The International Bank for Reconstruction and Development (World Bank) is a specialised agency of the UN. It is a multilateral development lender. It was established with the Bretton Woods agreement of 1944 and its goal was to fight poverty. Economic growth was seen as a prerequisite for reducing poverty. Capital markets in the 1940s were small and risk averse so an institution such as this was seen as necessary. There are now 187 member countries. Its headquarters are in Washington DC. (2012)
The World Bank was originally established to assist post-war economic recovery. Today it is primarily concerned with promoting the development of poorer nations by providing loans for infrastructure and technical assistance. They also assist developing economies to adjust to the process of globalisation. The major aim in recent years has been to reduce the percentage of people living on US$1 a day from 29% (1990 level) to 10% by 2015. All regions except the Sub-Saharan Africa region are on track to halve the proportion of people living on less than $1 a day between 1990 and 2015. However, the Sub-Saharan region will only reduce poverty by 33%. South Asia had the second highest proportion of people living on less than $1 a day in 1990 (43%) but has made substantial progress in reducing this statistic and may even surpass the target in 2015, based on current trends.
It is hoped that the assistance provided by the World Bank will help alleviate poverty by boosting productivity. It provides loans at little or no interest (i.e. soft loans) for long term development projects. Funds are provided by member nations and from the borrowings undertaken by the World Bank in global financial markets.
INFLUENCE & IMPORTANCE
Loans are made directly to member governments or to a private enterprise with the condition that the government guarantee the loan. The emphasis in recent years has shifted from loans to technical assistance.
In 2010 this institution was working on 303 projects in developing countries. In 2011 it was involved in over 1800 projects in virtually every sector and developing country. It works in partnership with the national governments and many non-profit organisations to jointly fund development projects around the world. The World Bank attaches conditions to their loans. These may affect government policy settings.
The World Bank has been the world’s most significant source of development assistance in the years since its establishments. With the growth of FDI in recent years World Bank’s role as lender has diminished e.g. in 2002 they provided only 3% of capital flows going to developing countries.
In 2008, the World Bank committed $24.7 billion in loans, credits, and grants to its member countries. Africa received the highest Bank Group support, at more than $7.2 billion in loans, grants, equity investments, and guarantees, which is a record for the…