Catherine Gwin examines the evolution of U.S. policy toward the World Bank and the impact of the United States on the institution's policies and operations. Beginning with the U.S. role in the start-up of the Bank, Gwin describes the ebb and flow of the U.S. support: the increasing activism of Congress in U.S.-World Bank policy starting in the 1970s, the breakdown in the bipartisan character of support for the Bank in the early 1980s, followed by renewed U.S. attention in response to the debt crisis, and the later entry of Russia and other transforming economies into the Bank. Gwin disputes both those who see the Bank as under the thumb of the United States and those who see it as unresponsive to U.S. concerns. She suggests that the U.S. policy toward the World Bank has always reflected an underlying ambivalence toward both development assistance and multilateral cooperation. As a result, U.S. policy in the Bank has been erraticoften reflecting the swings in U.S. politics and foreign policy rather than presenting a coherent view of the development financing role of the World Bank and a rigorous concern for the effectiveness of Bank operations.

Powerful global trends demand a wholesale rethinking of the system of international development assistance. A key issue is the future of concessional aid provided by multilateral development banks. What should be the future role of MDB concessional aid? And what is needed to maintain donor countries' support?

In a rapidly changing global environment there is still a strong case for maintaining MDB concessional aid. But that case only holds, provided a new approach is taken which adapts the roles of MDB aid to development lessons of the recent past and changing global conditions -- and does so in a way that improves aid's effectiveness.

This study argues that without these conditions, continued donor country support cannot and should not be expected. The study lays out a new "framework" for future decision-making of MDB funding, based on: (1) a new performance-based approach to aid allocations among countries: (2) an expansion of MDB investments in regional and global problem solving; (3) the resolution of specific operational issues that stand in the way of greater effectiveness in delivery of aid; and (4) changes in the burden-sharing and governance arrangements of individual MDBs.