A book that has gained word-of-mouth best seller status is “Confessions of an Economic Hit Man,” based on author John Perkins' premise that international development lending exists to sustain a concerted effort by big corporations, international banks, and government to establish a global empire that brings “servitude, misery, and death to millions of people.”

The title itself is certainly an attention grabber. The book plays into the popular distrust of elites, and the growing angst surrounding globalization.

The 'economic hit men' in Perkins' narrative are the foot soldiers of this corporatocracy, “highly paid professionals who cheat countries around the globe out of trillions of dollars” as they “funnel money from the World Bank, the U.S. Agency for International Development, and other foreign aid organizations into the coffers of huge corporations and the pockets of a few wealthy families who control the planet's natural resources.”

As a professional in the field of economic development for some 20 years, I feel obliged to respond. Yes, one can always cite global examples of corporate malfeasance, projects gone awry, and meddling in the internal affairs of other governments-but a wholesale indictment of economic growth and international lending as the cause of global misery is widely off the mark.

It is precisely because of economic growth that millions around the world have been lifted out of global poverty. The very organizations Perkins condemns-the World Bank, IMF, and USAID-were created in the post-World War II years to promote global economic growth and to prevent the occurrence of another global depression. While there is always room for improvement in any organization, these organizations have made major contributions.

A little perspective about what has occurred over the past half century is appropriate. Consider the following:

China is probably the world's most visible example of the positive role of borrowing from the international financial institutions. China is the World Bank's biggest borrower, and has used this borrowing and foreign direct investment to promote development and improve living standards; as a result, hundreds of millions have been moved out of poverty in that country.

Here's another consideration that undermines the 'hit man's' polemic argument. Question: Which nation is the largest recipient of foreign direct investment? Students are invariably surprised by the answer, which is the United States.

Then the follow up question: Where does the U.S. place most of its foreign direct investment, high-income or low-income countries? Answer: Seventy percent of U.S. foreign direct investment is concentrated in high-income countries.

What do these numbers mean? Namely, that the popular argument that global capitalism is largely exploiting less developed countries doesn't pass the test of evidence. The bulk of private investment is going to developed countries; which underscores why it is critically important to have government-supported World Bank financing available to lower income countries who otherwise would be unable to compete for capital.

So how does international lending really work? The reality is really much less conspiratorial and considerably more mundane than globalization critics like Perkins would have us believe.

Take this typical project undertaken by the International Development Association (IDA), the particular World Bank entity whose mission is to lend to countries with less than $700 per capita income. The World Bank Board recently approved a $28 million IDA loan to Cambodia to improve basic education, in part by building secondary schools, with special focus on the poor and underserved communities. The terms of the loan were the standard IDA terms: 40-year loan with a 10-year grace period, and an interest rate of 0%.

The issue that critics of global development and trade like Perkins fail to consider is this: who will lend to the poorest countries for projects like Cambodia if not the IDA? There is simply no way that poor countries can climb out of poverty without basic infrastructure and human capital, and there is no way to do this without access to long-term, cost-effective financing.

1950 2000 2050 est.

Global Output Per capita ($) $586 $6,666 $15,155

Global GDP percentage
Industrial countries 95% 77% 45%

Emerging markets 5% 23% 55%

Life Expectancy (years)
Industrial countries 65 77 84

Emerging markets 41 64 78

Literacy Rate
Industrial countries 95% 98% 99%

Emerging markets 33% 64% 88%

Infant Mortality (per 1000)
Industrial countries 30 8 4

Emerging markets 140 65 10