World Bank Forecasts and Planning in the Third World

Abstract

The growth forecasts of the World Bank have become increasingly influential for the planning efforts of developing countries. However, after reviewing these forecasts this author concludes that the projections of the Bank for the economic growth rates both of the industrial and of the developing countries are systematically biased, and its estimates of the locomotive effect for developing countries are ambiguous. A similar pattern is reflected in the forecasts of the major United Nations agencies, in particular the Secretariat and UNCTAD. These forecasts are not readily explained by the data presented or by the forecasting methods used by the agencies. Rather, the explanation appears to lie in the need to rationalize forecasts within the context of a particular institutional imperative. An alternative model of forecasting is suggested which shows how peer group and pressures within the interagency system have resulted in a misplaced consensus about long-term trends, changed the methods used, undermined the potential benefits of the forecasting exercise, and ultimately harmed the situation of many people in the developing countries.