History of the World Bank
The World Bank was established in 1944 in Bretton Woods, New Hampshire, and is comprised of two institutions: the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA). It was created to help countries in need of post-war construction and development.1. 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 however it soon let money to Chile, Mexico and India. By 1975 the bank was lending money to help other countries with pollution control as well as environmentalism2. The World Bank is made up of a very strong coalition of member countries who help to determine the path that the World Bank is to take. World Bank has over 7,000 staff members and maintains about 40 offices throughout the world, although a majority of its staff work is located in their Washington, D.C., headquarters. The staff is made up of incredible individuals with expertise from: economists, engineers, urban planners, agronomists, statisticians, lawyers, portfolio managers, loan officers, project appraisers, as well as experts in telecommunications, water supply and sewerage, transportation, education, energy, rural development, population and health care, and other disciplines3.
The World Bank is made up of 188 member countries, which act like shareholders, and are represented by a Board of Governors who make the ultimate decisions of the Bank.4 Only members of the International Monetary Fund (IMF) may be considered for membership. These governors are the ministers of finance or development for member countries who meet once a year at the Annual Meeting of the Boards of Governors of the World Bank Group.5
The governors delegate specific duties to 25 Executive Directors, who work at the bank, under the leadership of a president, management and senior staff.6 The main decision that is made by the directors is about lending for development of third-world countries. Working very closely with the International Monetary Fund, The World Bank votes to decide on Bank policy and on all loan and credit proposals.7
The Purpose of the World Bank
World Bank as well as the International Monetary Fund is institutions in the United Nations system share the same goal of raising living standards in their member countries. Their approaches to this goal are complementary, the World Bank concentrating on long-term economic development and poverty reduction and the IMF focusing on macroeconomic issues8. The World Bank has one central purpose: to promote economic and social progress in developing countries. The do this by helping to raise productivity so that their people may live a better and fuller life. The World Bank exists to encourage poor countries to develop by providing them with technical assistance and funding for projects and policies that will realize the countries' economic potential. The Bank views development as a long-term, integrated endeavor9.
The purpose of The World Bank was originally to grant loans to rebuild Europe after the war. The World Bank was focused on making loans to governments in order to rebuild railroads, highways, bridges, ports and other infrastructure.10 The World Bank loans usually were used to invest in education, health, and infrastructure; however they can also be used to modernize that country’s financial sector, agriculture and natural resources. One of the biggest purposes of the World Bank 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."11 In order to reach its goal, the Bank focuses on six areas12:
1. Overcome poverty
2. Offer reconstruction to poor countries emerging from war
3. Provide a customized development solution to help those middle-income countries overcome problems that could throw