to several pooled trust funds for education, including funds for education in conflict‐affected states, and it is the host of a global “vertical fund” for education, the Global Partnership for Education (formerly the Fast Track Initiative). As we shall argue, the Bank’s formal policies on education are the iterative outcomes of three central dynamics: organizational dynamics, the political opportunities created by geo‐political and ideological shifts among its most powerful member governments, and the Bank’s relationships with its borrowing (or “client”) member governments (on whose willingness to borrow the Bank depends). This article explores how these three dynamics interact in the constitution of the Bank’s educational activities and policies in four key periods: from the 1960s to the beginning of the 1980s, when the debt crisis exploded in many developing nations; from 1981 to mid‐nineties, a period marked by structural adjustment lending; from mid‐nineties to 2008, when the Post‐Washington consensus emerged; and from 2008 to present, characterized by a loss of strategic focus and uncertainty at different levels within the Bank. Conceptual Framework Three approaches from the field of international relations have dominated the study of international organizations (IOs): realism, institutionalism and constructivism. In conventional realist theories, IOs are seen as instruments at the service of the interests of powerful states; accordingly, it is assumed that IOs’ policies change and evolve as a consequence of the will of their (most powerful) members. Taking this state centric approach a step further, neo‐liberal institutionalism conceives IOs as rational institutions created by states to reinforce cooperation and reduce transaction costs in an increasingly interdependent world (Rittberger & Zangl, 2006). Constructivism, for its part, is more oriented towards unpacking agency and social relations within IOs and between IOs and a broader world polity. This theoretical perspective goes beyond a state‐centric approach to IOs, and focuses on the role played by international bureaucracies and other non‐state actors, as well as the cultural and ideational factors that shape political outcomes in the global arena (Barnett & Finnemore, 2004). Constructivists observe that even when IOs are created to serve member‐states, with the passage of time, they evolve into autonomous sources of power. As bureaucracies, IOs often have sufficient autonomy to interpret and redefine their own broad mandate and, at the same time, to influence country members’ decisions and preferences. Organizational culture is a key concept for constructivists when understanding the dynamics of policy change and reproduction in IOs. It can be defined as the “shared ideologies, norms and routines that shape staff members’ expectations about how agendas are set, mandates are operationalized, projects are implemented and evaluated, and what staff behavior will be rewarded or punished in promotions and demotions” (Nielson, Tierney, & Weaver, 2006, p. 109). In this paper, we adopt the notion advanced by Nielson, Tierney and Weaver (2006) of bridging the rationalist‐ constructivist divide. The rationalist approach contributes to a more sophisticated understanding of principal and agent relationships that influence IOs’ outcomes, and can complement the constructivist framework. To operationalize such an approach, three central dynamics need to be analyzed. These dynamics can be analyzed independently, although they are mutually constitutive and, in ontological terms, they are intertwined in the 2 everyday activities at the Bank. (1) The first dynamic is the relationship between the Bank and its most powerful member states. As an organization the Bank was set in motion by the winners of World War II, and has since been dominated by the liberal polities and industrialized economies of the OECD. As might be expected within a rationalist/realist paradigm, the Bank has had to respond to these states and to their changing demands and priorities (Abbott & Sindal, 2005). However, the rise of new world powers is shifting the constellation of powerful states within the Bank, while the emergence of global civil society advocates, critical of Bank activities, has also added a new complexity to the Bank’s external authorizing environment. In this new universe, a “second level” of political responsiveness evolves when civil society pressures powerful governments to mandate new norms for World Bank activities (O’Brien, Goetz, Scholte, & Williams, 2000; Putnam, 1988). (2) At the same time, the Bank bureaucracy has enjoyed considerable autonomy and room for manoeuvre. The Bank’s most powerful member governments have not always converged in their views about development. At important moments they have faced uncertainty about the best ways forward. This creates an important opportunity for autonomy that is amplified by the fact that among development IOs, the Bank has a unique degree of financial autonomy (derived from its call on initial capital commitments from rich world members) and legitimacy (derived from its claims to scientific rationality and political neutrality) (cf. Finnemore, 1996). Such autonomy has been used at two levels within the Bank. Starting with Robert McNamara, Bank presidents have played an important role in reshaping both the Bank’s mandate as well as the wider global policy agenda for international development. Policy entrepreneurship also thrives at a second level: among technical staff within specific policy fields. Bank staff operate within a context characterized by ingrained organizational imperatives and norms (such as the longstanding dominance of the discipline of economics in decision‐making and the “pressure to lend”). Nonetheless, in social policy fields like education, for example, or pension reform, staff often use Bank resources to build both internal (to the Bank) and transnational policy networks and epistemic communities that influence global agenda setting (see Haas, 2004; Verger, 2012; Ornstein, 2008; Broad, 2006; Weaver, 2008; Finnemore, 1996). Thus, the second set of dynamics we will explore are the complex patterns of institutional autonomy, organizational culture and bureaucratic path dependency that have shaped the character of the Bank’s education sector work. (3) Finally, we explore the Bank’s relationships with middle and low‐income borrowing countries. From the Bank side, lending conditionality has been a central but evolving mechanism for managing this relationship; the Bank increasingly utilizes soft power mechanisms (like benchmarking, technical assistance, dissemination of ideas) as a way of framing and influencing the preferences of member countries (Stone & Wright, 2007; Marshall, 2008; World Bank, 2005). It should not be assumed however, that the Bank’s relationship with borrowing countries is only driven by the Bank. To survive, the Bank must lend and countries must be willing to borrow. Complex patterns of decision‐making, involving both rational dimensions on the part of borrowing countries (such as the existence of financing alternatives and other strategic considerations), and cultural features (such as the match between national policy models and the policy models promoted by the Bank’s policy entrepreneurs) shape the Bank’s 3 relationships with borrowers. The combination of these three dynamics constitutes a heuristic framework that fosters structured analysis of the evolution of the World Bank’s work throughout this paper. The World Bank and Education: Origins of a Mandate Formed as a kind of credit union among sovereign states in the period after World War II, the International Bank For Reconstruction and Development (IBRD), known today as the World Bank, initially focused on economic reconstruction and development in Europe. The Bank gradually emerged as a global governor in social policy fields during the 1960s, when the organization became a central provider of development finance to newly post‐ colonial states. Under Robert McNamara’s presidency (1968‐1981), the Bank adopted its early focus on poverty reduction and increasingly framed its work in social policy around a poverty reduction mandate (Vetterlain, 2012, p. 43). Dynamics among the Bank’s principals fed the development of the Bank’s role as a social policy actor. For the last 60 years, agenda‐setting at the World Bank has been dominated by Northern countries, which hold the largest number of voting shares. While the Bank’s fixed capital base provides it with some autonomy, the historical record suggests that it has been most strongly affected by the policy preferences of the United States (US), which holds the power of veto and appoints the Bank’s president (Woods, 2000; Wade, 2002). Though other governments have at times worked together to influence the Bank (for example, Japan in the 1990s (see Wade, 1996), American hegemony has been a constant. In the 1960s, concern from the US and its allies over the advance of communism into newly independent post‐colonial nations led to the creation of a new highly concessional financing facility for low‐income countries inside the World Bank, the International Development Association (IDA). In this broader geo‐political context, McNamara emerged as a successful policy entrepreneur, selling the Bank’s role in promoting poverty reduction and the delivery of basic needs as essential to the maintenance of stability in the world system (Vetterlain, 2012). The Bank’s capital base increased fourfold under McNamara’s leadership. Under McNamara, the Bank’s approach to poverty revolved around the idea of redistributing the outputs of growth, through investment projects that targeted the productive capacities of the poor (Kapur, Lewis, & Webb, 1997). Lending in fields such as integrated rural development for small farmers, water supply, and urban services and infrastructure provided a clever bridge between the Bank’s early infrastructure focus and the new poverty agenda. Poverty reduction was also carefully framed as part of the Bank’s evolution as a source of expertise on economic growth and development. In the 1960s and 70s, the Bank became the largest employer of development economists and pioneered the development of country economic reviews and other types of development policy research based in the discipline of economics (Ayers, 1983; Finnemore, 1996). Education did not figure as importantly as other social sectors in the Bank’s activities during the 1960’s, in part because education was not viewed by Bank leadership as directly linked to its focus on improving the material assets of the poor (Stern, 1997, p. 603; Kapur, Lewis, & Webb, 1997). The Bank’s first foray into education was the training components of larger infrastructure initiatives in the 1960s. However as more and more newly independent nations joined the Bank, the demand for loans to education increased. In the seventies, a new Department of Education was created inside the Bank. Education sector efforts led by this new department were 4 framed within theories of manpower planning, endorsed by the dominant country economics teams who controlled lending priorities within the Bank (Heyneman, 2003). Projects therefore focused on technical vocational education and providing more ‘practical’ curriculum in secondary education, as a way to train skilled workers and help governments fill skills shortages (Heyneman, 2003; Jones, 1992). Education projects also focused on infrastructure for education systems: the building of schools, laboratories, workshops, and libraries (Jones, 1992). Neither the Bank nor its client governments were interested in loans for recurrent costs such as teachers’ salaries or even textbooks (Heyneman, 2003). The McNamara period saw education established as a legitimate sector of Bank activity, one that had considerable attraction for borrowing countries. But perhaps because the link between investing in education and economic growth had not yet been well established, education sector lending during this period rose at only a slightly greater rate than overall bank lending (Mundy, 2002, p. 486). The Bank’s Education spending remained less than 5% of total lending (see Figure 1). It was only towards the end of McNamara’s reign, when a new generation of “human capital” economists were hired at the Bank, that the link between investments in health and education and the increase in the productivity of workers became widely recognized within the institution (World Bank, 1980; Kapur, Lewis, & Webb, 1997, pp. 326‐327).1 Figure 1. Education as percent of World Bank total lending Source: Authors with data from the WB education lending ?igures database (http://go.worldbank.org/PMV1NRBOM1) 10 8 % 6 4 2 0 Structural Adjustment and Basic Education: Surprising Bedfellows and a New Economic Argument The 1980s and early 1990s saw the World Bank develop a distinctive policy agenda for education, which married a new focus on basic education to its broader engagement in mitigating the debt crisis in low and middle‐income countries. Drawing heavily on the economic theories of human capital, the education sector within the Bank was able to produce a strong internal rationale for the rapid expansion of Bank lending in education (see Figure 1 above), in a way that intersected with its approach to structural adjustment lending during this era. 1 Human capital theory, as developed within the public economics, states that there is a direct relationship between investments in education (usually measured as years of schooling) and the productivity of workers (reflected both on the workers’ income and in their countries’ economic growth) (Schultz, 1971). 5 In the beginning of the eighties, the spectre of massive public debt in the developing world was making it increasingly difficult for the Bank to justify further lending to governments. Among the Bank’s most powerful shareholders, there was little appetite for debt relief, and the Bank was increasingly drawn into joint cause with the IMF as it developed techniques to address debt through fundamental restructuring of national economies and governments. The Reagan administration actively promoted a harsh version of neoliberal orthodoxy within the Bank and the IMF, and under the US appointed President, Tom Clausen and the Bank’s American chief economist, Anne Krueger, the focus on poverty in the Bank’s corporate level discourse declined (Vetterlain, 2012). Structural adjustment policies targeted the downsizing of public expenditure, the liberalization of markets, and the privatization of public utilities as key measures towards achieving macro‐economic stabilization. The Bank emerged at the center of a neo‐classical resurgence in development economics, more responsible than perhaps any other organization for elaborating what has come to be called the “Washington consensus” agenda for low and middle income countries (cf. Miller‐Adams, 1999; Williamson, 1993). It was in this context that the Bank hired a prominent human capital economist previously based at the London School of Economics, George Psacharopoulos (Heyneman, 2012). Psacharopoulos’ research on wage differentials by level of education in developing countries suggested that investing in primary education produces higher net returns on public investment than tertiary education. The technique he helped to popularize in the education domain, “rate of return analysis” (RoR), fell onto fertile ground within the Bank, long dominated by the discipline of economics. For the first time education sector staff had a standard technique for “cost‐benefit” estimations of World Bank investments in education (Heyneman, 2003). RoR analysis fit in well with the neo‐classical resurgence occurring within the Bank, and particularly with the argument that elite capture of state resources forms the primary barrier to economic restructuring and growth. RoR analysis provided a clear strategy on education policy priorities, arguing for a concentration of public investment in primary education. It also encouraged the privatization of higher education levels, where government subsidies were understood as regressive because they primarily supported the attendance of economically well off students (Colclough, 1996). Around the world, governments in the throes of debt crises were advised by the Bank to restructure their education sectors following a rather simple “short policy menu” (cf Heyneman, 2003), which emphasized privatization of tertiary level institutions (cuts to student subsidies, loan schemes and taxes on graduates, etc.) while also encouraging investments in primary education that included greater decentralization of educational systems, increased parental contributions to the basic costs of buildings, books and materials, and openness to private provision. 2 As captured in the 1986 “Financing Education in Developing Countries”, and the 1995 Policy Paper “Priorities and Strategies in Education” the Bank’s education policy discourse became firmly rooted in the Bank’s overarching response to the debt crisis among its client member states (World Bank, 1986; 1988a; 1995).3 An increasing volume of Bank lending in the structural adjustment era was delivered in larger loans conditioned on policy changes – differing from the project‐like investments of the previous period. Certain aspects of 2 See the Bank’s 1988 education in Sub‐Saharan Africa report and its 1995 Policy and Strategies for Education (World Bank 1988 and 1995). Additional momentum for education sector lending was garnered through the Bank’s “discovery” of the East Asian economic miracle in a series of research publications which found that investment in basic education, alongside the development of export oriented markets, had produced rapid economic growth (Mundy, 2002; Wade, 1996). 3 6 structural adjustment loans had clear bearing on education – for example caps on governments spending or conditionalities focused on cuts to the size of the civil service. At the same time, wherever a need for structural adjustment emerged in the context of fiscal insolvency (from Africa in the late 1980s, to Mexico and former Soviet states in the early 1990s, and to Asia post 1997), the Bank also offered borrowing countries new “sector adjustment loans” with policy conditionalities aimed at the restructuring of public sector education spending. Common policy recommendations built upon the Bank’s epistemic anchor in neo‐classical economics to form what Colclough (1996) has described as the Edlib (education liberalization) agenda. This included lowering subsidies to tertiary level education and introducing user fees at this level; and encouraging efficiency‐driven reforms in kindergarten to Grade 12 level schooling through the use of contract teachers, lowering of repetition rates, and parental “participation” in school level costs (IEG, 2011a; World Bank, 2004; Alexander, 2002; Hinchcliffe, 1993; Jimenez, 1987; Mingat & Tan, 1984; World Bank, 1988b; 1986; 1995). During this period, Bank investment in secondary vocational schools declined significantly in favour of less expensive non‐formal vocational training (Middleton, 1988), and Bank work on literacy and adult education further deteriorated (Nordtveit, 2012). Borrowing countries, increasingly reliant on international financial institutions for liquidity, had limited ability to contest this new policy agenda. One of the paradoxes of this period came precisely because the Bank’s short policy menu in education focused on primary schooling as the most reasonable public sector investment in education. By the early 1990s, a powerful push back against structural adjustment was emerging within civil society and among UN organizations, which pressed the Bank to implement “structural adjustment with a human face” (see Cornia, Jolly, & Stewart, 1988). Bank education sector staff capitalized on this opportunity. On the basis of rates of return analysis, they skilfully argued to the Bank Executive Directors and the Bank’s internal country economists that spending in social sectors like education had to be protected and refocused on services that mostly benefit the poor – particularly primary schooling, while at the same time playing to internal expectations among its own economists for a smaller and more efficient public sector (Jones, 1992, 2006). Bank education sector staff also mobilized politically, linking up with leaders at UNICEF and UNESCO to host the World Conference on Education for All in Jomtien in 1990 which created an important external source of legitimacy and attention for the Bank’s role in education at a time when the Bank was under fire and UNESCO itself was faltering under increased political tension (Chabbott, 2003). In summary, an opportunistic technical cadre within the Bank found a way of framing a Bank mandate in education that could be legitimated in the terms of the economic orthodoxy of the period, but also in terms of pro‐poor sentiments, building on the context of the Washington Consensus which was actively promoted by the American administration with support from other OECD members. Despite the criticisms of its excessive simplicity, the Bank emerged from this era as the IO with the most consistent strategy and message in the field of educational development. As can been seen in Figures 2 and 3 below, the era of structural adjustment lending contributed to substantial increases in Bank lending activity in education. It also gave an enormous lift to Bank lending to basic education,4 which came to dominate all other education subsectors (Mundy, 2002). 4 Basic education is defined by the Bank as the sum of 3/4*General education + Pre‐primary education + Primary education + 1/2*Secondary education + 3/4*Public administration‐education. 7 Million dollars Figue2. Education New Commitments (2011 constant dolars) Source: Authors with data from the WB education lending Aigures database 4000 3500 3000 2500 2000 1500 1000 500 0 IDA IBRD IBRD+IDA Figure 3. WB (IBRD+IDA) new education commitments per level (as % of total education commitments) Source: Authors with data from the WB education lending Aigures database 100 80 60 40 20 0 90‐91 92‐93 94‐95 96‐97 BAS 98‐99 PRIM 00‐01 02‐03 SEC 04‐05 TER 06‐07 08‐09 10‐11 12 VOC The Bank and the Global Development Consensus (1996‐2008) The period from the mid‐1990s into the first decade of the new millennium saw the Bank face a series of new challenges in its broader authorising environment. Private financing for development was on the upsurge, challenging the Bank’s lending in middle‐income countries. Civil society advocacy against structural adjustment policies reached its zenith,5 forcing the Bank into a much stronger campaign to legitimate its practices and activities. At the same time, the decade following the end of the Cold War, saw the Bank’s most powerful member states, the G‐8 countries, develop a strong consensus about international development, leading to the rise of grant based financing for development at the end of the 1990s captured at its peaks at the Gleneagles G‐8 summit in 2005. 5 Former officials from the Bank were also part of this wave of critiques – most notably Joseph Stiglitz ‐ senior vice‐president and chief economist between 1997 and 2000 (see Stiglitz, 2003). 8 The new compact on development that began to emerge among OECD governments after 1996 committed them to an expanded program of debt relief, increased levels and harmonization of bilateral aid, and a focus on a handful of top development priorities, including universal education (OECD/DAC, 1996). In 2000, the IMF, OECD, World Bank, and UN also promised closer coordination, more attention to country ownership of development, and a tighter focus on specific development priorities (again including education) in a document entitled “A Better World for All” (IMF, OECD, World Bank, & UN, 2000). Both agreements fed into the Millennium Development Summit and Millennium Development Declaration, which aligned the United Nations and its agencies, the Bretton Woods institutions, and OECD governments behind a unifying framework (United Nations General Assembly, 2000). This new consensus about international poverty and inequality set out a global "Third Way" between the Washington consensus and a more pro‐poor approach to development, capable of responding to rising international protests against globalization and the aftermath of the East Asian economic crisis of the late 1990s (Stiglitz, 2003; Therien, 2002; 2005; Ruggie, 2003; Noel, 2005). Under James Wolfensohn (World Bank president from 1995‐2005), the Bank emerged as central to this new development consensus. Wolfensohn quickly announced that the Bank would revitalize its focus on poverty alleviation, and restructure its practices to become more “client centred.” The establishment of the Heavily Indebted Poor Country Initiative in 1996 under the IMF and World Bank (enhanced in 1999), created the largest single impetus for expanded national social sector spending in a generation (Hinchcliffe, 2004). In this context, the Bank’s structural adjustment lending was replaced by “poverty reduction strategy operations” which now provided policy based tranches of financing for country‐led poverty reduction strategies. Such strategies, which became a central policy tool in the context of the Bank but also many other aid agencies, combined macroeconomic Washington consensus era reforms with enhanced attention to human development, social protection, and governance in what became known as the “post‐Washington consensus” (Tarabini & Jacovkis, 2012). Wolfensohn’s efforts also included a plan to diversify the Bank’s business by becoming “a Knowledge Bank” through renewed emphasis on policy relevant evidence and the provision of technical advice to governments (Stone & Wright, 2007). Education emerged quite centrally within the new post‐Washington agenda. Although the education‐poverty relationship remained quite weakly conceptualized within the Bank (Bonal, 2007), it was attractive to the Bank precisely because it straddled both equity ‐ and productivity ‐ conceptualizations of development, while limiting commitment to stronger redistributive measures that might conflict with neo‐classical economic theories. Thus, according to the Bank: The expansion of educational opportunity, which can simultaneously promote income equality and growth, is a win‐win strategy that in most societies is far easier to implement than the redistribution of other assets, such as land or capital. In short, education is one of the most powerful instruments known for reducing poverty and inequality and for laying the basis for sustained economic growth, sound governance and effective institutions (World Bank, 2002, p. v). In keeping with this broad framing, many of the Bank’s core ideas from its 1990s education policy statements remained consistent in this period, reflecting the continued dominance of neo‐classical economic orthodoxy within the Bank. In the Bank’s expanded focus on “good governance” prescriptions for education systems took on an economistic and orthodox colouring. Thus, ideas grounded on public choice and new public management like the decentralization of central state control over basic services, school‐based management, local accountability, 9 and the introduction of direct incentives to productivity among user groups emerged across the Bank’s K‐12 operations. This type of policy ideas received perhaps their strongest and most forceful articulation in the 2004 World Development Report “Making Services Work of the Poor” (World Bank, 2004; Weaver, 2008; Lincove, 2006; IEG, 2011b; Gershberg, 2012). Similarly, in higher education where the Bank sought to expand its lending and diversify its business, much of the earlier logic of the Bank’s short policy menu remained intact: most projects retained a preference for private sector provision and cost recovery and advocated the use of competition based incentives to enhance university performance, adding to this agenda new third party “quality assurance” mechanisms (Robertson, 2009). The Bank was able to retain its central role in basic education during the 2000s, especially in primary education, the education subsector most tightly linked to Wolfensohn’s resurgent vision of the Bank’s poverty mandate and most closely aligned to the Millennium Development goals. In education, as in health, the Bank successfully promoted a vision of itself as a platform for pooled funding from OECD donor countries, utilizing sector‐wide approaches to education anchored with coherent sector plans. The Bank also became a host for sector trust funds from bilateral and private sector donors.6 At the Dakar world conference on education in 2000, Wolfensohn announced that the Bank would allow no country with a coherent education sector plan to be left behind in achieving universal primary education for want of finance. To meet this pledge the Bank became the host of a new multilateral fund for basic education in 2002, called the “Education for All Fast Track Initiative.” Wolfensohn’s policy entrepreneurship and responsiveness to the broader demands from Bank members, resulted in the growth of education sector lending grow both as a share of total World Bank lending (almost doubling to reach over 8% of lending) and in real terms, especially in basic education (see Figures 2 and 3 above). At the same time, the Bank had to rethink its education activities in the face both of more widely available grant financing (for low income countries) and private lending (for middle income countries) as well as the sharpened external critique of its practices from NGO advocates. Bank lending for education declined substantially in the last years of the 1990s, particularly among middle income borrowers eligible under the IBRD (see Figure 2 above). This was, in part, the consequence of increasing private flows of finance for eligible borrowers, but it also reflected a push back against the Education for All agenda (concentrated on primary education) from countries convinced that higher‐level skills were most valuable in the global knowledge economy. Bank lending to IDA countries also dipped in the late 1990s, recovering rapidly after 2001 but in a context of increased availability of grant‐based aid. To respond to this decline in demand, the Bank sought to diversify the appeal of its education sector funding to different types of borrowers, focusing on more on client driven lending. Under Director of Education, Maris O’Rourke, it tried to solve the “problematic trends” of decreasing lending to middle income countries by promoting operations in emerging economies, including in Eastern Europe (Jones, 2006). Diverting from its “simplified policy” of the 1990s, the Bank offered more expansive policy statements recognizing the need for greater public spending on Higher Education within the context of a global knowledge economy (World Bank & UNESCO 2000; Samoff & Carrol 2004). Yet despite the move toward client driven lending with fewer sectoral 6 Many bilateral donors began to set up sector specific trust funds to support education research and analytical activities including for example, the Russians, Dutch and Irish, providing a flexible source of funding for “knowledge bank” initiatives in education (IEG, 2011a). Larger multi‐donor trust funds in education focused on conflict‐affected states (Sudan and Haiti, for example) were also established inside the Bank rather than in other potential IO venues. As the IEG evaluation of Bank hosted trust funds notes, the overall value of trust funds between 2003 and 2008 exceeded IDA commitments in the same period (IEG, 2011a). 10 conditionalities, ex post conditions such as indicative benchmarks and numerical objectives were expanded, as another way of incentivizing specific country behaviour (World Bank, 2005).7 Throughout this period of rapid growth in the Bank’s authority and scope in the education sector, it is important to note that internal policy entrepreneurship by Bank education sector staff was not always successful, and depended heavily upon wider political opportunities in the Bank’s authorizing environment. Two contentious issues in global education policy illustrate how a complex interplay of internal and external factors came to determine World Bank policies and activities in education during this period: free and universal access to primary education, and the private provision of schooling. In the case of fee‐free education, the Bank’s policies from the late 1980s to the late 1990s had encouraged parental participation (contributions) to basic education, both to offset gaps in national budgets and to encourage (according to the Bank’s 1995 Policies and Strategies) greater parental commitment and engagement in schools. However, in 2001, the Bank changed its longstanding support for parental “participation” in school financing under direct pressure from US based NGO advocacy organizations. As O’Brien, Goetz, Scholte and Williams (2000), and others have shown, when social movements try to influence the Bank policies, they quite often do so by putting pressure on the US Treasury first. In this instance a powerful transnational campaign to end user fees in education and health, grounded on the case of Tanzania, resulted in a decision by Congress to include language in the foreign aid appropriations bill that required the U.S. Treasury to instruct the US Executive Director at the Bank to oppose any multilateral development loan that included user fees in basic education and health (Alonso i Terme, 2002; Mundy, 2006). The Bank responded quickly, issuing a policy statement officially opposing school fees in 2001. Soon after the Bank developed a program with UNICEF to promote school fee abolition in low‐ income countries (Katten & Burnett, 2004; Vavrus & Kwauk, 2011). Increasing the share of private education service providers, and promoting the channelling of public funds to private providers, is another policy with longstanding support from among the Bank’s economists and education sector specialists. Research and advocacy for this approach flourished alongside the Bank’s endorsement of “universal free education/education for all.” As documented in Mundy & Menashy (2012) and Verger (2012), private provision of schooling was characterized as inherently desirable in many of the Bank’s policy statements and research publications (see World Bank, 1999; 2005; Patrinos, Barrera‐Osorio, & Guaqueta, 2009). An influential epistemic community supportive of private provision emerged within the Bank, anchored by a joint program of research and events between the Bank’s Economics of Education group and a new group devoted to financing private education at the International Finance Corporation (the Bank’s private sector lending arm)(Verger, 2012; Mundy & Menashy, 2014a; Mundy & Menashy, 2014b). In‐house policy entrepreneurs hosted regular workshops on private provision and brought leading providers of private schooling and key US based advocates of privatization (where the trend towards private provision has grown) into the Bank’s ambit. Yet despite these efforts, loans that support private sector provision decreased in the Bank’s lending portfolio during the 2000s (Mundy & Menashy, 2012), as suggested in Figure 4 below. It seems that many client governments were simply not interested in taking public sector loans to support private provision. Drawing on Weaver (2008) we can hypothesize that this disjuncture between talk, decisions and actions became a functional response of the 7 A good example of this can be found in the Bank’s PRSP Handbook, which provided prescriptive arguments and policy benchmarks in education that were quite clearly in tension with the participatory and bottom‐up processes putatively intended to accompany PRSPS (Robertson et al., 2007). 11 World Bank as it attempted to manage conflicting external agendas arising from the demands of client governments, and the internal institutional preferences derived from pre‐existing cultural norms and routines. Figure 4. Percentage of Education Projects with Privatization Components Source: authors with data from the WB Education Projects Database (see http://go.worldbank.org/6LRTJRJK30) 60% 50% 40% 30% 20% 10% 0% 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 In summary, the character of the Bank as a global governor of education changed substantively in the 1996‐2008 period. The Bank proved adept at capturing and leading on major parts of the OECD development consensus as it related to primary education, and at the same time, managed to diversify its policy prescriptions while retaining a strong focus on financing efficiencies and private provision in its approach to education. While the Bank’s internal culture – especially its reliance on neo‐classical economic orthodoxies – led to a degree of consistency in its formal policy setting, and in some dimensions of its lending programs, the “short policy menu” for education of the structural adjustment era clearly gave way to a wider and more diverse approach to education in its actual operations. Here the demands and preferences of borrowing countries played an important role in shaping some surprising disjunctures between the Bank as a setter of a global education agenda, and its role as the single largest global financer of educational reforms. After Wolfensohn and the Global Financial Crisis: Bank Hegemony Challenged? Although it is dangerous to speculate, we can use our heuristic focus on the three drivers of change in World Bank policy to explore how geo‐political and ideological shifts among the Bank’s most powerful member governments and in its borrowing (or “client”) countries are likely to interact with the Bank’s distinctive organizational culture in the period after 2008. The Bank has a new, reform‐minded President, Jim Yong Kim. It is widely seen as no longer enjoying the stable coalition of principals who share a common agenda (see for example, recent coverage in the media: El‐Erian, 2014); and its work has been profoundly shaped by the 2008 financial crisis and will likely be affected by rising international insecurity. In this section we ask how such changes internally and in the Bank’s wider authorizing environment are affecting or likely to affect its work in the education sector. In relation to the Bank’s longstanding relationship with its most powerful members, the Bank presently operates in a climate of what Rodrik describes as “leaderless globalization” (Rodrik, 2012). The G7 governments that have 12 historically been the Bank’s most powerful principals, including the United States, continue to face significant economic fall‐out from the 2008 financial crisis: they themselves are plagued by high debt and low growth. At the same time, they have been hit by a wave of complex security issues that threaten global stability and the global economy, including recent events in Eastern Europe, the Middle East, and the growth of Islamic fundamentalist militantism. We can speculate that finance for global development is unlikely to emerge high on the policy agendas of G7 countries, though if it does it will likely be linked to areas that directly address these collective geopolitical challenges. At the same time, rising powers, such as China, India, Brazil, and countries in the Middle East (among others), are increasingly powerful on the global stage. They also became influential development actors: annual concessional flows from emerging economies to low‐income countries was roughly estimated to be between US$12–15 billion by 2011, equivalent to about 10 percent and 15 percent of the aid provided by developed countries (World Bank, 2013a). To date the Bank has made much of the opportunity to work with these emerging powers, relying on the innate economic pragmatism of emerging economies, which value access to an expanded, relatively open and globally integrated world economy, and which in some cases (such as China) remain reliable borrowers of Bank finance (Cammack, 2011). The Bank has also gained considerable support from the G20 governments from its responsiveness in rapidly disbursing funds after the financial crisis. However, observers note that it is important to remember that these countries are primarily focused on expanding their spheres of geo‐political influence on a bilateral basis. They have sharply different approaches to economic, political and social development and share a limited appetite for international regimes that constrain national sovereignty (including in such putatively domestic spheres as education); and they are not satisfied with their representation within the Bank (Güven, 2012; Economist, 2014). Going forward the Bank will have to address the concerns of rising powers, such as China and India, who are in transition from being “clients” of the Bank to “powerful principals” and who along with Russia and India have expressed dissatisfaction with the pace of reforms in the Bretton Woods institutions (Bracht, 2013). As illustrated by the creation of a new international development Bank by the BRICS (Brazil, Russia, India, China and South Africa) at their annual summit in 2013, as well as by the growth of bilateral aid from the BRICS, emerging economies are beginning to destabilize the Bank’s hegemony as a development policy setter and lender. The Bank will have to work hard to shape a thicker set of developmental preferences that are endorsed and supported by its emerging market members (Cammack, 2011). In relation to its lower income and lower middle‐income borrowing members, the Bank faces an equally perplexing set of challenges. As recent analyses suggest, many of the Bank’s high performing IDA borrowers are set to graduate into the league of middle‐income countries. The Bank is under some pressure to redirect its IDA portfolio and find successful new ways of working with a shrinking group of IDA eligible borrowers, which are often conflict‐affected or politically fragile (contexts where the Bank’s experience has been quite weak) (Severino & Moss, 2012). The Bank is in better shape on the IBRD side, with its more secure funding base derived from the proceeds of previous loans. But the IBRD, which focuses lending on middle‐income countries, faces its own challenges. The rising majority of the world’s poor live in middle income countries, creating a natural market for new Bank lending. Yet middle‐income governments are among the Bank’s most discerning and demanding borrowers, and they are not interested in one size fits all policy prescriptions (Güven, 2012). 13 Organizationally the Bank is in a state of flux. Over a relatively short period (2005‐2012) it has had three presidents, most recently, Jim Yong Kim, a reform minded medical doctor who has a background in the health sector development. Unlike many previous Bank presidents, Kim is neither an economist nor someone with business/financial sector experience. Kim has introduced a new World Bank Group Strategy (2013b), which commits the Bank to two main goals: ending extreme poverty, and promoting shared prosperity and income growth among the bottom 40 percent of the population in every country. The strategy promises to reposition the Bank as a “solutions Bank” focused on the science of delivery, results, and the dissemination of global best practices; and to align the work of all three arms of the Bank (IDA/IBRD, the International Financial Corporation, and the Multilateral Investment Guarantee Agency), as well as the multiplying number of donor funded “trust funds” that the Bank manages, around a clearer set of solutions that better leverages the development impact of both public and private actors. Kim has also instituted a complete organizational restructuring of the Bank’s bureaucracy, including the creation in 2014 of fourteen global practices groups (through a process in which all senior managers resigned and reapplied for positions) and significant cuts to staffing and the Bank’s administrative budget. This restructuring responds to two key problems. First are complaints from donor members and others that the Bank is bloated – for example, the claim by the World Bank Alumni Association, that the Bank “has a very cumbersome inefficient internal structure. It is highly reliant on consultants, in large measure because it has mismanaged its core cadre of experts, and excessively decentralized to the point that the budget is a serious and growing constraint” (quoted in Samerasekera, 2012; see also Behar, 2012; Lowrey, 2014; Talley, 2014). Second, the reforms try to reposition the Bank as a purveyor of expertise, especially of expertise on poverty alleviation relevant to middle income countries – responding to the fact that the Bank has not been able to secure a clear role for itself as a knowledge bank and to increasing competition from other expertise providing organizations, such as private consulting firms and other international organizations, including regional banks (Nehru, 2012). Trends in the education sector suggest how the Bank is scrambling to manage these different dynamics. As part of the Bank’s response to the financial crisis (2008‐2010), its education lending activity spiked in 2008‐2009, rising from 24,702 to 58,747 million US$ “through a combination of additional financing of ongoing projects and approval of large projects in Brazil, Indonesia, Mexico, and Pakistan” (IEG, 2011b, p. xi). Nonetheless, Bank spending on education has fallen off significantly as a share of total Bank lending since it peaked in 2004/5 (Figure 1, above), reflecting a drop in demand for education sector lending. As shown below Sub‐Saharan‐African countries have disappeared from the top list of Bank education borrowers – in part because many very low‐ income countries prefer grant based financing for basic education, such as that provided by the Global Partnership for Education (which the Bank hosts) (see Beardmore & Middleton, 2012). Thus the financial crisis secured a trend that tilts Bank education lending towards large emerging economies, and away from basic education to secondary and tertiary levels of education which are in particular demand among emerging market economies (see Table 1, below and Figure 3). Table 1. Top 10 borrowers in education projects (million $) Source: authors, with data from the WB Projects & Operations Database ‐ Projects identified include non‐education projects with education components ‐ 1. 2. 1987‐1995 India ‐ 2314.9 Mexico ‐ 2009 1. 2. 1996‐2007 India ‐ 3918.23 Pakistan ‐ 2394.8 1. 2. 2008‐2012 Brazil ‐ 5284 Poland ‐ 2631 14 3. 4. 5. 6. 7. 8. 9. 10. Brazil ‐ 1134.1 China ‐ 923.9 Indonesia ‐ 871.3 Pakistan ‐ 753.7 Argentina ‐ 622.5 Korea ‐ 496.6 The Philippines ‐ 321 Kenya ‐ 249.3 3. 4. 5. 6. 7. 8. 9. 10. Indonesia ‐2019.84 Brazil ‐ 1907.9 Mexico ‐ 1865.2 Bangladesh ‐ 1385.7 Colombia ‐ 1057.2 Uganda ‐ 921.14 Ghana ‐ 852 Ethiopia ‐ 846.5 3. 4. 5. 6. 7. 8. 9. 10. India ‐ 2356 Turkey ‐ 2000 Indonesia ‐ 1821.66 Pakistan ‐ 1771 Mexico ‐ 1320.75 Colombia ‐ 1001.5 Costa Rica ‐ 700 Bangladesh ‐ 695 To manage the shifts in external demand for its services, a high profile series of consultations led to the drafting and Board adoption of a new Bank education sector strategy in 2011 (Verger et al. 2014). Focused on “learning for all,” the new policy poises the Bank to break with an earlier pattern of funding project inputs, and embraces policy based lending that is intended to spur the Bank’s new results focus by creating incentives for learning outcomes (World Bank, 2011a). In its new strategy, the Bank promises to focus on whole system reform (allowing clients to define different sub‐sectoral investments), while also committing itself to enlarging its role as purveyor of policy knowledge and expertise. Central to this is the creation of standardized benchmarks and policy tools for system development in such areas as teachers’ management, national learning assessments, decentralization and accountability, and private provision of services, under its new SABER initiative (Systems Approach for Better Educational Results). The translation of the ambitious ‘systemic reform for learning’ agenda at the country level may be more challenging than ever, and could feed what the Bank’s Independent Evaluation Group has noted is a longer term of decreasing effectiveness in education operations (IEG, 2011b). 8 According to Nelson (1999) and to the IEG (2011b) the larger scope of Bank operations in education with respect to the time frame for results and staffing incentives, on the one hand, and the increasing degree of complexity in projects’ design in relation to the level of borrower’s political commitment and capacity, on the other, create significant problems in implementation and therefore in the delivery of quantifiable results. The Bank has had great difficulty in improving learning outcomes despite a concerted effort over more than a decade to focus on investments that will enhance learning (see for evidence the evaluation of the Bank’s support to primary education, IEG, 2004). Going forward it will be very interesting to see whether the Bank can sell the idea of borrowing to enhance learning outcomes for the bottom 40% in middle income countries (we suspect the more likely alternative is a continued rise in demand among middle income countries for loans to expand higher education and post secondary skills training). It will be equally important to monitor the Bank’s effectiveness in translating its learning and results focused education agenda into results in the shrinking (increasingly conflict affected) group of IDA eligible countries. These are contexts in which the Bank’s highly planned and government focused approach to reform has not proven nimble and responsive. As a lender to governments, the Bank is not well positioned to provide intermediate solutions (such as direct funding of non‐state service providers) that are needed as stop‐gaps while engaging in system re‐ building (see Pritchett, 2014 for a controversial review of this issue). A strong bid for a scientifically based, simplified framework is the somewhat predictable outcome of the Bank’s organizational culture and history, and it fits well with President Kim’s call for the Bank to invest in the “science of 8 According to a recent IEG review, only fifty‐seven percent of education sector board projects had satisfactory Bank performance ratings, a 29 percent decline from FY05–07. Bank performance ratings at the institutional level, without education, would increase to 79 percent. (IEG, 2011b) 15 delivery”. But it is an open question whether this highly linear conceptualization of educational development, married as it is to a focus on leveraging system change through the creation of new types of incentives within borrowing country systems, will prove attractive to (and effective for) an increasingly diverse and discerning group of borrowers. Conclusions On the basis of its substantial lending capacity, persuasive knowledge production and transnational political clout, the World Bank has become a key global governance actor in the education for development field. The World Bank entered into the education business in a quite tangential way and without a proper mandate, but education has ended up representing a significant portion of the Bank’s lending portfolio. Furthermore, its education policy agenda has become wider and increasingly more complex with the passage of time: it started by providing basic material inputs to education systems, and now is focusing on improving learning outcomes through ambitious systemic reforms. To understand the evolution of the World Bank education agenda, we have harnessed an approach to understanding international organizations borrowed from the field of political science. In this approach three main dynamics interact and are the focus for our analysis: geopolitical factors and the way most powerful states use the IO to promote their interests and preferences; the influence exerted by IO bureaucracies (both at their apex and within among their technical divisions); and the way the Bank tries to condition and/or is forced to respond to client‐countries demands. The case of education illustrates how changing external dynamics became opportunities for internal entrepreneurs to develop a strong, simplified agenda for educational reform that bridged core precepts of neoliberalism and the Washington consensus. These same staff also proved adept at marrying this agenda, which argued for the concentration of public investment in primary education, to both aspects of the Bank’s structural adjustment agenda and to the emergence of a global development consensus focused on poverty reduction and human development in the late 1990s. Yet while specific parts of this agenda, such as system decentralization and the introduction of performance incentives has spread into most Bank lending programs, some aspects of the agenda have clearly been rejected by borrowers and (often after civil society contestation) by some powerful members. Thus for example, the Bank had to reverse its policies on school fees in elementary education and has had difficulty convincing client countries to borrow for programs that expand private and commercially provided educational services. Clearly, borrowing governments play an important role in conditioning the character of Bank activities, and their preferences are at least partly responsible for disjunctures between Bank’s agenda‐setting role and its practical engagement in the financing of educational development. This article has also raised questions about the future of the Bank in the global governance of education. Until quite recently one could confidently identify the Bank as the pre‐eminent global governor of educational policies, particularly influential in emerging and low‐income country contexts. Today, the Bank’s influence in education is less certain, for at least four reasons: the changing composition of its most powerful members; the growing diversity of preferences among Bank borrowers (many of whom prefer membership in the OECD “club” over Bank 16 prescriptions); the rigidity and linearity of Bank prescriptions for educational systems (which are of questionable value in the varied political economies of rapidly transforming emerging economies); and the fact that the Bank’s IDA facility must now address the complex needs of conflict affected and politically fragile states, very different from the concentration on “high performing” countries that has anchored its IDA lending over the past decade. 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International Journal of Educational Development 40 (2015) 9–18 Contents lists available at ScienceDirect International Journal of Educational Development journal homepage: www.elsevier.com/locate/ijedudev The World Bank and the global governance of education in a changing world order Karen Mundy a, Antoni Verger b,* a b University of Toronto, Canada Universitat Autònoma de Barcelona, Spain A R T I C L E I N F O A B S T R A C T Keywords: World Bank International organizations Global governance Agenda-setting Education policy The World Bank’s involvement in education policy and reform has grown substantially since the 1960s. For an organization that originally had no mandate to work on education, the Bank has become perhaps the most powerful and hegemonic of the international organizations operating in the education for development field. The Bank is the largest single international funder of education for development in low-income countries, and its technical and knowledge-based resources tower over those of other international institutions. This article develops a heuristic framework for understanding agenda-setting processes in international organizations (IOs), and applies it to analyze how the World Bank work in education has evolved with the passage of time. The framework focuses on three dynamics as keys to understanding the Bank and education: the political opportunities created by geo-political and ideological shifts among the most powerful member governments; the IOs relationships with borrowing (or ‘‘client’’) countries; and finally the internal dynamics and organizational culture of the IOs own bureaucracy as it aims to reproduce itself and manage shifts in the previous two dynamics. These three dynamics and their interaction are explored over four key periods: from the 1960s to the beginning of the 1980s, when the debt crisis exploded in many developing nations; from 1981 to mid-nineties, a period marked by structural adjustment lending and the reorganization of the Bank’s education sector activities around basic education; from the mid-nineties to 2008, when the Post-Washington consensus emerged; and from 2008 to present, a period characterized by significant shifts in power in the world system and an accompanying rise of strategic uncertainty at different levels within the Bank. ß 2014 Elsevier Ltd. All rights reserved. 1. Introduction Over the past 50 years, the World Bank has arguably become the epicentre for the global governance of social policy within emerging economies and low-income societies. The Bank is the largest single international provider of development finance to governments. Its staffing and internal resources tower over those of other international institutions, and it is regarded by other providers of international development assistance as a key source of policy evidence and policy advice. For these reasons, the World Bank has often been viewed as holding ‘‘a near monopoly on the business of development’’ (Marshall, 2008, p. xv). Yet like all international institutions, the Bank is both a global governor in its * Corresponding author. Tel.: +34 935814654. E-mail address: antoni.verger@uab.cat (A. Verger). http://dx.doi.org/10.1016/j.ijedudev.2014.11.021 0738-0593/ß 2014 Elsevier Ltd. All rights reserved. own right, and a member of a larger system of interstate and transnational relationships. In this article, we explore the evolution of the World Bank’s policies and practices in the field of education to understand how the Bank has come to exert authority in the settlement of global education agendas. Education has long been a significant sectoral focus for the Bank’s lending portfolio (smaller but comparable in volume to its efforts in health). Globally, the Bank is the largest single international source of education finance, with a multibillion dollar budget for education operations. It is also host to several pooled trust funds for education, including funds for education in conflict-affected states, and it is the host of a global ‘‘vertical fund’’ for education, the Global Partnership for Education (formerly the Fast Track Initiative). As we shall argue, the Bank’s formal policies on education are the iterative outcomes of three central dynamics: organizational dynamics, the political opportunities created by geo-political and ideological shifts among its most powerful member governments, 10 K. Mundy, A. Verger / International Journal of Educational Development 40 (2015) 9–18 and the Bank’s relationships with its borrowing (or ‘‘client’’) member governments (on whose willingness to borrow the Bank depends). This article explores how these three dynamics interact in the constitution of the Bank’s educational activities and policies in four key periods: from the 1960s to the beginning of the 1980s, when the debt crisis exploded in many developing nations; from 1981 to mid-nineties, a period marked by structural adjustment lending; from mid-nineties to 2008, when the Post-Washington consensus emerged; and from 2008 to present, characterized by a loss of strategic focus and uncertainty at different levels within the Bank. 2. Conceptual framework Three approaches from the field of international relations have dominated the study of international organizations (IOs): realism, institutionalism and constructivism. In conventional realist theories, IOs are seen as instruments at the service of the interests of powerful states; accordingly, it is assumed that IOs’ policies change and evolve as a consequence of the will of their (most powerful) members. Taking this state centric approach a step further, neoliberal institutionalism conceives IOs as rational institutions created by states to reinforce cooperation and reduce transaction costs in an increasingly interdependent world (Rittberger and Zangl, 2006). Constructivism, for its part, is more oriented towards unpacking agency and social relations within IOs and between IOs and a broader world polity. This theoretical perspective goes beyond a state-centric approach to IOs, and focuses on the role played by international bureaucracies and other non-state actors, as well as the cultural and ideational factors that shape political outcomes in the global arena (Barnett and Finnemore, 2004). Constructivists observe that even when IOs are created to serve member-states, with the passage of time, they evolve into autonomous sources of power. As bureaucracies, IOs often have sufficient autonomy to interpret and redefine their own broad mandate and, at the same time, to influence country members’ decisions and preferences. Organizational culture is a key concept for constructivists when understanding the dynamics of policy change and reproduction in IOs. It can be defined as the ‘‘shared ideologies, norms and routines that shape staff members’ expectations about how agendas are set, mandates are operationalized, projects are implemented and evaluated, and what staff behaviour will be rewarded or punished in promotions and demotions’’ (Nielson et al., 2006, p. 109). In this paper, we adopt the notion advanced by Nielson et al. (2006) of bridging the rationalist-constructivist divide. The rationalist approach contributes to a more sophisticated understanding of principal and agent relationships that influence IOs’ outcomes, and can complement the constructivist framework. To operationalize such an approach, three central dynamics need to be analyzed. These dynamics can be analyzed independently, although they are mutually constitutive and, in ontological terms, they are intertwined in the everyday activities at the Bank. (1) The first dynamic is the relationship between the Bank and its most powerful member states. As an organization the Bank was set in motion by the winners of World War II, and has since been dominated by the liberal polities and industrialized economies of the OECD. As might be expected within a rationalist/realist paradigm, the Bank has had to respond to these states and to their changing demands and priorities (Abbott and Sindal, 2005). However, the rise of new world powers is shifting the constellation of powerful states within the Bank, while the emergence of global civil society advocates, critical of Bank activities, has also added a new complexity to the Bank’s external authorizing environment. In this new universe, a ‘‘second level’’ of political responsiveness evolves when civil society pressures powerful governments to mandate new norms for World Bank activities (O’Brien et al., 2000; Putnam, 1988). (2) At the same time, the Bank bureaucracy has enjoyed considerable autonomy and room for manoeuvre. The Bank’s most powerful member governments have not always converged in their views about development. At important moments they have faced uncertainty about the best ways forward. This creates an important opportunity for autonomy that is amplified by the fact that among development IOs, the Bank has a unique degree of financial autonomy (derived from its call on initial capital commitments from rich world members) and legitimacy (derived from its claims to scientific rationality and political neutrality) (cf. Finnemore, 1996). Such autonomy has been used at two levels within the Bank. Starting with Robert McNamara, Bank presidents have played an important role in reshaping both the Bank’s mandate as well as the wider global policy agenda for international development. Policy entrepreneurship also thrives at a second level: among technical staff within specific policy fields. Bank staff operate within a context characterized by ingrained organizational imperatives and norms (such as the longstanding dominance of the discipline of economics in decision-making and the ‘‘pressure to lend’’). Nonetheless, in social policy fields like education, for example, or pension reform, staff often use Bank resources to build both internal (to the Bank) and transnational policy networks and epistemic communities that influence global agenda setting (see Haas, 2004; Verger, 2012; Ornstein, 2008; Broad, 2006; Weaver, 2008; Finnemore, 1996). Thus, the second set of dynamics we will explore are the complex patterns of institutional autonomy, organizational culture and bureaucratic path dependency that have shaped the character of the Bank’s education sector work. (3) Finally, we explore the Bank’s relationships with middle and low-income borrowing countries. From the Bank side, lending conditionality has been a central but evolving mechanism for managing this relationship; the Bank increasingly utilizes soft power mechanisms (like benchmarking, technical assistance, dissemination of ideas) as a way of framing and influencing the preferences of member countries (Stone and Wright, 2007; Marshall, 2008; World Bank, 2005). It should not be assumed however, that the Bank’s relationship with borrowing countries is only driven by the Bank. To survive, the Bank must lend and countries must be willing to borrow. Complex patterns of decision-making, involving both rational dimensions on the part of borrowing countries (such as the existence of financing alternatives and other strategic considerations), and cultural features (such as the match between national policy models and the policy models promoted by the Bank’s policy entrepreneurs) shape the Bank’s relationships with borrowers. The combination of these three dynamics constitutes a heuristic framework that fosters structured analysis of the evolution of the World Bank’s work throughout this paper. 3. The World Bank and education: origins of a mandate Formed as a kind of credit union among sovereign states in the period after World War II, the International Bank For Reconstruction and Development (IBRD), known today as the World Bank, initially focused on economic reconstruction and development in Europe. The Bank gradually emerged as a global governor in social policy fields during the 1960s, when the organization became a central provider of development finance to newly post-colonial states. Under Robert McNamara’s presidency (1968–1981), the Bank adopted its early focus on poverty reduction and increasingly framed its work in social policy around a poverty reduction mandate (Vetterlain, 2012, p. 43). Dynamics among the Bank’s principals fed the development of the Bank’s role as a social policy actor. For the last 60 years, agendasetting at the World Bank has been dominated by Northern countries, which hold the largest number of voting shares. While the Bank’s fixed capital base provides it with some autonomy, the historical record suggests that it has been most strongly affected by the policy preferences of the United States (US), which holds the power of veto and appoints the Bank’s president (Woods, 2000; Wade, 2002). Though other governments have at times worked together to influence the Bank (for example, Japan in the 1990s, see Wade, 1996), American hegemony has been a constant. In the 1960s, concern from the US and its allies over the advance of communism into newly independent post-colonial nations led to the creation of a new highly concessional financing facility for low-income countries inside the World Bank, the International Development Association (IDA). In this broader geo-political context, McNamara emerged as a successful policy entrepreneur, selling the Bank’s role in promoting poverty reduction and the delivery of basic needs as essential to the maintenance of stability in the world system (Vetterlain, 2012). The Bank’s capital base increased fourfold under McNamara’s leadership. Under McNamara, the Bank’s approach to poverty revolved around the idea of redistributing the outputs of growth, through investment projects that targeted the productive capacities of the poor (Kapur et al., 1997). Lending in fields such as integrated rural development for small farmers, water supply, and urban services and infrastructure provided a clever bridge between the Bank’s early infrastructure focus and the new poverty agenda. Poverty reduction was also carefully framed as part of the Bank’s evolution as a source of expertise on economic growth and development. In the 1960s and 1970s, the Bank became the largest employer of development economists and pioneered the development of country economic reviews and other types of development policy research based in the discipline of economics (Ayres, 1983; Finnemore, 1996). Education did not figure as importantly as other social sectors in the Bank’s activities during the 1960s, in part because education was not viewed by Bank leadership as directly linked to its focus on improving the material assets of the poor (Stern, 1997, p. 603; Kapur et al., 1997). The Bank’s first foray into education was the training components of larger infrastructure initiatives in the 1960s. However as more and more newly independent nations joined the Bank, the demand for loans to education increased. In the seventies, a new Department of Education was created inside the Bank. Education sector efforts led by this new department were framed within theories of manpower planning, endorsed by the dominant country economics teams who controlled lending priorities within the Bank (Heyneman, 2003). Projects therefore focused on technical vocational education and providing more ‘practical’ curriculum in secondary education, as a way to train skilled workers and help governments fill skills shortages (Heyneman, 2003; Jones, 1992). Education projects also focused on infrastructure for education systems: the building of schools, laboratories, workshops, and libraries (Jones, 1992). Neither the Bank nor its client governments were interested in loans for recurrent costs such as teachers’ salaries or even textbooks (Heyneman, 2003). The McNamara period saw education established as a legitimate sector of Bank activity, one that had considerable attraction for borrowing countries. But perhaps because the link between investing in education and economic growth had not yet been well established, education sector lending during this period rose at only a slightly greater rate than overall bank lending % K. Mundy, A. Verger / International Journal of Educational Development 40 (2015) 9–18 11 10 9 8 7 6 5 4 3 2 1 0 Fig. 1. Education as percent of World Bank total lending. Source: Authors with data from the WB education lending figures database (http:// go.worldbank.org/PMV1NRBOM1). (Mundy, 2002, p. 486). The Bank’s Education spending remained less than 5 percent of total lending (see Fig. 1). It was only towards the end of McNamara’s reign, when a new generation of ‘‘human capital’’ economists were hired at the Bank, that the link between investments in health and education and the increase in the productivity of workers became widely recognized within the institution (World Bank, 1980; Kapur et al., 1997, pp. 326–327).1 4. Structural adjustment and basic education: surprising bedfellows and a new economic argument The 1980s and early 1990s saw the World Bank develop a distinctive policy agenda for education, which married a new focus on basic education to its broader engagement in mitigating the debt crisis in low and middle-income countries. Drawing heavily on the economic theories of human capital, the education sector within the Bank was able to produce a strong internal rationale for the rapid expansion of Bank lending in education (see Fig. 1 above), in a way that intersected with its approach to structural adjustment lending during this era. In the beginning of the eighties, the spectre of massive public debt in the developing world was making it increasingly difficult for the Bank to justify further lending to governments. Among the Bank’s most powerful shareholders, there was little appetite for debt relief, and the Bank was increasingly drawn into joint cause with the IMF as it developed techniques to address debt through fundamental restructuring of national economies and governments. The Reagan administration actively promoted a harsh version of neoliberal orthodoxy within the Bank and the IMF, and under the US appointed President, Tom Clausen and the Bank’s American chief economist, Anne Krueger, the focus on poverty in the Bank’s corporate level discourse declined (Vetterlain, 2012). Structural adjustment policies targeted the downsizing of public expenditure, the liberalization of markets, and the privatization of public utilities as key measures towards achieving macroeconomic stabilization. The Bank emerged at the centre of a neo-classical resurgence in development economics, more responsible than perhaps any other organization for elaborating what has come to be called the ‘‘Washington consensus’’ agenda for low and middle income countries (cf. Miller-Adams, 1999; Williamson, 1993). It was in this context that the Bank hired a prominent human capital economist previously based at the London School of Economics, George Psacharopoulos (Heyneman, 2012). Psacharopoulos’ research on wage differentials by level of education in 1 Human capital theory, as developed within the public economics, states that there is a direct relationship between investments in education (usually measured as years of schooling) and the productivity of workers (reflected both on the workers’ income and in their countries’ economic growth) (Schultz, 1971). 12 K. Mundy, A. Verger / International Journal of Educational Development 40 (2015) 9–18 developing countries suggested that investing in primary education produces higher net returns on public investment than tertiary education. The technique he helped to popularize in the education domain, ‘‘rate of return analysis’’ (RoR), fell onto fertile ground within the Bank, long dominated by the discipline of economics. For the first time education sector staff had a standard technique for ‘‘cost–benefit’’ estimations of World Bank investments in education (Heyneman, 2003). RoR analysis fit in well with the neo-classical resurgence occurring within the Bank, and particularly with the argument that elite capture of state resources forms the primary barrier to economic restructuring and growth. RoR analysis provided a clear strategy on education policy priorities, arguing for a concentration of public investment in primary education. It also encouraged the privatization of higher education levels, where government subsidies were understood as regressive because they primarily supported the attendance of economically well off students (Colclough, 1996). Around the world, governments in the throes of debt crises were advised by the Bank to restructure their education sectors following a rather simple ‘‘short policy menu’’ (cf Heyneman, 2003), which emphasized privatization of tertiary level institutions (cuts to student subsidies, loan schemes and taxes on graduates, etc.) while also encouraging investments in primary education that included greater decentralization of educational systems, increased parental contributions to the basic costs of buildings, books and materials, and openness to private provision.2 As captured in the 1986 ‘‘Financing Education in Developing Countries’’, and the 1995 Policy Paper ‘‘Priorities and Strategies in Education’’ the Bank’s education policy discourse became firmly rooted in the Bank’s overarching response to the debt crisis among its client member states (World Bank, 1986, 1988a, 1995).3 An increasing volume of Bank lending in the structural adjustment era was delivered in larger loans conditioned on policy changes – differing from the project-like investments of the previous period. Certain aspects of structural adjustment loans had clear bearing on education – for example caps on governments spending or conditionalities focused on cuts to the size of the civil service. At the same time, wherever a need for structural adjustment emerged in the context of fiscal insolvency (from Africa in the late 1980s, to Mexico and former Soviet states in the early 1990s, and to Asia post 1997), the Bank also offered borrowing countries new ‘‘sector adjustment loans’’ with policy conditionalities aimed at the restructuring of public sector education spending. Common policy recommendations built upon the Bank’s epistemic anchor in neo-classical economics to form what Colclough (1996) has described as the Edlib (education liberalization) agenda. This included lowering subsidies to tertiary level education and introducing user fees at this level; and encouraging efficiency-driven reforms in kindergarten to Grade 12 level schooling through the use of contract teachers, lowering of repetition rates, and parental ‘‘participation’’ in school level costs (IEG, 2011a; World Bank, 2004; Alexander, 2002; Hinchliffe, 1993; Jimenez, 1987; Mingat and Tan, 1984; World Bank, 1988b, 1986; World Bank, 1995). During this period, Bank investment in secondary vocational schools declined significantly in favour of less expensive non-formal vocational training (Middleton, 1988), and Bank work on literacy and adult education further deteriorated (Nordtveit, 2012). Borrowing countries, increasingly reliant on 2 See the Bank’s 1988 education in Sub-Saharan Africa report and its 1995 Policy and Strategies for Education (World Bank, 1988a, 1988b, 1995). 3 Additional momentum for education sector lending was garnered through the Bank’s ‘‘discovery’’ of the East Asian economic miracle in a series of research publications which found that investment in basic education, alongside the development of export oriented markets, had produced rapid economic growth (Mundy, 2002; Wade, 1996). international financial institutions for liquidity, had limited ability to contest this new policy agenda. One of the paradoxes of this period came precisely because the Bank’s short policy menu in education focused on primary schooling as the most reasonable public sector investment in education. By the early 1990s, a powerful push back against structural adjustment was emerging within civil society and among UN organizations, which pressed the Bank to implement ‘‘structural adjustment with a human face’’ (see Cornia et al., 1988). Bank education sector staff capitalized on this opportunity. On the basis of rates of return analysis, they skilfully argued to the Bank Executive Directors and the Bank’s internal country economists that spending in social sectors like education had to be protected and refocused on services that mostly benefit the poor – particularly primary schooling, while at the same time playing to internal expectations among its own economists for a smaller and more efficient public sector (Jones, 1992, 2006). Bank education sector staff also mobilized politically, linking up with leaders at UNICEF and UNESCO to host the World Conference on Education for All in Jomtien in 1990 which created an important external source of legitimacy and attention for the Bank’s role in education at a time when the Bank was under fire and UNESCO itself was faltering under increased political tension (Chabbott, 2003). In summary, an opportunistic technical cadre within the Bank found a way of framing a Bank mandate in education that could be legitimated in the terms of the economic orthodoxy of the period, but also in terms of pro-poor sentiments, building on the context of the Washington Consensus which was actively promoted by the American administration with support from other OECD members. Despite the criticisms of its excessive simplicity, the Bank emerged from this era as the IO with the most consistent strategy and message in the field of educational development. As can been seen in Figs. 2 and 3, the era of structural adjustment lending contributed to substantial increases in Bank lending activity in education. It also gave an enormous lift to Bank lending to basic education,4 which came to dominate all other education subsectors (Mundy, 2002). 5. The bank and the global development consensus (1996– 2008) The period from the mid-1990s into the first decade of the new millennium saw the Bank face a series of new challenges in its broader authorizing environment. Private financing for development was on the upsurge, challenging the Bank’s lending in middle-income countries. Civil society advocacy against structural adjustment policies reached its zenith,5 forcing the Bank into a much stronger campaign to legitimate its practices and activities. At the same time, the decade following the end of the Cold War, saw the Bank’s most powerful member states, the G-8 countries, develop a strong consensus about international development, leading to the rise of grant based financing for development at the end of the 1990s captured at its peaks at the Gleneagles G-8 summit in 2005. The new compact on development that began to emerge among OECD governments after 1996 committed them to an expanded programme of debt relief, increased levels and harmonization of bilateral aid, and a focus on a handful of top development 4 Basic education is defined by the Bank as the sum of 3/4*General education + Pre-primary education + Primary education + 1/2*Secondary education + 3/4*Public administration-education. 5 Former officials from the Bank were also part of this wave of critiques – most notably Joseph Stiglitz - senior vice-president and chief economist between 1997 and 2000 (see Stiglitz, 2003). Million dollars K. Mundy, A. Verger / International Journal of Educational Development 40 (2015) 9–18 4000 3500 3000 2500 2000 1500 1000 500 0 IDA IBRD IBRD+IDA Fig. 2. Education new commitments (2011 constant dolars). Source: Authors with data from the WB education lending figures database. 100 80 60 40 20 0 90-91 92-93 94-95 96-97 BAS 98-99 PRIM 00-01 02-03 SEC 04-05 TER 06-07 08-09 10-11 12 VOC Fig. 3. WB (IBRD + IDA) new education commitments per level (as percentage of total education commitments). Source: Authors with data from the WB education lending figures database. priorities, including universal education (OECD/DAC., 1996). In 2000, the IMF, OECD, World Bank, and UN also promised closer coordination, more attention to country ownership of development, and a tighter focus on specific development priorities (again including education) in a document entitled ‘‘A Better World for All’’ (IMF et al., 2000). Both agreements fed into the Millennium Development Summit and Millennium Development Declaration, which aligned the United Nations and its agencies, the Bretton Woods institutions, and OECD governments behind a unifying framework (United Nations General Assembly, 2000). This new consensus about international poverty and inequality set out a global ‘‘Third Way’’ between the Washington consensus and a more pro-poor approach to development, capable of responding to rising international protests against globalization and the aftermath of the East Asian economic crisis of the late 1990s (Stiglitz, 2003; Thérien, 2002, 2005; Ruggie, 2003; Noel, 2005). Under James Wolfensohn (World Bank president from 1995– 2005), the Bank emerged as central to this new development consensus. Wolfensohn quickly announced that the Bank would revitalize its focus on poverty alleviation, and restructure its practices to become more ‘‘client centred.’’ The establishment of the Heavily Indebted Poor Country Initiative in 1996 under the IMF and World Bank (enhanced in 1999), created the largest single impetus for expanded national social sector spending in a generation (Hinchliffe, 2004). In this context, the Bank’s structural adjustment lending was replaced by ‘‘poverty reduction strategy operations’’ which now provided policy based tranches of financing for country-led poverty reduction strategies. Such strategies, which became a central policy tool in the context of the Bank but also many other aid agencies, combined macroeconomic Washington consensus era reforms with enhanced attention to human development, social protection, and governance in what became known as the ‘‘post-Washington consensus’’ (Tarabini and Jacovkis, 2012). Wolfensohn’s efforts also included a plan to diversify the Bank’s business by becoming ‘‘a Knowledge Bank’’ through renewed emphasis on policy relevant evidence and the provision of technical advice to governments (Stone and Wright, 2007). Education emerged quite centrally within the new postWashington agenda. Although the education–poverty relationship 13 remained quite weakly conceptualized within the Bank (Bonal, 2007), it was attractive to the Bank precisely because it straddled both equity – and productivity – conceptualizations of development, while limiting commitment to stronger redistributive measures that might conflict with neo-classical economic theories. Thus, according to the Bank: The expansion of educational opportunity, which can simultaneously promote income equality and growth, is a win–win strategy that in most societies is far easier to implement than the redistribution of other assets, such as land or capital. In short, education is one of the most powerful instruments known for reducing poverty and inequality and for laying the basis for sustained economic growth, sound governance and effective institutions (World Bank, 2002, p. v). In keeping with this broad framing, many of the Bank’s core ideas from its 1990s education policy statements remained consistent in this period, reflecting the continued dominance of neo-classical economic orthodoxy within the Bank. In the Bank’s expanded focus on ‘‘good governance’’ prescriptions for education systems took on an economistic and orthodox colouring. Thus, ideas grounded on public choice and new public management like the decentralization of central state control over basic services, school-based management, local accountability, and the introduction of direct incentives to productivity among user groups emerged across the Bank’s K-12 operations. This type of policy ideas received perhaps their strongest and most forceful articulation in the 2004 World Development Report ‘‘Making Services Work of the Poor’’ (World Bank, 2004; Weaver, 2008; Lincove, 2006; IEG, 2011b; Gershberg et al., 2012). Similarly, in higher education where the Bank sought to expand its lending and diversify its business, much of the earlier logic of the Bank’s short policy menu remained intact: most projects retained a preference for private sector provision and cost recovery and advocated the use of competition based incentives to enhance university performance, adding to this agenda new third party ‘‘quality assurance’’ mechanisms (Robertson, 2009). The Bank was able to retain its central role in basic education during the 2000s, especially in primary education, the education subsector most tightly linked to Wolfensohn’s resurgent vision of the Bank’s poverty mandate and most closely aligned to the Millennium Development goals. In education, as in health, the Bank successfully promoted a vision of itself as a platform for pooled funding from OECD donor countries, utilizing sector-wide approaches to education anchored with coherent sector plans. The Bank also became a host for sector trust funds from bilateral and private sector donors.6 At the Dakar world conference on education in 2000, Wolfensohn announced that the Bank would allow no country with a coherent education sector plan to be left behind in achieving universal primary education for want of finance. To meet this pledge the Bank became the host of a new multilateral fund for basic education in 2002, called the ‘‘Education for All Fast Track Initiative.’’ Wolfensohn’s policy entrepreneurship and responsiveness to the broader demands from Bank members, resulted in the growth of education sector lending grow both as a share of total World Bank lending (almost doubling to reach over 8 percent of lending) and in real terms, especially in basic education (see Figs. 2 and 3). 6 Many bilateral donors began to set up sector specific trust funds to support education research and analytical activities including for example, the Russians, Dutch and Irish, providing a flexible source of funding for ‘‘knowledge bank’’ initiatives in education (IEG, 2011a). Larger multi-donor trust funds in education focused on conflict-affected states (Sudan and Haiti, for example) were also established inside the Bank rather than in other potential IO venues. As the IEG evaluation of Bank hosted trust funds notes, the overall value of trust funds between 2003 and 2008 exceeded IDA commitments in the same period (IEG, 2011a). 14 K. Mundy, A. Verger / International Journal of Educational Development 40 (2015) 9–18 At the same time, the Bank had to rethink its education activities in the face both of more widely available grant financing (for low income countries) and private lending (for middle income countries) as well as the sharpened external critique of its practices from NGO advocates. Bank lending for education declined substantially in the last years of the 1990s, particularly among middle income borrowers eligible under the IBRD (see Fig. 2). This was, in part, the consequence of increasing private flows of finance for eligible borrowers, but it also reflected a push back against the Education for All agenda (concentrated on primary education) from countries convinced that higher-level skills were most valuable in the global knowledge economy. Bank lending to IDA countries also dipped in the late 1990s, recovering rapidly after 2001 but in a context of increased availability of grant-based aid. To respond to this decline in demand, the Bank sought to diversify the appeal of its education sector funding to different types of borrowers, focusing on more on client driven lending. Under Director of Education, Maris O’Rourke, it tried to solve the ‘‘problematic trends’’ of decreasing lending to middle income countries by promoting operations in emerging economies, including in Eastern Europe (Jones, 2006). Diverting from its ‘‘simplified policy’’ of the 1990s, the Bank offered more expansive policy statements recognizing the need for greater public spending on Higher Education within the context of a global knowledge economy (World Bank, 2000; Samoff and Carrol, 2003). Yet despite the move towards client driven lending with fewer sectoral conditionalities, ex post conditions such as indicative benchmarks and numerical objectives were expanded, as another way of incentivizing specific country behaviour (World Bank, 2005).7 Throughout this period of rapid growth in the Bank’s authority and scope in the education sector, it is important to note that internal policy entrepreneurship by Bank education sector staff was not always successful, and depended heavily upon wider political opportunities in the Bank’s authorizing environment. Two contentious issues in global education policy illustrate how a complex interplay of internal and external factors came to determine World Bank policies and activities in education during this period: free and universal access to primary education, and the private provision of schooling. In the case of fee-free education, the Bank’s policies from the late 1980s to the late 1990s had encouraged parental participation (contributions) to basic education, both to offset gaps in national budgets and to encourage (according to the Bank’s 1995 Policies and Strategies) greater parental commitment and engagement in schools. However, in 2001, the Bank changed its longstanding support for parental ‘‘participation’’ in school financing under direct pressure from US based NGO advocacy organizations. As O’Brien et al., 2000, and others have shown, when social movements try to influence the Bank policies, they quite often do so by putting pressure on the US Treasury first. In this instance a powerful transnational campaign to end user fees in education and health, grounded on the case of Tanzania, resulted in a decision by Congress to include language in the foreign aid appropriations bill that required the U.S. Treasury to instruct the US Executive Director at the Bank to oppose any multilateral development loan that included user fees in basic education and health (Alonso i Terme, 2002; Mundy, 2006). The Bank responded quickly, issuing a policy statement officially opposing school fees in 2001. Soon after the Bank developed a programme with UNICEF to promote school fee abolition in low-income countries (Katten and Burnett, 2004; Vavrus and Kwauk, 2012). Increasing the share of private education service providers, and promoting the channelling of public funds to private providers, is another policy with longstanding support from among the Bank’s economists and education sector specialists. Research and advocacy for this approach flourished alongside the Bank’s endorsement of ‘‘universal free education/education for all.’’ As documented in Mundy and Menashy (2012) and Verger (2012), private provision of schooling was characterized as inherently desirable in many of the Bank’s policy statements and research publications (see World Bank, 1999, 2005; Patrinos et al., 2009). An influential epistemic community supportive of private provision emerged within the Bank, anchored by a joint programme of research and events between the Bank’s Economics of Education group and a new group devoted to financing private education at the International Finance Corporation (the Bank’s private sector lending arm) (Verger, 2012; Mundy and Menashy, 2014a, 2014b). In-house policy entrepreneurs hosted regular workshops on private provision and brought leading providers of private schooling and key US based advocates of privatization (where the trend towards private provision has grown) into the Bank’s ambit. Yet despite these efforts, loans that support private sector provision decreased in the Bank’s lending portfolio during the 2000s (Mundy and Menashy, 2012), as suggested in Fig. 4. It seems that many client governments were simply not interested in taking public sector loans to support private provision. Drawing on Weaver (2008) we can hypothesize that this disjuncture between talk, decisions and actions became a functional response of the World Bank as it attempted to manage conflicting external agendas arising from the demands of client governments, and the internal institutional preferences derived from pre-existing cultural norms and routines. In summary, the character of the Bank as a global governor of education changed substantively in the 1996–2008 period. The Bank proved adept at capturing and leading on major parts of the OECD development consensus as it related to primary education, and at the same time, managed to diversify its policy prescriptions while retaining a strong focus on financing efficiencies and private provision in its approach to education. While the Bank’s internal culture – especially its reliance on neo-classical economic orthodoxies – led to a degree of consistency in its formal policy setting, and in some dimensions of its lending programmes, the ‘‘short policy menu’’ for education of the structural adjustment era clearly gave way to a wider and more diverse approach to education in its actual operations. Here the demands and preferences of borrowing countries played an important role in shaping some surprising disjunctures between the Bank as a setter of a global education agenda, and its role as the single largest global financer of educational reforms. 60% 50% 40% 30% 20% 10% 0% 7 A good example of this can be found in the Bank’s PRSP Handbook, which provided prescriptive arguments and policy benchmarks in education that were quite clearly in tension with the participatory and bottom-up processes putatively intended to accompany PRSPS (Robertson et al., 2007). Fig. 4. Percentage of Education projects with privatization components. Source: Authors with data from the WB Education Projects Database (see http:// go.worldbank.org/6LRTJRJK30). K. Mundy, A. Verger / International Journal of Educational Development 40 (2015) 9–18 6. After Wolfensohn and the global financial crisis: bank hegemony challenged? Although it is dangerous to speculate, we can use our heuristic focus on the three drivers of change in World Bank policy to explore how geo-political and ideological shifts among the Bank’s most powerful member governments and in its borrowing (or ‘‘client’’) countries are likely to interact with the Bank’s distinctive organizational culture in the period after 2008. The Bank has a new, reform-minded President, Jim Yong Kim. It is widely seen as no longer enjoying the stable coalition of principals who share a common agenda (see for example, recent coverage in the media: El-Erian, 2014); and its work has been profoundly shaped by the 2008 financial crisis and will likely be affected by rising international insecurity. In this section we ask how such changes internally and in the Bank’s wider authorizing environment are affecting or likely to affect its work in the education sector. In relation to the Bank’s longstanding relationship with its most powerful members, the Bank presently operates in a climate of what Rodrik describes as ‘‘leaderless globalization’’ (Rodrik, 2012). The G7 governments that have historically been the Bank’s most powerful principals, including the United States, continue to face significant economic fall-out from the 2008 financial crisis: they themselves are plagued by high debt and low growth. At the same time, they have been hit by a wave of complex security issues that threaten global stability and the global economy, including recent events in Eastern Europe, the Middle East, and the growth of Islamic fundamentalist militantism. We can speculate that finance for global development is unlikely to emerge high on the policy agendas of G7 countries, though if it does it will likely be linked to areas that directly address these collective geopolitical challenges. At the same time, rising powers, such as China, India, Brazil, and countries in the Middle East (among others), are increasingly powerful on the global stage. They also became influential development actors: annual concessional flows from emerging economies to low-income countries was roughly estimated to be between US$12–15 billion by 2011, equivalent to about 10 percent and 15 percent of the aid provided by developed countries (World Bank, 2013a). To date the Bank has made much of the opportunity to work with these emerging powers, relying on the innate economic pragmatism of emerging economies, which value access to an expanded, relatively open and globally integrated world economy, and which in some cases (such as China) remain reliable borrowers of Bank finance (Cammack, 2011). The Bank has also gained considerable support from the G20 governments from its responsiveness in rapidly disbursing funds after the financial crisis. However, observers note that it is important to remember that these countries are primarily focused on expanding their spheres of geo-political influence on a bilateral basis. They have sharply different approaches to economic, political and social development and share a limited appetite for international regimes that constrain national sovereignty (including in such putatively domestic spheres as education); and they are not satisfied with their representation within the Bank (Güven, 2012; The Economist, 2014). Going forward the Bank will have to address the concerns of rising powers, such as China and India, who are in transition from being ‘‘clients’’ of the Bank to ‘‘powerful principals’’ and who along with Russia and India have expressed dissatisfaction with the pace of reforms in the Bretton Woods institutions (Bracht, 2013). As illustrated by the creation of a new international development Bank by the BRICS (Brazil, Russia, India, China and South Africa) at their annual summit in 2013, as well as by the growth of bilateral aid from the BRICS, emerging economies are beginning to destabilize the Bank’s hegemony as a development policy setter and lender. The Bank will have to work hard to shape a thicker set 15 of developmental preferences that are endorsed and supported by its emerging market members (Cammack, 2011). In relation to its lower income and lower middle-income borrowing members, the Bank faces an equally perplexing set of challenges. As recent analyses suggest, many of the Bank’s high performing IDA borrowers are set to graduate into the league of middle-income countries. The Bank is under some pressure to redirect its IDA portfolio and find successful new ways of working with a shrinking group of IDA eligible borrowers, which are often conflict-affected or politically fragile (contexts where the Bank’s experience has been quite weak) (Severino, 2012). The Bank is in better shape on the IBRD side, with its more secure funding base derived from the proceeds of previous loans. But the IBRD, which focuses lending on middle-income countries, faces its own challenges. The rising majority of the world’s poor live in middle income countries, creating a natural market for new Bank lending. Yet middle-income governments are among the Bank’s most discerning and demanding borrowers, and they are not interested in one size fits all policy prescriptions (Güven, 2012). Organizationally the Bank is in a state of flux. Over a relatively short period (2005–2012) it has had three presidents, most recently, Jim Yong Kim, a reform minded medical doctor who has a background in the health sector development. Unlike many previous Bank presidents, Kim is neither an economist nor someone with business/financial sector experience. Kim has introduced a new World Bank Group Strategy (2013b), which commits the Bank to two main goals: ending extreme poverty, and promoting shared prosperity and income growth among the bottom 40 percent of the population in every country. The strategy promises to reposition the Bank as a ‘‘solutions Bank’’ focused on the science of delivery, results, and the dissemination of global best practices; and to align the work of all three arms of the Bank (IDA/ IBRD, the International Financial Corporation, and the Multilateral Investment Guarantee Agency), as well as the multiplying number of donor funded ‘‘trust funds’’ that the Bank manages, around a clearer set of solutions that better leverages the development impact of both public and private actors. Kim has also instituted a complete organizational restructuring of the Bank’s bureaucracy, including the creation in 2014 of fourteen global practices groups (through a process in which all senior managers resigned and reapplied for positions) and significant cuts to staffing and the Bank’s administrative budget. This restructuring responds to two key problems. First are complaints from donor members and others that the Bank is bloated – for example, the claim by the World Bank Alumni Association, that the Bank ‘‘has a very cumbersome inefficient internal structure. It is highly reliant on consultants, in large measure because it has mismanaged its core cadre of experts, and excessively decentralized to the point that the budget is a serious and growing constraint’’ (quoted in Samerasekera, 2012; see also Behar, 2012; Lowrey, 2014; Talley, 2014). Second, the reforms try to reposition the Bank as a purveyor of expertise, especially of expertise on poverty alleviation relevant to middle income countries – responding to the fact that the Bank has not been able to secure a clear role for itself as a knowledge bank and to increasing competition from other expertise providing organizations, such as private consulting firms and other international organizations, including regional banks (Nehru, 2012). Trends in the education sector suggest how the Bank is scrambling to manage these different dynamics. As part of the Bank’s response to the financial crisis (2008–2010), its education lending activity spiked in 2008–2009, rising from 24,702 to 58,747 million US$ ‘‘through a combination of additional financing of ongoing projects and approval of large projects in Brazil, Indonesia, Mexico, and Pakistan’’ (IEG, 2011b, p. xi). Nonetheless, Bank spending on education has fallen off significantly as a share of total 16 K. Mundy, A. Verger / International Journal of Educational Development 40 (2015) 9–18 Table 1 Top 10 borrowers in education projects (million $). 1987–1995 1996–2007 2008–2012 1. India – 2314.9 2. Mexico – 2009 3. Brazil – 1134.1 4. China – 923.9 5. Indonesia – 871.3 6. Pakistan – 753.7 7. Argentina – 622.5 8. Korea – 496.6 9. The Philippines – 321 10. Kenya – 249.3 1. India – 3918.23 2. Pakistan – 2394.8 3. Indonesia – 2019.84 4. Brazil – 1907.9 5. Mexico – 1865.2 6. Bangladesh – 1385.7 7. Colombia – 1057.2 8. Uganda – 921.14 9. Ghana – 852 10. Ethiopia – 846.5 1. Brazil – 5284 2. Poland – 2631 3. India – 2356 4. Turkey – 2000 5. Indonesia – 1821.66 6. Pakistan – 1771 7. Mexico – 1320.75 8. Colombia – 1001.5 9. Costa Rica – 700 10. Bangladesh – 695 Source: Authors, with data from the WB Projects & Operations Database – projects identified include non-education projects with education components. Bank lending since it peaked in 2004/2005 (Fig. 1), reflecting a drop in demand for education sector lending. As shown below SubSaharan-African countries have disappeared from the top list of Bank education borrowers – in part because many very lowincome countries prefer grant based financing for basic education, such as that provided by the Global Partnership for Education (which the Bank hosts) (see Beardmore and Middleton, 2012). Thus the financial crisis secured a trend that tilts Bank education lending towards large emerging economies, and away from basic education to secondary and tertiary levels of education which are in particular demand among emerging market economies (see Table 1 and Fig. 3). To manage the shifts in external demand for its services, a high profile series of consultations led to the drafting and Board adoption of a new Bank education sector strategy in 2011 (Verger et al., 2014). Focused on ‘‘learning for all,’’ the new policy poises the Bank to break with an earlier pattern of funding project inputs, and embraces policy based lending that is intended to spur the Bank’s new results focus by creating incentives for learning outcomes (World Bank, 2011). In its new strategy, the Bank promises to focus on whole system reform (allowing clients to define different subsectoral investments), while also committing itself to enlarging its role as purveyor of policy knowledge and expertise. Central to this is the creation of standardized benchmarks and policy tools for system development in such areas as teachers’ management, national learning assessments, decentralization and accountability, and private provision of services, under its new SABER initiative (Systems Approach for Better Educational Results). The translation of the ambitious ‘systemic reform for learning’ agenda at the country level may be more challenging than ever, and could feed what the Bank’s Independent Evaluation Group has noted is a longer term of decreasing effectiveness in education operations (IEG, 2011b).8 According to Nelson (1999) and to the IEG (2011b) the larger scope of Bank operations in education with respect to the time frame for results and staffing incentives, on the one hand, and the increasing degree of complexity in projects’ design in relation to the level of borrower’s political commitment and capacity, on the other, create significant problems in implementation and therefore in the delivery of quantifiable results. The Bank has had great difficulty in improving learning outcomes despite a concerted effort over more than a decade to focus on investments that will enhance learning (see for evidence the evaluation of the Bank’s support to primary education, IEG, 2004). Going forward it will be very interesting to see whether the Bank can sell the idea of borrowing to enhance learning outcomes for the bottom 40 percent in middle income countries (we suspect the more likely alternative is a continued rise in demand among middle income countries for loans to expand higher education and post secondary skills training). It will be equally important to monitor the Bank’s effectiveness in translating its learning and results focused education agenda into results in the shrinking (increasingly conflict affected) group of IDA eligible countries. These are contexts in which the Bank’s highly planned and government focused approach to reform has not proven nimble and responsive. As a lender to governments, the Bank is not well positioned to provide intermediate solutions (such as direct funding of non-state service providers) that are needed as stopgaps while engaging in system re-building (see Pritchett, 2013 for a controversial review of this issue). A strong bid for a scientifically based, simplified framework is the somewhat predictable outcome of the Bank’s organizational culture and history, and it fits well with President Kim’s call for the Bank to invest in the ‘‘science of delivery’’. But it is an open question whether this highly linear conceptualization of educational development, married as it is to a focus on leveraging system change through the creation of new types of incentives within borrowing country systems, will prove attractive to (and effective for) an increasingly diverse and discerning group of borrowers. 7. Conclusions On the basis of its substantial lending capacity, persuasive knowledge production and transnational political clout, the World Bank has become a key global governance actor in the education for development field. The World Bank entered into the education business in a quite tangential way and without a proper mandate, but education has ended up representing a significant portion of the Bank’s lending portfolio. Furthermore, its education policy agenda has become wider and increasingly more complex with the passage of time: it started by providing basic material inputs to education systems, and now is focusing on improving learning outcomes through ambitious systemic reforms. To understand the evolution of the World Bank education agenda, we have harnessed an approach to understanding international organizations borrowed from the field of political science. In this approach three main dynamics interact and are the focus for our analysis: geopolitical factors and the way most powerful states use the IO to promote their interests and preferences; the influence exerted by IO bureaucracies (both at their apex and within among their technical divisions); and the way the Bank tries to condition and/or is forced to respond to client-countries demands. The case of education illustrates how changing external dynamics became opportunities for internal entrepreneurs to develop a strong, simplified agenda for educational reform that bridged core precepts of neoliberalism and the Washington consensus. These same staff also proved adept at marrying this agenda, which argued for the concentration of public investment in primary education, to both aspects of the Bank’s structural adjustment agenda and to the emergence of a global development consensus focused on poverty reduction and human development in the late 1990s. Yet while specific parts of this agenda, such as system decentralization and the introduction of performance incentives has spread into most Bank lending programmes, some aspects of the agenda have clearly been rejected by borrowers and (often after civil society contestation) by some powerful members. Thus for example, the Bank had to reverse its policies on school fees in elementary education and has had difficulty convincing client countries to borrow for programmes that expand private and commercially provided educational services. Clearly, borrowing 8 According to a recent IEG review, only fifty-seven percent of education sector board projects had satisfactory Bank performance ratings, a 29 percent decline from FY05–07. Bank performance ratings at the institutional level, without education, would increase to 79 percent (IEG, 2011b). K. Mundy, A. Verger / International Journal of Educational Development 40 (2015) 9–18 governments play an important role in conditioning the character of Bank activities, and their preferences are at least partly responsible for disjunctures between Bank’s agenda-setting role and its practical engagement in the financing of educational development. This article has also raised questions about the future of the Bank in the global governance of education. Until quite recently one could confidently identify the Bank as the pre-eminent global governor of educational policies, particularly influential in emerging and low-income country contexts. Today, the Bank’s influence in education is less certain, for at least four reasons: the changing composition of its most powerful members; the growing diversity of preferences among Bank borrowers (many of whom prefer membership in the OECD ‘‘club’’ over Bank prescriptions); the rigidity and linearity of Bank prescriptions for educational systems (which are of questionable value in the varied political economies of rapidly transforming emerging economies); and the fact that the Bank’s IDA facility must now address the complex needs of conflict affected and politically fragile states, very different from the concentration on ‘‘high performing’’ countries that has anchored its IDA lending over the past decade. 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