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World Bank
Formation 27 December 1945
Type International organization
Legal status Treaty
Purpose/focus Economic development, poverty elimination
Membership 185 countries
President Robert B. Zoellick
Main organ Board of Directors[1]
Website www.worldbankgroup.org

The World Bank Group (WBG) is a family of five international organizations that makes leveraged loans, generally to poor countries. 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 July – 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 ($250M to France for postwar reconstruction, in real terms the largest loan issued by the Bank to date). Its five agencies are:

The term "World Bank" generally refers to the IBRD and IDA, whereas the World Bank Group is used to refer to the institutions collectively.[2]

The World Bank's (i.e. the IBRD and IDA'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 activities of the IFC and MIGA include investment in the private sector and providing insurance respectively.

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 Two countries, Venezuela and Ecuador, have recently withdrawn from the World Bank.

Contents

Organizational structure

Together with four affiliated agencies created between 1956 and 1988, the IBRD is part of the World Bank Group. The Group's headquarters are in Washington, D.C. It is an international organization owned by member governments; although it makes profits, these profits are used to support continued efforts in poverty reduction.[citation needed]

Technically the World Bank is part of the United Nations system, but its governance structure is different: each institution in the World Bank Group is owned by its member governments, which subscribe to its basic share capital, with votes proportional to shareholding. Membership gives certain voting rights that are the same for all countries but there are also additional votes which depend on financial contributions to the organization. The President of the World Bank is nominated by the President of the United States and elected by the Bank's Board of Governors.[2] As of November 1, 2006 the United States held 16.4% of total votes, Japan 7.9%, Germany 4.5%, and France and the United Kingdom each held 4.3%. As changes to the Bank's Charter require an 85% super-majority, the US can block any major change in the Bank's governing structure.[3]

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World Bank Group agencies

The World Bank Group consists of

The IBRD has 185 member governments, and the other institutions have between 140 and 176 members. The institutions of the World Bank Group are all run by a Board of Governors meeting once a year.[2] Each member country appoints a governor, generally its Minister of Finance. On a daily basis the World Bank Group is run by a Board of 24 Executive Directors to whom the governors have delegated certain powers. Each Director represents either one country (for the largest countries), or a group of countries. Executive Directors are appointed by their respective governments or the constituencies.[2] The agencies of the World Bank are each governed by their Articles of Agreement that serve as the legal and institutional foundation for all of their work.[2] The Bank also serves as one of several Implementing Agencies for the United Nations Global Environment Facility (GEF).as per provision world bank donates loan at higher rate.

Presidency

Traditionally, the Bank President has always been a U.S. citizen nominated by the President of the United States, the largest shareholder in the bank. The nominee is subject to confirmation by the Board of Governors, to serve for a five-year, renewable term.[2]

Current President

Current President Robert Zoellick

On May 30, 2007, US President George W. Bush nominated former deputy secretary of state Robert Zoellick to succeed Paul Wolfowitz as President of the World Bank. The Executive Directors unanimously approved Zoellick, effective July 1, 2007, as the 11th President of the Bank for a five-year term.[4] Robert Zoellick is the former Deputy Secretary of the U.S. State Department and the former Chairman of Goldman Sachs' Board of International Advisors. He graduated magna cum laude from Harvard Law School and Phi Beta Kappa from Swarthmore College.[5]

Zoellick announced in October, 2007 that his priorities for the World Bank included increasing efforts to reduce poverty in the world's poorest countries, increasing support for neglected Arab countries, increasing support for countries emerging from violent conflicts, addressing poverty in "emerging" economies like India and China, increasing emphasis on environmental issues (especially global warming), and improving access to treatments for HIV and malaria. [1] [2]

List of presidents

List of chief economists

List of World Bank Directors-General of Evaluation

  • Christopher Willoughby, Successively Unit Chief, Division Chief, and Department Director for Operations Evaluation (1970–1976)
  • Mervyn L. Weiner, First Director-General, Operations Evaluation (1975–1984)
  • Yves Rovani, Director-General, Operations Evaluation (1986–1992)
  • Robert Picciotto, Director-General, Operations Evaluation (1992–2002)
  • Gregory K. Ingram, Director-General, Operations Evaluation (2002–2005)
  • Vinod Thomas Director-General, Evaluation (2005–present)

Evaluation at the World Bank

Social and environmental concerns

Throughout the period from 1972 to 1989, the Bank did not conduct its own environmental assessments and did not require assessments for every project that was proposed. Assessments were required only for a varying, small percentage of projects, with the environmental staff, in the early 1970s, sending check-off forms to the borrowers and, in the latter part of the period, sending more detailed documentation and suggestions for analysis.

During this same period, the Bank’s failure to adequately consider social environmental factors was most evident in the 1976 Indonesian Transmigration program (Transmigration V). This project was funded after the establishment of the Bank’s OESA (environmental) office in 1971. According to the Bank critic Le Prestre, Transmigration V was the “largest resettlement program ever attempted... designed ultimately to transfer, over a period of twenty years, 65 million of the nation’s 165 million inhabitants from the overcrowded islands of Java, Bali, Madura, and Lombok...” (175). The objectives were: relief of the economic and social problems of the inner islands, reduction of unemployment on Java, relocation of manpower to the outer islands, and to “strengthen national unity through ethnic integration, and improve the living standard of the poor” (Le Prestre 175).

Putting aside the political aspects of such a project, it otherwise failed as the new settlements went out of control; local populations fought with the migrators and the tropical forest was devastated (destroying the lives of indigenous peoples). Also, “[s]ome settlements were established in inhospitable sites, and failures were common;” these concerns were noted by the Bank's environmental unit whose recommendations (to Bank management) and analyses were ignored (Le Prestre, 176). Funding continued through 1987, despite the problems noted and despite the Bank’s published stipulations (1982) concerning the treatment of groups to be resettled.

More recent authors have pointed out that the World Bank learned from the mistakes of projects such as Transmigration V and greatly improved its social and environmental controls, especially during the 1990s. It has established a set of "Safeguard Policies" that set out wide ranging basic criteria that projects must meet to be acceptable. The policies are demanding, and as Mallaby (reference below) observes: "Because of the combined pressures from Northern NGOs and shareholders, the Bank's project managers labor under "safeguard" rules covering ten sensitives issues...no other development lender is hamstrung in this way" (page 389). The ten policies cover: Environmental Assessment, Natural Habitats, Forests, Pest Management, Cultural Property, Involuntary Resettlement, Indigenous Peoples, Safety of Dams, Disputed Areas, and International Waterways.[6]

The Independent Evaluation Group

The Independent Evaluation Group (IEG) (formerly known as the Operations Evaluation Department (OED)) plays an important check and balance role in the World Bank. Similar in its role to the US Government's Government Accountability Office (GAO), it is an independent unit of the World Bank that reports evaluation findings directly to the Bank's Board of Executive Directors. Dr. Vinod Thomas is the Director-General, Evaluation, whose evaluations provide an objective basis for assessing the results of the Bank's work, and ensuring accountability of World Bank management to the member countries (through the World Bank Board) in the achievement of its objectives.

Extractive Industries Review

After longstanding criticisms from civil society of the Bank's involvement in the oil, gas, and mining sectors, the World Bank in July 2001 launched an independent review called the Extractive Industries Review (EIR – not to be confused with Environmental Impact Report). The review was headed by an "Eminent Person", Dr. Emil Salim (former Environment Minister of Indonesia). Dr. Salim held consultations with a wide range of stakeholders in 2002 and 2003. The EIR recommendations were published in January 2004 in a final report entitled "Striking a Better Balance".[7] The report concluded that fossil fuel and mining projects do not alleviate poverty, and recommended that World Bank involvement with these sectors be phased out by 2008 to be replaced by investment in renewable energy and clean energy. The World Bank published its Management Response to the EIR in September 2004.[8] following extensive discussions with the Board of Directors. The Management Response did not accept many of the EIR report's conclusions. However, the EIR served to alter the World Bank's policies on oil, gas and mining in important ways, as has been documented by the World Bank in a recent follow-up report.[9] One area of particular controversy concerned the rights of indigenous peoples. Critics point out that the Management Response weakened a key recommendation that indigenous peoples and affected communities should have to provide 'consent' for projects to proceed – instead, there would be 'consultation'.[10] Following the EIR process, the World Bank issued a revised Policy on Indigenous Peoples.[11]

Impact evaluations

In recent years there has been an increased focus on measuring results of World Bank development assistance through impact evaluations. An impact evaluation assesses the changes in the well-being of individuals that can be attributed to a particular project, program or policy. Impact evaluations demand a substantial amount of information, time and resources. Therefore, it is important to select carefully the public actions that will be evaluated. One of the important considerations that could govern the selection of interventions (whether they be projects, programs or policies) for impact evaluation is the potential of evaluation results for learning. In general, it is best to evaluate interventions that maximize the possibility of learning from current poverty reduction efforts and provide insights for midcourse correction, as necessary.[citation needed]

Allegations of corruption

The World Bank is supposedly working against corruption both outside and within its organisation. Its website states:

Recognizing that any program to assist in controlling corruption worldwide needs to start with the example of best practices at home, the Bank has taken initiatives to stamp out conflicts of interest and any possible corrupt practices among its own staff. [3]

Beginning in 2005, Paul Wolfowitz, President of the World Bank, allegedly used his position to influence a pay and grade increase for his girlfriend Shaha Riza. Riza, who had held a position at the bank before Wolfowitz was appointed president in June 2005, was required to leave the bank and re-assigned to the State Department to avoid a conflict of interest, working in the office of Liz Cheney, daughter of Dick Cheney, while remaining on the bank's payroll. Her salary was increased from nearly $133,000 to tax-free compensation of $180,000, and eventually reached $193,590 after subsequent raises. The panel concluded that the salary increase "at Mr. Wolfowitz's direction" was "in excess of the range" allowed under bank rules. As a result of this controversy, Paul Wolfowotz has resigned effective June 30, 2007.[citation needed]

.

The World Bank head of "Institutional Integrity" department at that time was Suzanne Folsom. She is the wife of George Folsom who is the President of the International Republican Institute and a personal friend of Paul Wolfowitz. According to the Financial Times her appointment as "a person close to Mr Wolfowitz, and with a political background...to a unit that was seen as independent of the president’s office since it was set up in 2001" was met with great concern by some senior staff. Wolfowitz's efforts to control the bank are seen by some senior staff to have led to "a lack of consultation by Mr Wolfowitz’s advisers, and an atmosphere of suspicion."[12]

Criticism

A young World Bank protester in Jakarta, Indonesia.
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.[13] 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.[14] World Bank loan agreements can also force procurements of goods and services at uncompetitive, non free-market, prices.[15]:5

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 southern 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 try and blame the poor for their condition.[16]

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.

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.[17] Its critics, however, claim these financial expenditures to be insufficient. In the 2005 Massey Lecture, entitled "Race Against Time", Stephen Lewis argued that the structural adjustment policies of the World Bank and the International Monetary Fund have aggravated and aided the spread of the AIDS pandemic by limiting the funding allowed to health and education sectors.[citation needed] ....

See also

References

  • Axel Dreher (2002). The Development and Implementation of IMF and World Bank Conditionality. HWWA. ISSN 1616-4814. 
  • William Easterly (2001). The Elusive Quest for Growth. MIT Press. ISBN 0-262-55042-3. 
  • Catherine Caufield (1997). Masters of Illusion. Henry Holt & Company, New York. ISBN 0-8050-2875-7 (hardcover) ISBN 0-330-35321-7 (paperback, 1998). 
  • Bruce Rich (1994). Mortgaging the Earth. Beacon Press. ISBN 0-8070-4704-X (hardcover), ISBN 0-8070-4707-4 (paperback). 
  • Walden Bello, et al. (1999). Dark Victory. Pluto Press. ISBN 0-7453-1466-X (hardcover) ISBN 0-935028-61-7 (paperback). 
  • Paul McClure (editor) (2003). A Guide to the World Bank. World Bank Publications. ISBN 0-8213-5344-6. 
  • Elizabeth P. McLellan (editor) (2003). The World Bank: Overview and Current Issues. Nova Science Publishers. ISBN 1-59033-550-3. 
  • Phillipe Le Prestre (1989). The World Bank and the Environmental Challenge. Susquehanna University Press. ISBN 0-941664-98-8. 
  • Ansel Webb (1994). The World Bank Is Closed. NCSU Term Paper. ISBN none. 
  • Sebastian Mallaby (2004). The World's Banker: a story of failed states, financial crises, and the wealth and poverty of nations. Penguin Press HC. ISBN 1-59420-023-8. 
  • Zoe Young (2002). A New Green Order? The World Bank and the Politics of the Global Environment Facility. Pluto Press. ISBN 0-7453-1553-4. 
  • John Perkins (2004). Confessions of an Economic Hit Man. Ebury Press. ISBN 0-452-28708-1. 

Notes

  1. ^ http://web.worldbank.org/WBSITE/EXTERNAL/EXTABOUTUS/ORGANIZATION/BODEXT/0,,pagePK:64020055~theSitePK:278036,00.html
  2. ^ a b c d e f "About Us", wordbank.org, accessed May 30, 2007.
  3. ^ US Blocks Stronger African Voice At World Bank http://www.globalpolicy.org/socecon/bwi-wto/wbank/2003/0626blocks.htm, Accessed 7 August 2007
  4. ^ "Press Release Regarding the Selection of Mr. Robert B. Zoellick as President of the World Bank", press release, worldbank.org, June 25, 2007, accessed July 12, 2007 (corrected date).
  5. ^ "Office of the President- Biography"
  6. ^ "Safeguard Policies", worldbank.org, accessed May 30, 2007.
  7. ^ "Striking a Better Balance", worldbank.org, January 2004, accessed May 30, 2007.
  8. ^ "Striking a Better Balance", "World Bank Group Management Response" to "The World Bank Group and Extractive Industries: The Final Report of the Extractive Industries Review: World Bank Group Management Response" PDF (200 KiB),September 17, 2004, accessed May 30, 2007.
  9. ^ "Oil, Gas, Mining, and Chemicals" (follow up report), accessed May 30, 2007.
  10. ^ "The Energy Tug of War", The New Internationalist, No. 373 (November 2004), accessed May 30, 2007.
  11. ^ "World Bank Operational Manual: Operational Policies: Indigenous Peoples" (Op 4.10), worldbank.org, July 2005, accessed May 30, 2007.
  12. ^ Andrew Balls and Edward Allen, "Wolfowitz Triggers Graft Storm at World Bank", The Financial Times, January 23, 2006, accessed May 30, 2007.
  13. ^ See Joseph Stiglitz, The Roaring Nineties, Globalization and Its Discontents, and Making Globalization Work.
  14. ^ Ibid.
  15. ^ IFI watch Bangladesh
  16. ^ For instance see David Moore's edited book 'The World Bank', University of KwaZulu-Natal Press, 2007
  17. ^ The World Bank Global HIV/AIDS Program, The World Bank’s Global HIV/AIDS Program of Action PDF (554 KiB) (Washington, D.C.: International Bank for Reconstruction and Development/The World Bank, 2005), online posting, worldbank.org/aids, accessed May 30, 2007.

External links

NGOs


Simple English

The World Bank Group is a group of five international organizations. The World Bank Group gives advice and finance to member countries for economic development and reducing poverty. It is a non-profit-making international organization owned by member governments. The Group has its headquarters in Washington, D.C.. It also has offices in 124 other member countries.

Contents

The group

The World Bank Group is made of the following five organizations:

  • the International Bank for Reconstruction and Development (IBRD), established in 1945,
  • the International Finance Corporation (IFC), established in 1956,
  • the International Development Association (IDA), established in 1960,
  • the Multilateral Investment Guarantee Agency (MIGA), established in 1988 and
  • the International Centre for Settlement of Investment Disputes (ICSID), established in 1966.

The beginning

The World Bank Group originated at Bretton Woods, New Hampshire. There many countries decided to establish an international organization to provide finance to member countries. The Bank came into existence on 27th December 1945. Its name was the International Bank for Reconstruction and Development. The Bank’s first loan was to France. The loan was of 250 million US Dollar. The purpose was to help France to again build industry and other important things like roads destroyed during the Second World War.

The activities

The activities of the World Bank Group cover many activities. Some of these activities are as follows:

  • Development of health and education
  • Development of agriculture and rural development
  • Reduction of pollution
  • Development of infrastructure, for example, development of facilities likes roads and electricity
  • Development of system for good government

The World Bank Group gives loans at low rate of interest to member countries. The member countries use the money received for any one of above or some other similar activity.

In short, the World Bank Group’s main mission is 1) to fight poverty and 2) to improve the living standards of people in the developing world. Beside giving direct money and finance, the World Bank Group provides advice and assistance to developing countries on almost every aspect of economic development.

The management

In general, the World Bank Group is part of the United Nations system. But, member countries govern it through a board. The IBRD has 184 countries as its members. Other four organizations of the Group have between 140 to 176 member countries. A Board of 24 Executive Directors controls the activities of the World Bank Group. A President heads the Board.

Its criticism

Many economists and people have criticized the World Bank Group for its style of functioning. Before giving loans, the Bank sometimes requires many changes in the policies of a country. This has attracted criticism as it reduces the country’s independence to run its economy in its own way. The criticism is also on account of other factors. One of them is that two or three countries have more power to decide matters. As of November 1, 2004 the United States held 16.4% of total votes, Japan 7.9%, Germany 4.5%, and the United Kingdom and France each held 4.3%. As major decisions require an 85% super-majority, the US can block any change.

In spite of several criticisms, the World Bank Group’s role in economic development and reduction of poverty has continued in many countries.

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