Headlines all over the world tell the same story: “our world economy is shrinking.” This is the first time it has shrunk since World War II. Industrial output is down 15 percent, the International Monetary Fund is staring a $700 billion financial shortfall in the face, and everyone seems to be out of money.

The president of the World Bank, in an attempt to alleviate the situation, has called for developed nations to increase investments in developing counties, with the hopes of creating jobs and avoiding unrest in these undeveloped nations.

Without the IMF or the World Bank, developing nations are facing a very bleak future. Beginning in January, the United States and other large Western nations have been investing less in these organizations because of their own economic shortcomings. It started with mortgage failures, or “junk mortgages,” right here in the States, which stunted economic growth and limited the availability of credit for borrowing and investment.

This ripple-effect made its way across the Atlantic into Europe, and as the IMF and World Bank have suffered a drain in financial resources, developing nations sit and wait. They had nothing to do with the original problem, but because of their lack of influence, they have no voice. African countries will suffer this economic shrink the most, stuck as bystanders, watching as the Western world makes decisions without their input.

The IMF and the World Bank have been in the money business for a long time. Some of their long-established policies, while seemingly innocent, have crippling long-term effects for developing nations, only solving money problems temporarily.

For example, according to IMF standards, certain nations that are borrowing can only purchase grains from American growers. Arguably, the American grains are cheaper to buy and usually of a better quality, but this subsidizing of sorts leaves local growers in the dust, forced further into poverty. In the short run, people get food, but in the long run, policies like this only deepen the nation’s dependence on IMF funding.

In short, because of this shrinking world economy, poor countries are forced to rely on developed nations. Unfortunately, as large investors like America run out of money, there is going to be less money available, and more hands held out in need.


Amy Hooveris a senior in journalism. She can be reached at [email protected].