The World Bank provides financial and technical assistance to emerging market countries. The World Bank is not actually a bank in the common sense. Instead, it consists of two development institutions the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA) owned by 186 member countries. The Bank is closely affiliated with three other organizations the International Finance Corporation (IFC), the Multilateral Guarantee Agency (MIGA), and the International Centre for the Settlement of Investment Disputes (ICSID) that support its goal of reducing worldwide poverty. The five organizations make up the World Bank Group.
World Bank History:
The World Bank was created at Bretton Woods in 1944 to lend to European countries to help them rebuild after World War II. It was the world’s first multilateral development bank, and was funded through the sale of World Bonds. Its first loans were to France and other European countries, but soon lent money to Chile, Mexico and India to build power plants and railways. The Bank came into formal existence on 27 December 1945 following international ratification of the Bretton Woods agreements, which emerged from the United Nations Monetary and Financial Conference (1–22 July 1944). It also provided the foundation of the Osiander-Committee in 1951, responsible for the preparation and evaluation of the World Development Report. Commencing operations on 25 June 1946, it approved its first loan on 9 May 1947 (US$250M to France for postwar reconstruction, in real terms the largest loan issued by the Bank to date). Its five agencies are:
- International Bank for Reconstruction and Development (IBRD)
- International Development Association (IDA)
- International Finance Corporation (IFC)
- Multilateral Investment Guarantee Agency (MIGA)
- International Centre for Settlement of Investment Disputes (ICSID)
The World Bank’s activities are focused on developing countries, in fields such as human development (e.g. education, health), agriculture and rural development (e.g. irrigation, rural services), environmental protection (e.g. pollution reduction, establishing and enforcing regulations), infrastructure (e.g. roads, urban regeneration, electricity), and governance (e.g. anti-corruption, legal institutions development). The IBRD and IDA provide loans at preferential rates to member countries, as well as grants to the poorest countries. Loans or grants for specific projects are often linked to wider policy changes in the sector or the economy. For example, a loan to improve coastal environmental management may be linked to development of new environmental institutions at national and local levels and the implementation of new regulations to limit pollution. The World Bank Institute is the capacity development branch of the World Bank, providing learning and other capacity-building programs to member countries. Two countries, Venezuela and Ecuador, have recently withdrawn from the World Bank. It is stated that it is also an observer on the United Nations Development Group.
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President of World Bank:
Jim Yong Kim (born December 8, 1959) is a Korean-American physician and 17th President of Dartmouth College. He was formerly the Chair of the Department of Global Health and Social Medicine at Harvard Medical School, and was a co-founder and executive director of Partners In Health. On March 2, 2009, Kim was named as the president of Dartmouth College, a position he formally assumed on July 1, 2009. Kim is the first Asian-American to assume the post of president at an Ivy League institution. On March 23, 2012, President Barack Obama announced that the United States would nominate Kim as the next president of the World Bank.
Background: Born in Seoul, South Korea in 1959, Jim Yong Kim moved with his family to the U.S. at the age of five and grew up in Muscatine, Iowa. His father taught dentistry at the University of Iowa, while his mother received her Ph.D. in philosophy. Kim attended Muscatine High School, where he was valedictorian, president of his class, and played both quarterback for the football team and point guard on the basketball team. After a year and a half at the University of Iowa, he transferred to Brown University, where he graduated magna cum laude with an A.B. in 1982. He was awarded an M.D. from Harvard Medical School in 1991, and a Ph.D. from Harvard University, Department of Anthropology, in 1993. He was among the first enrollees of Harvard’s experimental MD/Ph.D. program in the social sciences.
List of presidents
- Eugene Meyer (June 1946 – December 1946)
- John J. McCloy (March 1947 – June 1949)
- Eugene R. Black, Sr. (1949–1963)
- George D. Woods (January 1963 – March 1968)
- Robert McNamara (April 1968 – June 1981)
- Alden W. Clausen (July 1981 – June 1986)
- Barber Conable (July 1986 – August 1991)
- Lewis T. Preston (September 1991 – May 1995)
- James Wolfensohn (May 1995 – June 2005)
- Paul Wolfowitz (1 June 2005 – June 2007)
- Robert Zoellick (1 July 2007–22 March 2012)
- Jim Yong Kim (23 March 2012-Present)
Boards of Governors and Executive Directors:
The Board of Executive Directors and the president of the Bank who serves as chairman of the board are responsible for the conduct of the general operations of the Bank, oversee the work of the Bank on a daily basis, and perform their duties under powers delegated to them by the Board of Governors. The directors meet twice a week in Washington D.C., to approve new loans and review bank operations and policies. The Board of Governors is made up of shareholders 187 member countries who are the ultimate policymakers at the Bank. Generally, the governors are member countries’ ministers of finance or ministers of development. They meet once a year at the Annual Meetings of the Boards of Governors of the World Bank Group and the International Monetary Fund to set the overall policies of the institution, review country membership and perform other tasks. Because the governors meet only annually, they delegate specific duties to the 24 Executive Directors, who work on-site at the Bank. According to the Articles of Agreement, the five largest shareholders, France, Germany, Japan, the United Kingdom, and the United States, each appoint an executive director, while other member countries are represented by 19 executive directors who represent constituencies in several countries. Each of the directors is elected by a country or group of countries every two years. It is customary for election rules to ensure that a wide geographical balance is maintained on the board.
Some 10,000 development professionals from nearly every country in the world work at the Bank in Washington D.C., or in our more than 100 Country Offices. We are economists, educators, environmental scientists, financial analysts, anthropologists, engineers and many others. Approximately 3,000 of us work in country offices in the developing world. We apply our skills and the Bank’s resources to bridge the economic divide between poor and rich countries, to turn rich country resources into poor country growth, and to achieve sustainable poverty reduction.
All of the 193 of the UN members and Kosovo that are WB members participate as a minimum in the IBRD. Most of them also participate in some of the other 4 organizations: IDA, IFC, MIGA, ICSID.WB members by the number of organizations where they participate are the following:
- only in IBRD: San Marino
- IBRD and one other organization: Suriname, Tuvalu, Brunei
- IBRD and two other organizations: Antigua and Barbuda, Sao Tome and Principe, Namibia, Bhutan, Myanmar, Qatar, Marshall Islands, Kiribati
- IBRD and three other organizations: Canada, Mexico, Belize, Jamaica, Dominican Republic, Venezuela, Brazil, Bolivia, Uruguay, Ecuador, Dominica, Saint Vincent and the Grenadines, Cape Verde, Guinea-Bissau, Niger, Equatorial Guinea, Angola, South Africa, Comoros, Seychelles, Libya, Somalia, Ethiopia, Eritrea, Djibouti, Bahrain, Iran, Iraq, Malta, Montenegro, Bulgaria, Romania, Moldova, Poland, Russia, Lithuania, Belarus, Kyrgyzstan, Tajikistan, Turkmenistan, India, Thailand, Laos, Vietnam, Palau, Vanuatu, Samoa, Maldives
- All five WBG organizations: the rest of the 127 WBG members
- one Pacific island nation – Nauru,
- two communist states – Republic of Cuba, Democratic People’s Republic of Korea
- two New Zealand dependencies – Cook Islands, Niue
- four European microstates – Principality of Andorra, Principality of Monaco, Principality of Liechtenstein, State of Vatican City
- and states with limited recognition – Republic of Abkhazia, the Republic of China, State of Palestine, Sahrawi Arab Democratic Republic, Republic of Somaliland, Republic of South Ossetia, Pridnestrovian Moldavian Republic, [Russian republic of Armenia]
Purpose of World Bank:
The World Bank provides low-interest loans, interest-free credits and grants to developing countries. In the past, this usually occurred when they were in danger of sovereign debt default, itself often a result of overspending and extensive borrowing. Many countries then devalued their currencies, which resulted in hyperinflation. To combat this, the Bank often required austerity measures, where the country must agree to cut back on spending and support its currency. The World Bank loans are usually to invest in education, health, and infrastructure. The loans can also be used to modernize a country’s financial sector, agriculture, and natural resources management. The Bank’s goal is to “bridge the economic divide between poor and rich countries, to turn rich country resources into poor country growth and to achieve sustainable poverty reduction.”
To achieve this goal, the Bank focuses on six areas:
- Overcome poverty by spurring growth in the poorest countries, focusing on Africa.
- Offer reconstruction to poor countries emerging from war, a major contributing factor to extreme poverty.
- Provide a customized development solution to help those middle-income countries overcome problems that could throw them back into poverty.
- Spur governments to act on preventing climate change, controlling communicable diseases, (especially HIV/AIDS and malaria), managing international financial crises, and promoting free trade.
- Work with the League of Arab States to improve education, build infrastructure and provide micro-loans to small businesses in the Arab world.
Share its expertise with developing countries, and its knowledge with anyone via reports and its interactive online database.
World Bank Statistics and Reports:
The World Bank provides a wealth a downloadable data for more than 200 countries. In 2010, the Bank launched a new Open Data website. It provides free access to 298 major indicators, including:
· Climate change, the environment and energy,
· Health, such as life expectancy,
· Urban development and infrastructure,
· Labor, income and education,
· Government, economic policy and sovereign debt,
· Demographics such as poverty, gender and aid effectiveness,
· Business, agriculture and financial areas.
The Bank also does in-depth analyses of development issues, including the annual World Development Report. A variety of research reports examine global trends in trade, financial flows, and commodity prices, and their impacts on developing countries. Other reports include the World Development Indicators, Global Development Finance, Little Data Book, Little Green Data Book and The World Bank Atlas.
Difference between the Bank and the World Bank:
The term “World Bank” refers only to the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA). The term “World Bank Group” incorporates five closely associated entities that work collaboratively toward poverty reduction: the World Bank (IBRD and IDA), and three other agencies, the International Finance Corporation (IFC), the Multilateral Investment Guarantee Agency (MIGA), and the International Centre for Settlement of Investment Disputes (ICSID).
Procedure to become a member:
Under the Articles of Agreement of the International Bank for Reconstruction and Development (IBRD), a country must first join the International Monetary Fund (IMF) prior to becoming a member of the Bank. Membership in IDA, IFC, and MIGA is conditioned upon membership in IBRD.
We believe that sharing information is essential for sustainable development, so we seek out opportunities to talk about our work with the widest possible audience. Access to information stimulates public debate, broadens understanding of development issues, and enhances transparency and accountability in the development process. It also strengthens public support for development efforts, resulting in improvements in the quality of our assistance. Therefore, it is our policy to be open about our activities. To that end, we’ve expanded the information that we make available to the public and have streamlined access to it. Project Documents, including environmental and social assessments, are available throughout the Project Cycle, as well as our operations results, research and reviews. Approval is often withheld for projects, when project documents are not posted according to disclosure requirements. To facilitate timely public access to this information, we have established the World Bank’s Info shop, which is located in Washington, D.C. In addition, information is disseminated globally through the Public Information Centers (PIC). PIC staff members develop proactive outreach programs within their countries.
World Bank/IMF protesters smashed the windows of this PNC Bank branch located in the Logan Circle neighborhood of Washington D.C. The World Bank has long been criticized by a range of non-governmental organizations and academics, notably including its former Chief Economist Joseph Stiglitz, who is equally critical of the International Monetary Fund, the US Treasury Department, and US and other developed country trade negotiators. Critics argue that the so called free market reform policies which the Bank advocates in many cases in practice are often harmful to economic development if implemented badly, too quickly (“shock therapy”), in the wrong sequence, or in very weak, uncompetitive economies. World Bank loan agreements can also force procurements of goods and services at uncompetitive, non free-market, prices. In Masters of Illusion: The World Bank and the Poverty of Nations (1996), Catherine Caufield reveals how the assumptions and structure of the World Bank operation in the end harms developing nations rather than promoting them. In terms of assumption, Caufield first criticizes the highly homogenized and Western recipes of “development” held by the Bank. To the World Bank, different nations and regions are indistinguishable, and ready to receive the “uniform remedy of development”. The danger of this assumption is that to attain even small portions of success, Western approaches to life are adopted and traditional economic structures and values are abandoned. A second assumption is that poor countries cannot modernize without money and advice from abroad. A number of intellectuals in developing countries have argued that the World Bank is deeply implicated in contemporary modes of donor and NGO driven imperialism and that its intellectual contribution functions, primarily, to seek to blame the poor for their condition. Defenders of the World Bank contend that no country is forced to borrow its money. The Bank provides both loans and grants. Even the loans are concessional since they are given to countries that have no access to international capital markets. Furthermore, the loans, both to poor and middle-income countries, are at below market-value interest rates. The World Bank argues that it can help development more through loans than grants, because money repaid on the loans can then be lent for other projects.
Source of money:
We raise money in several different ways to support the low-interest and no-interest loans (credits) and grants that the World Bank (IBRD and IDA) offers to developing and poor countries. IBRD lending to developing countries is primarily financed by selling AAA rated bonds in the world’s financial markets. IBRD bonds are purchased by a wide range of private and institutional investors in North America, Europe, and Asia. While IBRD earns a small margin on this lending, the greater proportion of income comes from lending out our own capital. This capital consists of reserves built up over the years and money paid in from the bank’s 187 member country shareholders. IBRD income also pays for World Bank operating expenses and has contributed to IDA and debt relief. We maintain strict financial discipline to maintain the AAA status of our bonds and continue to extend financing to developing countries. Shareholder support is also very important for the Bank. This is reflected in the capital backing we have received from shareholders in meeting their debt service obligations to IBRD. We also have US$178 billion in what is known as “callable capital,” which could be drawn from our shareholders as backing, should it ever be needed to meet IBRD obligations for borrowings (bonds) or guarantees. We have never had to call on this resource. For more information on the Bank’s bonds and notes, go to the World Bank Debt Securities.IDA, the world’s largest source of interest-free loans and grant assistance to the poorest countries, is replenished every three years by 40 donor countries. Additional funds are regenerated through repayments of loan principal on 35-to-40-year, no-interest loans, which are then available for re-lending. IDA accounts for nearly 40 percent of our lending.
Profit and activities with it:
We often do have a surplus at the end of the fiscal year, which is earned from the interest rates charged on some loans and from fees charged for some of our services. Some of the surplus goes to IDA the part of the bank that provides grants and interest free loans to the world’s poorest countries. The rest of the surplus is either used for debt relief for heavily indebted poor countries, added to financial reserves, or helps us respond to unforeseen humanitarian crises.
Cause of poverty and prevention:
For the Bank, the bottom line is that there has been progress, but there has not been enough. We continue to do all we can to make sure successful projects and approaches are shared more widely so there’s a greater impact on poverty reduction. At the same time, we’ve learned from past mistakes and constantly work to improve our policies and programs. While poverty still exists, much progress has been made:
- During the past 40 years, life expectancy in developing countries has risen by 20 years about as much as was achieved in all of human history prior to the mid-20th century.
- During the past 30 years, adult illiteracy in the developing world has been nearly halved to 25 percent.
- During the past 20 years, the absolute number of people living on less than US$1 a day has begun to fall for the first time, even as the world’s population has grown by 1.6 billion people.
- During the last decade, growth in the developing world has outpaced that in developed countries, helping to provide jobs and boost revenues poor countries’ governments need to provide essential services.
World bank And Bangladesh
During the 1990s the World Bank’s lending for transport to Bangladesh was the largest sector investment operation in the country. Since 1990, the Bank has approved six transport projects totaling USD 1.08 billion. Some recent projects include:
The Emergency 2007 Flood Restoration and Recovery Assistance Program:
The 2007 Floods directly affected over 13 million people in 47 districts of Bangladesh, caused more than 1000 deaths, affected over 2 million acres of agricultural land, and damaged infrastructure, social and educational facilities and private assets. The World Bank is supporting a two part flood assistance strategy, budget support and restoration of infrastructure and livelihoods to help the country cope. Out of the USD 70 million for the Emergency 2007 Flood Restoration and Recovery Assistance Program, which is designed to ensure speedy recovery and reconstruction through additional financing to three existing Bank projects, USD 20 million will be used for infrastructure rehabilitation through the on going Rural Transport Improvement Project (RTIP). This will be used to rehabilitate the secondary and rural road network in flood affected areas, including rehabilitation of Upazila roads, culverts and bridges.
The Rural Transport Improvement Project 2003-2009, extended till 2011 with a credit amount of US$ 190 million, aims to provide rural communities with improved access to social services and economic opportunities, and to enhance the capacity of relevant government institutions to better manage rural transport infrastructure in 21 districts of the country. Following the successful implementation of RTIP a second project, RTIP II, is being planned to cover 26 districts all over the country,
The Bangladesh Railway Reform Programmatic Development Policy Credit: was the first major Bank operation in the country’s railway sector. The objective is to improve the governance structure within which Bangladesh Railway operates addressing both governance relationship between the Government and Bangladesh Railway on the one hand, and corporate governance and management structure within the railways organization on the other. This project is one of the flagship projects planned to be developed with the main CAS partners, ADB and JBIC, as part of a multi year, multi donor support program.
The Clean Air and Sustainable Environment Project (CASE):
was approved by the Bank in CY 2009. This project is designed to address the issue of urban air pollution by undertaking demonstration interventions and providing technical assistance for capacity building and reform in key polluting sub-sectors. The transport component will support capacity building through technical assistance and demonstration initiatives in urban transport in Dhaka that will focus on reducing conflict between motorized and non-motorized transport (NMT) and congestion, as well as providing safe and better mobility for those who walk and use public transport, particularly, working women. It will also help strengthen the institutional, policy, and regulatory framework for public transport, and help mainstream environmental considerations into urban transport related decision making.
Criticism and protests against World Bank:
Our role in development and in the wider globalization of the world’s economy has often been misunderstood. On one hand, this occurred because we did not explain the Bank’s mission or our work very well. On the other, critics tried to blame the bank for any or all of the perceived problems associated with globalization the growing integration of economies and societies around the world resulting from increased flows of goods, services, capital, technology, and ideas an economic force that the Bank does not control. Also, protests drew worldwide attention to the problem of extremely high multilateral debt levels carried by very poor countries, which high-income countries ultimately agreed were unsustainable and stifled the ability of poor countries to both pay those debts and combat poverty. This led the Bank and International Monetary Fund to form the Debt Initiative for Heavily Indebted Poor Countries (HIPC) and to further financial pledges by high-income countries to assist the Bank to carry out debt-relief efforts for heavily indebted poor countries.
World Bank and social service:
AIDS controversy: The World Bank is a major source of funding for combating AIDS in poor countries. In the past six years, it has committed about US$2 billion through grants, loans and credits for programs to fight HIV/AIDS. Its critics, however, claim these financial expenditures to be insufficient
Allegations of corruption: The World Bank’s Integrity Vice Presidency (INT) is charged with investigation of internal fraud and corruption, including complaint intake, investigation and investigation reports.