The International Monetary Fund and the World -- the two sister organizations that are jointly holding their annual meetings in Seoul this week -- have seen their roles shift dramatically since they were founded in 1945.
The IMF was set up to help countries that for one reason or another faced short-run problems in their ability to pay their international bills. Today, the multinational agency -- which has nearly 150 members -- has been at the center of a truly-long-run crisis among over-indebted developing countries, most of them in Latin America.
The World Bank's formal name is the International Bank for Reconstruction and Development, and its initial mission reflected the need to rebuild Europe after the ravages of World War II. Europe long has been rebuilt, and in the ensuing decades the bank has concentrated on funding projects and programs designed to help developing countries lay the base for further industrialization.
But the World Bank also is being pushed into new fields by the persistent economic crisis in Latin America. It is being prodded to provide the kinds of long-term financing that the IMF cannot provide and to speed up its loan-making process.
A new plan that U.S. Treasury Secretary James A. Baker III is expected to unveil this week in Seoul reportedly will call upon the World Bank to make more so-called structural adjustment loans to provide funds to countries that agree to change domestic economic policies that international experts believe impede their growth. The loans would serve as inducements to countries to rid themselves of inefficient and costly state enterprises, open up their protected industries to foreign competition or ease restrictions on foreign investment.
The Treasury secretary's plan also apparently would have the World Bank guarantee repayment of some portion of commercial bank loans made to developing countries to encourage private banks to resume lending to the debtor nations.
Baker and others want to see more cooperation between the World Bank and the IMF. Although the institutions have headquarters across the street from one another in Washington, more often than not they carry out their missions independently and sometimes at cross-purpose, critics charge.
The IMF generally deals with a country in crisis, a country that is running out of foreign exchange and must make major changes in its economy quickly. The IMF makes short-term loans to these countries, but in return for the loan requires the countries to make changes in their policies that enable them to pay their foreign bills.
Among the types of changes required by the IMF are major currency devaluations -- to encourage exports and discourage imports -- big cuts in government spending and tighter monetary policies to reduce inflation. Nearly all these policies trigger recessions in countries that have been living beyond their means.
But in the case of many Latin American debtors, the short-term crisis was triggered by long-term changes in the world economy and cannot be solved merely by short-term "adjustment" measures. For example, no amount of short-term austerity measures will change the picture for Chile -- which relies for nearly all its foreign income on copper and other commodities exports that the world does not need in the quantities it once did.