The International Finance Corporation and Forest Loss: A Cross-National Analysis

John M Shandra,Eric Shircliff,Bruce London

doi:10.5195/jwsr.2011.419

John M Shandra, Eric Shircliff + Show 1 more

Open Access

https://doi.org/10.5195/jwsr.2011.419

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Abstract

We conduct the first cross-national study to consider the impact of the World Banks International Finance Corporation loans on forests. In doing so, we analyze data for a sample of sixty-one low and middle income nations for the period of 1990 to 2005. We find substantial support for dependency theory that low and middle income nations that receive an International Finance Corporation loan tend to have higher rates of deforestation than low and middle income nations that do not receive such a loan. We also find that other aspects of World Bank lending affect forest loss including structural adjustment and investment lending. We conclude with a discussion of the findings, theoretical implications, methodological implications, policy implications, and possible directions for future research.

Highlights

The "debt crisis" of the 1980s highlighted the inability of many low and middle income nations to generate enough revenue to make payments on their mounting foreign debts (Peet 2003)
This study expands our understanding of forest loss in a novel way
We begin by providing a review of the International Finance Corporation (IFC) and its operations

Summary

Introduction

The "debt crisis" of the 1980s highlighted the inability of many low and middle income nations to generate enough revenue to make payments on their mounting foreign debts (Peet 2003) This was brought on by the sudden increase in the price of oil coupled with low and middle income nations borrowing large amounts of money from the World Bank in order to finance massive agriculture, forestry, mining, and infrastructure projects (Barbosa 2001). The World Bank responded to the debt crisis by rescheduling loan payments and providing new loans (McMichael 2004) These new loans, known as structural adjustment, are designed to resolve balance of payment issues by requiring indebted nations to institute a variety of economic policy reforms in order to receive the money (Peet 2003). The underlying logic behind structural adjustment is an attempt to generate hard currency for debt repayment by boosting exports and cutting government spending (Glover 1995)

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