Truman – Rostow Club and the Birth of Development Discourse
In 1949, U.S. President Harry Truman, in his “Point Four” speech, introduced an influential vision of “development” that charted the course of history toward a US centric world. Truman’s speech framed the Global South as “underdeveloped,” suggesting that these nations required Western-style modernization through industrialization and economic expansion, and the US is willing to help these nations to “develop” by investments and technical support. This rhetoric established the ideological foundation for a development paradigm that treated non-industrialized, resource-abundant, and historically colonized nations as “backward,” with Western intervention portrayed as a necessity for their progress. Walt Rostow, the name every development studies student has heard in his coursebook, further crystallized this view in his “Stages of Economic Growth” theory—a “non-communist manifesto” proposing a universal trajectory for all nations, from “traditional” societies to modern, industrialized economies. He presented Western-style development as ideal and natural and framed that alternative economic models are unrealistic.
This paternalistic conception of “development” paved the way for establishing the World Bank and the International Monetary Fund (IMF), created at the Bretton Woods Conference in 1944. Initially intended to aid Europe’s post-war reconstruction, these institutions soon shifted their focus to the Global South, positioning themselves as engines of global welfare, economic growth, and “development.” Yet, behind this rhetoric lay a complex, often coercive system of interventions that dictated the national policies of many Global South countries, enforcing a one-size-fits-all model of development that has proven, at best, deeply flawed, and at worst, exploitative. Not just that, they also appropriated their interventions by putting the global north on the pedestal of generous moneylenders who filled their pockets while deepening the financial grave.
The World Bank’s Foundation and the Narrative of Welfare
Founded with a stated mission to alleviate global poverty, the World Bank promoted itself as a benevolent force for “development” by investing in infrastructure, healthcare, and education in poor countries. But there was something they didn’t advertise. These projects often came at a significant cost, as the Bank typically attached stringent conditions to its loans, requiring countries to adopt structural adjustment programs, including privatization of state assets, deregulation, and trade liberalization. Framed as mechanisms for economic stability and growth, these conditions effectively stripped borrowing countries of control over their economic policies, leaving them vulnerable to external influence.
The mid-20th century, particularly the period from the 1950s to the 1980s, is especially notable. Many recently decolonized countries like India, Tanzania, and Egypt attempted to break free from colonial exploitation by adopting socialist-inspired or mixed-economy frameworks that emphasized self-reliance, public ownership of key industries, and welfare policies. This approach was intended to counterbalance
centuries of colonial extraction, which had systematically drained these regions through a process akin to “primitive accumulation,” In India, for example, the government nationalized critical industries such as steel, mining, and banking to protect the economy from foreign dominance and invest in public infrastructure.
However, the World Bank and IMF leadership, dominated by the US, viewed these strategies with suspicion, as they conflicted with their interests of a liberal economic order based on market openness, trade liberalization, and foreign investment. This ideological conflict set the stage for contentious interactions between newly independent nations and the Bretton Woods institutions. Many of these nations that were dependent on exporting raw commodities were vulnerable to fluctuations in global markets, a legacy of colonial economic structure that discouraged diversification. The oil shocks of the 1970s exacerbated these vulnerabilities, raising import costs for countries like India, where oil was essential for industrial and economic functions. Unlike wealthier Western nations, which had the accumulated resources to overcome economic slowdowns, countries in the Global South faced severe crises, with many pushing toward foreign reserve depletion.
Neoliberal Interventions and Dependency
Rather than assisting these nations in building sustainable, self-reliant economies, institutions like the World Bank and IMF seized this opportunity to expand their influence. Instead of granting financial support or adjusting terms to recognize historical injustices, they extended loans with stringent conditions that dismantled protective policies and opened economies to global capital. These strict stipulations required countries to abandon their socialist policies in favor of free-market reforms. Governments were pressured to privatize public assets, cut social welfare spending, reduce tariffs, and liberalize their economies to attract foreign investment.
In 1991, facing a severe balance-of-payments crisis, India was compelled to accept an IMF loan, enough to last for just a few weeks, on the condition of economic liberalization and completely restructuring the economy of the nation in future. The resulting reforms led to the privatization of public sectors, deregulation, reduced tariffs, and rupee devaluation to encourage exports. While these reforms opened India to foreign capital, they dismantled local markets which led to increased unemployment, reduced public services, a widening wealth gap, intensifying economic inequality and the entry of expanding crony capitalism. These structural changes redirected resources and wealth from India and the Global South to the Global North, in the form of compulsory loan debts, unfair foreign investments, patients and Intellectual Property Rights (IPRs).
The World Bank’s intervention in most of these countries marked a turning point. In many cases, foreign corporations were able to capitalize on newly deregulated markets, exploiting cheap labor and resources, while domestic industries, especially small businesses and cooperatives, struggled to compete. The emphasis on export
oriented growth meant that governments prioritized sectors lucrative for global trade, often at the expense of social services and agriculture, which were vital for the majority of the population. For instance, healthcare and education, once largely subsidized under socialist frameworks, became increasingly inaccessible to lower-income populations as privatization took hold.
Figure 1. A cartoon that depicts how leaders of the country were hiding the loan agreements.
(Image sourced from reddit, no original source was found)
A Colonial Legacy in the Modern Era
The World Bank’s actions depict an imperialist mindset in which wealthy nations dictate the economic and social policies of poorer countries under the guise of “development aid.” This dynamic is particularly evident in resource-rich countries, where international financial institutions exert control over natural resources, often at the expense of local communities and ecosystems. The colonial legacy continues as the World Bank funds projects that prioritize resource access for global markets over local needs, perpetuating the notion that the Global South exists to supply the Global North. In India, several World Bank-financed projects have displaced communities to facilitate water and energy initiatives, often disregarding the livelihoods of affected populations.
This colonial legacy also appears in the World Bank’s approach to environmental issues. While the Bank claims leadership in climate finance, it has faced criticism for funding fossil fuel projects and agribusiness ventures contributing to deforestation, land degradation, and biodiversity loss. Although some recent climate financing has focused on renewable energy and disaster resilience, the underlying economic model continues to prioritize market-based solutions such as carbon trade and infrastructure development. The World Bank claims to be addressing global environmental crises by given loans on conditions, it often does so by imposing models that benefits market,
bringing in the green money for the US Supremes and elites, even by replicating environmental harm and deepening social inequality, a double-edged sword for Global South.
The Politics of Dominance and the World Bank’s Future
As the World Bank and IMF approach their 80th anniversaries, their continued relevance could be a subject of debate for the West, but for Global South, it is a new power to colonize and appropriate new forms of injustices. These institutions represent a model of development that has proven to be violent, exploitative and threatening for life on earth. These institutions prioritize Western interests over locally driven growth, reinforcing a global hierarchy that privileges the Global North. By promoting an agenda that serves multinational corporations and wealthier nations, the World Bank has perpetuated an economic system that keeps many nations in a perpetual state of dependency and loan traps. This reality calls for a radical rethinking of global development institutions and their models, challenging the hegemony of the World Bank and IMF and creating space for alternative frameworks rooted in social equity, environmental sustainability, and economic sovereignty.
The World Bank’s legacy over the past 80 years reflects a pattern of dominance and dependency that mimics the worst aspects of colonialism, sugarcoated in the language of development. As India and other Global South nations confront challenges of inequality, climate change, and social justice, the need for alternative development models becomes urgent. While the World Bank and IMF have shaped the post-war economic landscape, their future relevance depends on a fundamental shift from profit-driven growth to a focus on human and environmental well-being. For these institutions to remain relevant in the 21st century, they must abandon their colonial legacies and support truly equitable, just, and sustainable development. Only then can they shed their reputation as enforcers of Western hegemony and contribute to a world where nations are free to determine their own paths toward prosperity.
This essay won third prize in the essay competition organized by the Centre for Financial Accountability on the topic *Interrogating the World Bank @ 80*. Learn more about the competition here.
Rachit Tiwari is currently pursuing a Master’s degree in Environment and Development at the London School of Economics and Political Science (LSE).