Definition
The World Bank is an international financial institution that provides financial and technical assistance to developing countries for development programs (e.g. bridges, roads, schools, etc.) with the stated goal of reducing poverty.
INTRODUCTION
The International Monetary Fund (IMF) and the International Bank for
Reconstruction and Development (IBRD), also known as the Bretton Woods Institutions
(BWIs), were formed in Bretton Woods, New Hampshire in 1944 on the eve of the end of
World War II. They were precursors to the United Nations and other multilateral
institutions formed after World War II and reflected the new spirit of cooperation between
nations, especially in economic matters. The purpose was more concerned about avoiding behavior among nations that led to economic catastrophe
and war and they also wanted to prepare for the economic problems they believed would
confront them after the end of World War II. Those who attended the Bretton Woods Conference in New Hampshire wanted to
establish a monetary system that would prevent the repetition of the chaos during the inter-
war period (1918-1939), which was marked by high inflation, restrictions on international
trade and payments, speculation in the foreign exchange market, sharp movements in central
banks’ foreign reserves, wildly fluctuating exchange rate movements, gold shortages, and
sharp drops in economic activity (deflation).
Difference b/w world bank and world bank group
The World Bank differs from the World Bank Group, in that the World Bank comprises only two institutions:
* International Bank for Reconstruction and Development (IBRD)
* International Development Association (IDA)
Whereas the latter incorporates these two in addition to three more:
* International Finance Corporation (IFC)
* Multilateral Investment Guarantee Agency (MIGA)
* International Centre for Settlement of Investment Disputes (ICSID)
Structure and Function of the IBRD The International Bank of Reconstruction and Development made its inception in 1944.The structure of the IBRD is just like a cooperative whose goal is to help the middle income countries in terms of loans at low rates of interest,provision of tools helping in risk management. Now a relevant question in this regard is that where from does the IBRD generate such funds. The answer is the world financial market. Its financial strength has grown ever since its issue of the first bond in 1947. As the years rolled over the finances of the IBRD gathered strength and they began to finance the development activities of the poor countries.
Structure and Function of IDA The IDA took birth in the year1960. It was established with the intention of reducing poverty by the provision of soft loans for the poor and downtrodden countries in the world. The IDA works hand in hand with the International Bank Of Reconstruction and Development. The IDA mostly caters to the African countries. The loans given out by the IDA are free of interest and they are termed as credits. The IDA receives its funds from the government of the rich member countries.
Members
The International Bank for Reconstruction and Development (IBRD) has 185 member countries, while the International Development Association (IDA) has 168 members.[15] Each member state of IBRD should be also a member of the International Monetary Fund (IMF) and only members of IBRD are allowed to join other institutions within the Bank (such as IDA).[16]
Leadership
Current President Robert B. Zoellick
The President of the Bank, currently Robert B. Zoellick, is responsible for chairing the meetings of the Boards of Directors and for overall management of the Bank. 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.
The Executive Directors make up the Board of Directors, usually meeting twice a week to oversee activities such as the approval of loans and guarantees, new policies, the administrative budget, country assistance strategies and borrowing and financing decisions.
The Vice Presidents of the Bank are its principal managers, in charge of regions, sectors, networks and functions. There are 24 Vice-Presidents, 3 Senior Vice Presidents and 2 Executive Vice Presidents.
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–Present)
World Bank Objectives
World Bank background and objectives have expanded and evolved over the years. The original purpose and objectives as the International Bank for Reconstruction and Development was a facilitator role in post-war reconstruction. Since 1944, this role has expanded and World Bank's objectives have grown to develop its current mandate to alleviate worldwide poverty. They work closely with their affiliate, the International Development Association.
With all this expansion and growth, World Bank's original focus has not changed. Today, reconstruction remains a top priority in such situations as:
• Natural disasters
• Needs affecting developing economies
• Post conflict rehabilitation
• Needs affecting a transitioning economy
Expanded Focus
In 2000, the World Bank background and objectives expanded with the adoption of the Millennium Development Goals. This effort cemented a historic, global partnership with specific goals targeted to reduce not only poverty but also hunger, illiteracy and disease. In an effort to accomplish these goals, the World Bank background and objectives have grown to include ventures in social sector lending. The purpose of these projects is to alleviate poverty and offer debt relief. Today World Bank considers the reduction of poverty as an overarching goal. Within this effort, they strive to alleviate poverty in developing countries with sustainable economic growth by encouraging the poor to take part in development. World Bank hopes to accomplish this goal with incentives like strengthening governments and educating government officials. Other objectives include:
• Creating infrastructure
• Develop financial systems
• Protect individual and property rights
• Implement legal systems that encourage business
As an overall objective, World Bank strives to combat corruption to ensure that the progress they make remains effective.
*Improving Living Standards
Across the earth, World Bank objectives touch lives for the better. World Bank development projects engage people to improve living standards while reducing poverty. In 2006, the World Bank contributed $23.6 billion for projects worldwide. Current projects within developing countries like Bosnia, Herzegovina, Mexico and India number more than 1,800.
Evaluating Results
It’s one thing to set goals and objectives, but without an effective way to measure the results it's difficult to know if they are effectively being met. In 1998, the World Bank adopted a Comprehensive Development Framework. This framework directs the development of poverty-reduction strategies and is specifically designed to reach objectives. It outlines four principles:
• Development strategies should be comprehensive and shaped by a long-term vision.
• Each country should devise and direct its own development agenda based on citizen participation.
• Government donors, civil society, the private secotr and other stakeholders should work together in partnership led by recipient countries to carry out development strategies.
• Development performance should be evaluated on the basis of measurable results.
Detailed assessments track progress made in each country.
Working Together
Currently, the more than 63,000 donor-funded development projects supported worldwide by the World Wide bank are individually governed by guidelines and procedures put in place to ensure aid gets into the hands of the poor. As donors coordinate their activities and synchronize procedures, that capacity within developing countries can be strengthened and improved.
Since its inception in 1944, World Bank has proven to be a vital financial source around the world.
Role of WORLD BANK
As a development institution, the World Bank supports two broad goals in South East Europe: (i) poverty reduction and (ii) economic and social development, the latter in support of the countries ambition to join the Europen Union. The central vehicle for supporting the national reform program of each country is the so-called Country Assistance Strategy (CAS). Based on an assessment of the country's priorities, past portfolio performance and creditworthiness, the CAS sets strategic priorities and determines the level and composition of financial and technical assistance that the Bank seeks to provide the country. The framework for poverty reduction and economic growth are the countries’ own Poverty Reduction Strategy Papers (PRSPs), developed by the government through a participatory consultation procedure.
In terms of financial assistance, over the period 1999-2005, the World Bank has been supporting the region of Europe through wide range of development projects, collectively amounting to approximately US $5.9 billion. These projects are directed towards a number of sectors, including: infrastructure and energy, private sector development, poverty reduction and economic management, social sectors, rural development and the environment.
In February 2004, the World Bank published a Regional Framework Paper. This paper complements an earlier paper on this subject 'The Road to Stability and Prosperity in South Eastern Europe' - which outlined a comprehensive approach to regional development and integration in South Eastern Europe - by providing a regional framework for the formulation of individual World Bank Group country assistance strategies (CAS), with the objective to ensure that World Bank programs have the greatest impact both at the country and regional level. Specifically, this paper identifies areas of activity, consistent with the CAS priorities and the World Bank's comparative advantage, where there exist cross-border externalities, economies of scale, or opportunities for " scaling up " successful interventions across borders, and thus where interventions may need to be coordinated across countries to fully realize their potential benefits. This paper also aims to identify opportunities to encourage regional cooperation within the ambit of World Bank activities. In fact, despite remarkable progress over the last few years, and somewhat greater country ownership of regional initiatives, the legacy of past conflicts and the still unfinished sovereign arrangements of the region continue to limit cooperation among the countries of South Eastern Europe.
Published in March 2000, the World Bank 'Regional Strategy Paper - The Road to Stability and Prosperity in South Eastern Europe' outlined four main areas for action:
moving rapidly towards trade integration with the EU and within the South East European region itself, and creating a stable, transparent and non-discriminatory environment for private sector development;
fostering social inclusion and social change within the region
improving institutional capacity and governance structures, and strengthening anti-corruption efforts in the region; and,
investing in regional infrastructure to integrate the region physically with the rest of Europe and within itself, while at the same time protecting the environment. A regional approach also allows for adequate prioritization of regional infrastructure investments in South East Europe. Moreover, regional cooperation is a critical component within the Stabilization and Association Process, as it is an integral part of preparation for integration of the countries of SEE into European Structures. In other words, this process essentially extends the EU's own philosophy to the western Balkan region, that deeper cooperation with neighboring countries is a route to national as well as regional stability and growth and that such cooperation serves the mutual interests of all countries concerned.
In Bulgaria and Romania European Commission and the World Bank continue to cooperate closely to assist countries in meeting remaining EU accession “conditions” which are primarily related to shortcomings in areas of legal and judiciary reform, fight against corruption and overall effectiveness of public administration. Also, both institutions cooperate closely to ensure that policy advice and lending support to both governments are consistent.
Country Assistance Strategies
The Country Assistance Strategy (CAS) normally takes a three-year focus on Bank activities and is developed in cooperation with the government and, often, with civil society. CASs for larger countries are revised more frequently, some annually. It is not, however, a negotiated document. Any differences between the country's own agenda and the strategy advocated by the Bank are highlighted in the CAS document.
Although the activities of the Bank are different in scope and size in each of the eight countries / regions of SEE, there are four key underlying priorities in the CAS in SEE:
maintaining macroeconomic stability;
*
improving governance and strengthening institutions by building efficient and inclusive public institutions;
*
promoting sustainable private sector growth and improving the business environment; and,
*
fostering human development.
Poverty Reduction Strategy Papers
At the 1999 Annual Meetings of the World Bank Group and the IMF, low income countries agreed to prepare participatory poverty reduction strategies, which should provide the basis of all World Bank and IMF concessional lending. These strategies, called Poverty Reduction Strategy Papers (PRSPs) describe a country's macroeconomic, structural and social policies and programs to promote growth and reduce poverty, and associated external financing needs.
Role of World bank in Pakistan.
World bank is supporting reforms at both the federal and provincial level in Pakistan. The outline of the cooperative work can be summorised as follows....
1. World bank is working with Pakistan Poverty Alleviation Fund to bring difference in the lives of poor.
2. World bank is helping the victims of the Earthquake
3. World bank is working with the government to improve education outcomes.
4. World bank is joining with international partners to help Pakistan fight polio.
5. World bank is focusing on un-served and underserved low-income communities.
6. World bank is helping Pakistan prevent the spread of HIV/AIDS.
7. World bank is helping to ‘improve trade flows’ and ‘lower transit costs and times’.
8. World bank is a “Knowledge Bank.”
9. World bank rely on local expertise
INDUS WATER TREATY
The Indus Waters Treaty is a water-sharing treaty between the Islamic Republic Of Pakistan and Republic of India . The treaty was signed in Karachi on September 19, 1960 by the then President of Pakistan Field Marshal Mohammad Ayub Khan and the then Indian Prime Minister Jawaharlal Nehru. The World Bank (then the International Bank for Reconstruction and Development) is a signatory as a third party.
CRITICISM
Sixty years old in 2004, the World Bank has played an influential role in international economic relations and in particular as the principal vehicle for channelling and coordinating international governmental loans from the developed nations to the less developed countries (LDCs). Its role has changed, especially during the past quarter century, as the world economy and world politics became more interdependent and more complex. In recent years, the World Bank has been subjected to severe criticism from a variety of sources and is undergoing a process of adaptation as it seeks to refashion a new role for itself and to strengthen its effectiveness but in some respects it has failed to modernize itself to meet the requirements of a rapidly changing world economy.
Critics of the World Bank and the IMF are concerned about the conditionalities imposed on borrower countries. The World Bank and the IMF often attach loan conditionalities based on what is termed the 'Washington Consensus', focusing on liberalisation—of trade, investment and the financial sector—, deregulation and privatisation of nationalised industries. Often the conditionalities are attached without due regard for the borrower countries' individual circumstances and the prescriptive recommendations by the World Bank and IMF fail to resolve the economic problems within the countries.
IMF conditionalities may additionally result in the loss of a state's authority to govern its own economy as national economic policies are predetermined under the structural adjustment packages. Issues of representation are raised as a consequence of the shift in the regulation of national economies from state governments to a Washington-based financial institution in which most developing countries hold little voting power.
There are also criticisms against the World Bank and IMF governance structures which are dominated by industrialised countries. Decisions are made and policies implemented by leading industrialised countries—the G7—because they represent the largest donors without much consultation with poor and developing countries.
RELATED TO VOTE RESTRICTION IN WORLD BANK
today the G-7, including Japan, which is the second largest contributor. Amendments to the Articles of Agreement can be blocked by 15 percent of the voting power, a figure always exceeded by the United States. The multi-member Board of Governors meets only once a year and has little real power. The 20 Executive Directors, who are appointed by member governments, are actively involved in broad policy and always include at least five from the G-7. The staff is international in its composition, but as late as 1966 over half of it was Anglo-American (Mason & Asher 71). Organizationally, the World Bank has had strong Presidents and is highly centralized. While the World Bank was established to make long-term development loans which would not be undertaken by the private sector, it was mandated by its charter "to promote private foreign investment by means or guarantees or participations in loans and other investments made by private investors" Its unwritten goal has been "to integrate countries into a capitalist world economy"
Deforestation
The World Bank has been a major force in the destruction of the world's forests by financing logging projects, transmigration projects and dam projects. Criticism of its disastrous schemes in the Amazon, South East Asia and West Africa forced the Bank to adopt a new policy in 1991 that would prohibit lending for logging in primary forests in the hope of a curbing deforestation. Despite this, a January 2000 internal World Bank study showed that forest lending has not curbed deforestation or reduced poverty, despite a 78% increase in forest-related lending over the past 10 years. A new proposed policy released in 2002 has been criticized for opening the door to more deforestation.
In 1981 the Bank lent Brazil US$445 million for the Northwest Brazil Integrated Development Programme to pave 1,500 kilometers of dirt tracks in the remote region of Rondonia which borders Bolivia. The newly modernized road allowed nearly half a million migrants to invade the forests and clear them for cultivation. By 1991 the destruction of Rondonia's forests had multiplied to ten times its original rate. The burning of the forest became a major focus of research as the single largest, most rapid human caused change on earth visible from space.
Diseases spread rapidly. Malaria infection rates soared to 100% in some killed indigenous communities with over 250,000 people infected. Infant mortality rates reached 50% in some communities.
Relataed to wall built b/w Israel and Palestine
Apartheid Wall—for the establishment of industrial zones, guaranteeing economic dependency and exploitation of Palestinian communities on top of the occupation control. The Apartheid Wall is a devastating extension and acceleration of occupation policies, designed to annex nearly half of West Bank lands and imprison the remaining population within 12 percent of historical Palestine. The Wall to date has destroyed thousands of dunums (4 dunums are equivalent to one acre) of land, uprooted olive trees, displaced families and communities, and separated Palestinians from their land and other Palestinians. Despite the 2004 International Court of Justice (ICJ) decision, which took up the Palestinian call that the Wall must be torn down and affected communities compensated—the construction of the Wall has only accelerated in the last year.
Global bodies have only increased their support for the Wall and occupation policies over the last year. The G-8 controlled World Bank has outlined the framework for this policy in their most recent report on Palestine published in December of 2004, Stagnation or Revival: Israeli Disengagement and Palestinian Economic Prospects.
In the report, the World Bank adopts the occupation’s strategically misleading terminology for the Wall, referring to it and its connected infrastructure as a “security fence” or “separation barrier.” This move by the World Bank seeks to legitimize the confiscation of Palestinian lands and obscures the reality on the ground in which 80 percent of the Wall’s destructive path deviates from the 1967 Armistice Line, separating Palestinians from other Palestinians, their capital Jerusalem, land, and essential sources of livelihood.
AIDS controversy
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
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
CONCLUSIONS
Created after World War II to help avoid Great Depression-like economic disasters, the World Bank and the IMF are the world's largest public lenders, with the Bank managing a total portfolio of $200 billion and the Fund supplying member governments with money to overcome short-term credit crunches.
But when the Bank and the Fund lend money to debtor countries, the money comes with strings attached. These strings come in the form of policy prescriptions called "structural adjustment policies." These policies—or SAPs, as they are sometimes called—require debtor governments to open their economies to penetration by foreign corporations, allowing access to the country's workers and environment at bargain basement prices.
Recent protests against the IMF and the World Bank have shined a harsh spotlight on the way the institutions put the interests of wealthy corporations in the developed world above the interests of the planet's poor majority.
For decades people in the Third World have protested the way the IMF and World Bank undemocratically impose such policies on their countries. In just the last year, those protests have spread to the power centers of the developed world. In April, some 20,000 people gathered in Washington, DC during the institutions' spring meetings to demand a more democratic kind of international decision-making. Similar protests took place in Prague, Czech Republic in September of that year. By dragging the Fund and the Bank into the light of public scrutiny, the Washington protests re-invigorated a public dialogue about the growing wealth inequalities within and among nations, and they put the institutions on notice that they can't continue business as usual.
My Suggestions
To improve its success rate with, the World Bank must become more selective and do a better job of understanding which environments are promising for reform and which are not. That is likely to lead to fewer adjustment loans, unless there is a significant change in the number of promising reformers. To become more effective at supporting policy reform, the agency must be willing to accept that this may lead to smaller volumes of lending.
References
http://en.wikipedia.org/wiki/World_Bank_Group#World_Bank_Group_agencies
http://www.globalexchange.org/campaigns/wbimf/
http://en.wikipedia.org/wiki/World_Bank
http://www.worldbank.org/html/dec/Publications/Workpapers/WPS1900series/wps1938/wps1938-abstract.htmlhttp://74.125.95.132/search?q=cache:k17Ql8HGxXIJ:www.res.org.uk/society/mediabriefings/pdfs/2000/October/dollar.pdf+success+of+world+bank&cd=11&hl=en&ct=clnk&gl=pk
http://www.worldbank.org/html/dec/Publications/Workpapers/WPS1900series/wps1938/wps1938-abstract.html
http://www.seerecon.org/gen/wbrole.htm
http://news.bbc.co.uk/2/hi/business/6099672.stm
http://www.brettonwoodsproject.org/item.shtml?x=320869
http://www.globalpolicy.org/socecon/bwi-wto/critics/generalindex.htm
http://www.globalpolicy.org/socecon/bwi-wto/critics/kanburindex.htm
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