WORLD BANK

IntroductionThe World Bank had much influence in shaping development since the second half of the twentieth century.

Immediately after the (WWII), world leaders saw a need for international cooperation in order to rebuild the devastated countries in Europe.

It consists of five closely associated institutions, including the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA).

The World Bank is one of the world’s largest sources of development assistance.

There are currently 188 member countries. Voting power is linked to member’s shares, which in turn are based on each country's relative economic strength.

History behind the World BankThe 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.

By 1975, the Bank also lent money to countries to help with family planning, pollution control and environmentalism.

After the Great Depression in the 1930s there was a need for an organization to create a system for exchange rate stability because there was uncertainty of the value of paper money and countries began cheating other countries in trade.

World Bank Made up of 5 different organizations:– International Bank for Reconstruction and

Development (IBRD)

– International Development Association (IDA)

– International Finance Corporation (IFC)

– Multilateral Investment Guarantee Agency (MIGA)

– International Center for the Settlement of Investment Disputes (ICSID)

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Developing Economies To Grow• Building Capacity

– Strengthen their governments and educate their government officials• Create Infrastructure

– Implement legal and judicial systems that encourage business, protect individual and property rights, and honor contracts

• Develop financial systems– Support small business from micro credit to financing larger corporate

ventures• Combat corruptions

– There is not much that can be done that is effective• If these can be achieved, businesses will be attracted, jobs

created and economy will grow.

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How is World Bank Run?

• The World Bank is like a cooperative, where its 184 member countries are shareholders.

• The shareholders are represented by a Board of Governors, who are the ultimate policy makers at the World Bank.

• 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.

• Because the governors only meet annually, they delegate specific duties to 24 Executive Directors, who work on-site at the bank.

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Where Does the Money Come from to Operate the World Bank

• IBRD lending to developing countries is primarily financed by selling AAA-rated bonds in the world's financial markets.

• The greater proportion of its income comes from lending out its own capital.

• This capital consists of reserves built up over the years and money paid in from the bank's 184 member country shareholders.

• IBRD’s income also pays for World Bank operating expenses and has contributed to IDA and debt relief.

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How Do we use the Funds to Carry out our Mission

• WB staff supervise the implementation of each loan and evaluate its results, the borrower implements the project or program according to the agreed terms.

• Nearly 30% of our staff is based in some 100 country offices worldwide,

• Three-fourths of outstanding loans are managed by country directors located away from the World Bank offices in Washington.

• IDA long term loans (credits) are interest free but do carry a small service charge of 0.75 percent on funds paid out.

• IDA commitment fees range from zero to 0.5 percent on un-disbursed credit balances; for FY06 commitment fees have been set at 0.30 percent.

• For complete information about IBRD financial products, services, lending rates and charges, please visit the World Bank Treasury .

• Treasury is at the heart of IBRD's borrowing and lending operations and also performs treasury functions for other members of the World Bank Group.

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Where Does the Money Come from to Operate the World Bank

• IDA is the world's largest source of interest-free loans and grant assistance to the poorest countries.

• This source 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% of our lending.

International Bank for Reconstruction and Development

• This is an institution within the World Bank that aims to reduce poverty in middle- income and creditworthy poorer countries by promoting sustainable development through loans, guarantees, risk management products, and analytical and advisory services.

• IBRD raises most of its funds on the world's financial markets.

• It has become one of the most established borrowers since issuing its first bond in 1947 to finance the reconstruction of Europe .

• Lends to countries with relatively high per capita incomes.

• Founded in 1944 at the Bretton Woods Conference– to finance the reconstruction of countries affected by WWII– help with development of impoverished nations

• World Bank’s central institution• 181 member countries

IBRD continued

• IBRD's earns an income every year from the return on its equity and from the small margin it makes on lending.

• The IBRD gets it money through the sale of its bonds in international capital markets and member’s subscriptions to its capital stock.

International Development Association

• The IDA is the second World Bank institution and its main focus is helping the poorest countries in the world by providing loans and grants to boost economic growth, reduce inequality and improve living conditions.

• IDA funding immunized nearly half a billion children, provided access to better water sources for 123 million people, and helped 65 million people receive health services.

IDA continued• IDA lends money on concessional terms. This

means that IDA charges little or no interest and repayments are stretched over 25 to 40 years, including a 5- to 10-year grace period.

• Lends to countries with annual per capita

incomes of about $800 or less.

• IDA mostly gets it money from government’s voluntary contributions.

International Finance Corporation

• Established in 1956 to reduce poverty and improve people's lives in an environmentally and socially responsible manner.

• finances private sector investments, mobilizes capital in international financial markets, and provides technical assistance and advice to governments and businesses.

• Provides both loan and equity finance for business ventures in developing countries.

Multilateral Investment Guarantee Agency

The Multilateral Investment Guarantee Agency (MIGA) was created in 1988 as a member of the World Bank Group to promote foreign direct investment into developing countries to support economic growth, reduce poverty, and improve people’s lives.

It fulfills this mandate by offering political risk insurance to investors and lenders.

International Center for the Settlement of Investment Disputes

• The International Centre for Settlement of Investment Disputes (ICSID) provides international facilities for conciliation and arbitration of investment disputes.

• Established in 1966 to promote increased flow of international investment.

• Provides facilities for the reconciliation of disputes between governments and foreign investors.

Contribution to India’s Economic Development

The World Bank has made a significant contribution to India's planned economic development through its direct as well as indirect assistance.

Important aspects of the Bank's assistance are as follows:• Founder-Member• Loans• Assistance from IDA•Assistance from Aid India Club

CONCLUSIONWorld Bank has consistently pushed a neo-liberal agenda imposing policies on developing countries which have been damaging, destructive and anti developmental.

It is also considered as an instrument for promotion of western interests in certain regions of the world.

Concluding, despite of some flaws, helping various nations by the World Bank can never be undermined.

References• http://www.slideshare.net/satyavrat1994/world-bank-

ppt-29308266.• http://www.preservearticles.com/2011092213909/

the-world-bank-has-made-a-significant-contribution-to-indias-planned-economic-development.html

• http://elibrary.worldbank.org/doi/pdf/10.1596/1813-9450-5517

• http://articles.timesofindia.indiatimes.com/keyword/world-bank

• http://www.cddc.vt.edu/knownet/lse-worldbank.pdf• http://www.worldbank.org/