Financial Crisis Comes With Huge Price Tag for Developing World

More than $700 billion may be needed by developing countries if they are to maintain current economic conditions, a World Bank report released this weekend predicted.

The

, "Swimming Against the Tide: How Developing Countries are Coping with the Global Crisis," which was prepared ahead of the G-20 meeting next week in Britain, calls for the creation of a global "vulnerability fund." The creation of the fund would require developed countries to contribute 0.7 percent of their stimulus packages to help developing nations.

"We need to react in real time to a growing crisis that is hurting people in developing countries," World Bank President Robert Zoellick

.

"This global crisis needs a global solution, and preventing an economic catastrophe in developing countries is important for global efforts to overcome this crisis."

The report says that $700 billion is the high prediction of what developing countries need. The least amount is pegged at $270 billion.

Whatever the case may be, the report is yet another indication of how developing countries are being squeezed by the financial crisis. If the World Bank report is accurate, 2009 is going to be a rough year for the developing world.

The report also comes as the World Bank is facing criticisms that it has not responded well to the financial crisis. In response, the bank has created a

, to be headed by Mexican President Ernesto Zedillo, which is expected to recommend ways in which the bank can better respond to crises in the future.

"From the attacks of 11 September, to the global recession today… from the terrorist networks of South Asia to the drug traffickers of West Africa … none of these problems is confined to the countries in which they originate," U.K. International Development Secretary Douglas Alexander told BBC. "In a world of cross-border risks and opportunities, in a world where there is no more ‘over there' and ‘over here', fighting poverty is, bluntly, in our own interests."

About the author

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    David Francis

    David is a Washington-based journalist and former Devex staffer who spearheaded Devex's "Obama's Foreign Aid Reform" blog. He has written for the Christian Science Monitor, Pittsburgh Post Gazette, SportsIllustrated.com, San Francisco Chronicle, Foreign Policy magazine, and the Washington Monthly. David holds an undergraduate degree from the University of Chicago and a graduate degree from Georgetown University.