This July, most of the global media had its eyes fixed on Brazil, where the world’s most-watched spectacle unfolded over the the course of a month: goals, sweat, tears and finally German joy splashed itself in newly-built or renovated stadiums and on television screens around the world. Away from the football pitches, however, in the coastal city of Fortaleza, another major event was taking place, and on the 15th of July, the governments of Brazil, Russia, India, China and South Africa – the BRICS nations – put on paper a development that had been rumoured for some time and confirmed only the previous week: the advent of the New Development Bank. In considering this week’s theme of development economics and economic development, the spotlight inevitably slides to this very recent event; in the two other Features pieces this week, Michael Margaritoff and Steven Chien unburden the context and controversies around the decision of the BRICS governments. In this complementary piece, I’ll seek to run through historical trends of transnational economic organizations – primarily since the Second World War – before and leading up to the NDB, and contextualize the motivations behind such alliances, as well as the changing idea of development itself.

The dominant form of transnational alliance before (and for most of) the twentieth century was of course empire. Accusations of the World Bank and the IMF being neo-colonialist in nature and thereby essentially an extension of empire are certainly present in the development discourse, but they are also politically contended statements. Less contentious links to the past, however, are also aplenty: the valorization of free trade in imperial spheres has been noted, particularly in the British Empire and its East India Company – Amitav Ghosh makes effectively turns this into a plot device in Sea of Poppies, his historical-fictional account of the Opium Wars. Attempts to formalize codes of conduct across borders had also been made several times by the turn of the century, perhaps most famously in philosophy by Immanuel Kant: in 1795’s Perpetual Peace: a Philosophical Essay, Kant laid out a number of political principles on which he believed a form of ‘world government’ could be built. His piece is grounded more in morality and politics than economics per se – in modern times, his influence is noted more in the formation of the United Nations than the World Bank – but apart from his recognition of that side of the argument (the fourth article of his essay regards international debt, specifically that it should be annulled), the idea of transnational organizations designed to secure international relations (which the World Bank clearly is) do seem to find firm foundations in Kant’s work.

The modern framework for ‘global’ organizations became more pronounced in the first half of the twentieth century, and especially so in the interwar period. In response to the Great Depression of the 1930s, the British Empire again sought to mediate the economies of its constituents and 1932 saw the representatives of its colonies and dominions meet for a month at the British Empire Economic Conference in Canada. It was towards the end of World War II that this tendency took on a really global characteristic, though: in July 1944, mindful of the economic consequences of WWI, the heads of 44 nations converged in Bretton Woods, New Hampshire, USA, and signed an agreement to govern the system of international economics following the end of the war (a system that was in place until 1971). It was here that the International Monetary Fund was set up, and the early foundations for the World Bank laid – hence the name ‘the Bretton Woods twins’. One thing especially notable about these organizations in their early form is how they seem to have been conceived around the idea of security for the international community: against war, against the economic disruptions war brought, and arguably against the political disruptions that were also prominent in the middle of the century.

Shortly after the end of the war, in 1949, US President Harry Truman delivered his inaugural speech that many critical scholars now mark as the starting point of modern ‘development’ as a concept as well as a discipline. In what is now known as the Four-Point Speech, Truman marked the beginnings of the Cold War (Point 3: “we will strengthen freedom-loving nations against the dangers of aggression”) but also highlighted the developmental paradigm of the age: the fourth point, now known as the Point Four Plan, was, “we must embark on a bold new program for making the benefits of our scientific advances and industrial progress available for the improvement and growth of underdeveloped areas.” This top-bottom, technocentric conception of ‘developed’ and ‘underdeveloped’ nations was at the time very much in the spirit of late colonial attitudes towards ‘the other’ and became the basis on which the World Bank, the IMF and arguably the United Nations remodeled themselves as ‘development’ organizations. It is in this ‘missionary’ model of development, which lasted on a large scale well into the century and in the eyes of many remains a persistent problem, that a lot of critics see a continuity between the direct rule of empire and the lingering hegemony in the post-colonial era.

Certain sensibilities of the post-colonialist mode of thinking, however, did certainly leave their imprints on development practices and discourses in the wake of the rather sudden collapse of empire in the 1960s. 1964 saw the establishment of the African Development Bank, developed and ratified by African officials to ensure a cooperative push at economic security in the potential turmoil of newly-found independence. The Asian Development Bank followed shortly in 1966 – although this institution and Japan’s involvement in it has generated criticism very similar to that around the World Bank – while a South Asian version – the South Asian Association for Regional Cooperation (SAARC) – was set up later in 1985. The growing localization of developmental responsibilities – an African organization for African needs, an Asian organization for Asian ones – could be read as a post-colonial response to the universalizing values of Truman’s development model – but also, interestingly, likened to the blocs-structure of imperial times. (On a slight tangent from the institution-centred focus of this piece, the final quarter or so of the century also generated important theoretical and practical deviations from conventional development ‘on the ground’: perhaps most prominently the participatory development movement.)

These cycles of convergence and divergence make the advent of the New Development Bank all the more intriguing. The agreement signed by the five heads of state this July makes the following declaration: “The purpose of the Bank shall be to mobilize resources for infrastructure and sustainable development projects in BRICS and other emerging market economies and developing countries to complement the existing efforts of multilateral and regional financial institutions for global growth and development.” The content is clearly geared towards making more than splash in the current development scene, and it might also be noted how ’emerging markets’ takes precedence over the traditional ‘developing countries’: this is a clear rejection of conventional frameworks. But while the NDB is without a doubt designed to challenge the practices and prominence of the Bretton-Woods twins, it is also difficult to equate it with the same sort of post-colonialist localization as the Asian and African Development Banks: the NDB does seem to aim at its own model of cosmopolitanism, and while this is currently defined within a state of tension by the term ’emergent’, the goal no longer looks like it is to ‘develop’ to the same level as the ‘developed’ but to emerge through and beyond the status quo. If the NDB simply marks a return to a blocs-structure of political economy, it might be more similar to the US-USSR divide of the 20th century (speculatively a accentuation of the ‘North-South’ divide) than the imperial blocs of the centuries before; and even then, none of those blocs have ever been totalizing representations of world systems. The assertion from many parties has been the the NDB cannot and will not replace the World Bank and IMF completely, which – if true – leads to the question of exactly how they will manage to coexist.

This article was written by Abiral Chitrakar Phnuyal. Send an email to to get in touch.
Photo Credit: Megan Graham

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