The Influence of Alternative Development Finance on the World Bank’s Safeguards Regime

Abstract

Abstract What shapes social-environmental regulations in the World Bank? To date, scholars have emphasized the influence of nongovernmental organization activism, donor power, and various elements of the Bank’s internal culture and incentive system. This article documents a new and important source of influence: outside financing options for borrower countries. I demonstrate this influence through an in-depth study of the World Bank’s Safeguards Review and Update, a four-year policy-making process that concluded in 2016. As alternative sources of finance carrying less stringent safeguard requirements than those of the World Bank proliferated in years preceding the Safeguards Review, borrowers gained negotiating power over Bank policy, enabling them to successfully push for more regulatory autonomy. These findings suggest that understanding the future of social-environmental standards in development finance institutions will require greater attention to new sources of finance and the power shifts they may entail.