longer story. Up until the 60s/70s, the dominant development strategy for emerging economies was to industrialize; industry and production create high value-added products you can sell abroad, creating wealth. The problem with this is a) this creates competition for developed economies and b) it raises incomes and wealth levels in these countries, making their use for cheap labor and resources for the north very difficult. Thus, it was in the interest of developed countries to prevent this.

Added problem now: if you talk about "free trade" all the time, imposing import regulations on products by these countries is politically difficult on the right. If you talk about "helping development", putting the brakes on them is politically difficult on the left.

So, miraculously (ahem) the global development paradigm changed after the 70s (this is what people talk about when they throw the word "neoliberalism" around). With reference to the economic theory of competitive advantage, the argument became: hey, Chile is really good at getting resources out of the ground, really cheaply (why? shhh, don't ask). It's not really good at making cars. It should invest in what it's good at. If they're in economic peril, we have to help them make money with what they're good it. Thus, a loan application for a factory, for train infrastructure that doesn't just run from the mine to the port? Crazy! You'll lose money!

Yes, now, you will; in 20 years, you'll do a lot better with it. But in the short term yes, this is a bad investment. But without it, you'll never get started. And, also, you'll never become a competitor for the developed world, and will keep producing cheap resources for northern industry.

The IMF, as a fundamentally neoliberal institution, works on this paradigm. It makes an analysis of how they can make more dollars to repay the loans (all the IMF really cares about), and resources it is. But local governments often collaborate willingly as well: the quick resource buck allows them to build a few more buses now and maybe fix the roads. Developing a productive economy takes patience and longer term planning, but would allow you to develop a high speed train network that is the envy of the world in 20 years.