WORLD BANK: History, Formation and controversies

Bank fund management-2011

Prepared for
Maam BOHI SHAJAHAN, Faculty of Business Administration American International University- Bangladesh Spring 2010-2011
SUBMITTED BY:

Khan, Md. Rakibul Islam

08-11377-2

Acknowledgements
First of all, I would like to thank the Almighty God for blessing me with the strength, aptitude and patience for successfully completing this report. I would like to thank our Faculty Maam BOHI SHAJAHAN for giving us the opportunity. I have been able to compile and complete this report in a comprehensive manner due to the guidance, support and counseling that she has provided me during this period. I have tried my best to implement her constructive suggestions while doing my report. I am deeply indebted to our honorable maam, whose help, stimulating suggestions and encouragement helped me all the time during writing this report.

WORLD BANK: History, Formation and controversies

Table of Contents
1. 2. 3. 4. INTRODUCTION: ........................................................................................................................................... 1 FORMATION ................................................................................................................................................. 1 ORGANIZATIONAL STRUCTURE ..................................................................................................................... 1 PURPOSE OF FORMATION ............................................................................................................................ 3 POVERTY REDUCTION STRATEGIES ............................................................................................................................3 CLEAN AIR INITIATIVE ............................................................................................................................................3 5. 6. 7. MAJOR CRITICISMS OF WORLD BANK ........................................................................................................... 3 DIFFERENCE BETWEEN WORLD BANK AND IMF ............................................................................................ 4 HOW HAS WORLD BANK HELPED BANGLADESH ........................................................................................... 5 THE WORLD BANK IS LISTENING TO THE VOICES OF THE POOR IN BANGLADESH MORE THAN EVER BEFORE. ......................................5 THE WORLD BANK HAS HELPED MAKE DHAKAS AIR MORE BREATHABLE. ..................................................................................5 THE WORLD BANK IS THE LARGEST EXTERNAL FUNDER OF MICROCREDIT IN BANGLADESH. ............................................................5 LARGEST EXTERNAL FUNDER OF EDUCATION AND HAS ASSISTED BANGLADESH IN ACHIEVING GENDER PARITY IN EDUCATION. ...............5 THE WORLD BANK HELPED BANGLADESH MODERNIZE ITS AGRICULTURAL SECTOR. ......................................................................6 THE WORLD BANK HELPS BANGLADESH CREATE A BETTER INVESTMENT CLIMATE. .......................................................................6 8. 9. CONCLUSION: ............................................................................................................................................... 7 BIBLIOGRAPHY.............................................................................................................................................. 7

WORLD BANK: HISTORY, FORMATION AND

CONTROVERSIES
Bank fund management1. Introduction:
Working for a world free of Poverty The World Bank is a vital source of financial and technical assistance to developing countries around the world. Its mission is to fight poverty with passion and professionalism for lasting results and to help people help themselves and their environment by providing resources, sharing knowledge, building capacity and forging partnerships in the public and private sectors. World Bank helps governments in developing countries reduce poverty by providing them with money and technical expertise they need for a wide range of projectssuch as education, health, infrastructure, communications, government reforms, and for many other purposes.

2. Formation
The World Bank is one of five institutions created at the Bretton Woods Conference in 1944. The International Monetary Fund, a related institution, is the second. Delegates from many countries attended the Bretton Woods Conference. The most powerful countries in attendance were the United States and United Kingdom, which dominated negotiations.
WORLD BANK: History, Formation and controversies

The World Bank, established in 1944, is headquartered in Washington; D.C. WB has more than 10,000 employees in more than 100 offices worldwide.

3. Organizational structure
The World Bank is a multi-lateral financial agency tied to the United Nations, and established in 1945. The Bank is owned by member governments who exercise their direction through a Board of Governors, consisting of one governor for each of the 187 member countries. The governors meet once a year to review operations and basic policies. They delegate most functions and the responsibility for the day-to-day running of the organization to 25 full-time Executive Directors, who are based at the Banks Headquarters in Washington, DC, USA. At the staff level, the Bank is managed by a President, three Managing Directors, and over 20 Vice-Presidents who oversee major operational units at the Banks headquarters in Washington as well as over 100 country offices.

WORLD BANK: History, Formation and controversies

4. Purpose of formation
The World Bank is not a bank in the common sense of the word. A single person cannot open an account or ask for a loan. Rather, the Bank provides loans, grants and technical assistance to countries and the private sector to reduce poverty in developing and transition countries.

The World Bank Group is actually comprised of five separate arms. Two of those arms - the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA) work primarily with governments and together are commonly known as "the World Bank". Two other branches the International Finance Corporation (IFC) and Multilateral Investment Guarantee Agency (MIGA) - directly support private businesses investing in developing countries. The fifth arm is the International Center for Settlement of Investment Disputes (ICSID), which arbitrates disagreements between foreign investors and governments. Few initiative of World Bank are as follows: Poverty reduction strategies For the poorest developing countries in the world, the bank's assistance plans are based on poverty reduction strategies; by combining a cross-section of local groups with an extensive analysis of the country's financial and economic situation the World Bank develops a strategy pertaining uniquely to the country in question. The government then identifies the country's priorities and targets for the reduction of poverty, and the World Bank aligns its aid efforts correspondingly. Clean Air Initiative Clean Air Initiative (CAI) is a World Bank initiative to advance innovative ways to improve air quality in cities through partnerships in selected regions of the world by sharing knowledge and experiences. It includes electric vehicles.

WORLD BANK: History, Formation and controversies

5. Major criticisms of World Bank

Criticism of the World Bank often takes the form of protesting as seen in recent events such as the World Bank Oslo 2002 Protests, the October Rebellion, and the Battle of Seattle. Such demonstrations have occurred all over the world, even amongst the Brazilian Kayapo people. One of the strongest criticisms of the World Bank has been the way in which it is governed. While the World Bank represents 186 countries, it is run by a small number of economically powerful countries. These countries choose the leadership and senior management of the World Bank, and so their interests dominate the bank. The World Bank has dual roles that are contradictory: that of a political organization and that of a practical organization. As a political organization, the World Bank must meet the demands of

donor and borrowing governments, private capital markets, and other international organizations. As an action-oriented organization, it must be neutral, specializing in development aid, technical assistance, and loans. The World Bank's obligations to donor countries and private capital markets have caused it to adopt policies which dictate that poverty is best alleviated by the implementation of "market" policies. Some analysis shows that the World Bank has increased poverty and been detrimental to the environment, public health and cultural diversity. Some critics also claim that the World Bank has consistently pushed a neoliberal agenda, imposing policies on developing countries which have been damaging, destructive and anti-developmental. A number of intellectuals in developing countries have argued that the World Bank is deeply implicated in contemporary modes of donor and NGO imperialism, and that its intellectual contributions function to blame the poor for their condition.

6. Difference between World Bank and IMF

BothThe World Bank and the IMF are based in Washington, D.C.; the World Bank is, by custom, headed by an American, while the IMF is led by a European.

WORLD BANK: History, Formation and controversies

7. How has World Bank helped Bangladesh The World Bank is listening t o the voices of the poor in Bangladesh more than ever before. The World Bank is increasing support for projects that directly impact people at the grassroots level. WB now follows a consultative process. This means WB are going to stakeholders and talking to the people for whom the projects are meant to benefit. Their voices are then considered as policies are proposed. One example is WBs Social Development Fund (SDF). Community groups are getting organized, assessing their own needs and writing their own proposals for SDF funding. The World Bank has helped make Dhakas air more breathable. Dhaka has today become a much livable place with most of the toxic fumes from two-stroke vehicles removed from the air. This is the outcome of the Government of Bangladeshs Dhaka Urban Transport Project (DUTP), funded by the World Bank. It has been estimated that exposure of air pollution in Dhaka causes several million cases of sickness each year. There was no initiative undertaken in the county to improve the air quality prior to the DUTP. There has been much improvement in Dhakas air quality since implementation - and the effect can be felt by all. Over time, an improvement in environmental conditions can have a favorable impact on foreign investment, which will reduce poverty. The World Bank is the largest external funder of microcredit in Bangladesh. The total number of female microcredit borrowers in Bangladesh has now reached 12 million. An important tool for empowering women, WB first entered into microcredit financing in December 2000 with $180 million which was channeled to the borrowers through a local NGO, Palli Karma Shahayak Foundation (PKSF). After success of the program, the Bank committed another $151 million, making the World Bank the largest external funder of micro credit programs in Bangladesh. And to reach the poorest of the poor, our Financial Services to the Poor (FSP) project is one of WBs most successful initiatives. It includes hard-core poor people from all walks of life including beggars, sex workers and women. Largest external funder of education and has assisted Bangladesh i n achieving gender parity in education. The World Bank provides around $200 million annually to the Government to support education, making WB the largest external funder of education in Bangladesh. WB is playing an important role in textbook improvement, as well as enhancing the quality of instruction and increasing enrollment in schools through various incentives such as stipends. WBs $150 million Primary Education Development Project II (PEDP II) is the main driver in this sector.

WORLD BANK: History, Formation and controversies

WBs $100 million Education Sector Adjustment Credit aims to assist the Government in finding ways to increase quality, cost-effectiveness and access to secondary education. WB has also supported girls education. Girls secondary school enrollment as a percentage of total enrollment increased from 44.73 percent in 1994 to 54.68 percent in 2000. The World Bank helped Bangladesh modernize its agricultural sector. Bangladeshs agriculture has undergone radical changes over the last decade with the introduction of new technology and liberalization. WB has financed projects that have laid the foundation of modern agriculture. In addition to research, these projects also focused on water management, irrigation, and drainage and flood control to reduce agricultural risk and make more land available for crop production. One such example is the National Minor Irrigation Development Project in rural Bangladesh which promoted growth in agriculture through increased private investment in irrigation development. WB also assisted in improving exports of Bangladeshs agro products. Hortex, one of our funded projects, has helped growers produce high quality French beans, and tap markets in Europe. The World Bank helps Bangladesh create a better investment climate. WB promotes a sound investment climate for Bangladesh, sharing the knowledge that the World Bank has gained from working in countries around the globe. For industry to grow, infrastructure is vital a stable power supply, reliable roads, and so on. WB is closely involved in power sector development and supporting uninterrupted, quality power generation. WB also supports the development of Bangladeshs road network. WB is supporting the Governments effort to modernize its customs department. A faster, more efficient customs clearance process is crucial to being globally competitive today.

WORLD BANK: History, Formation and controversies

8. Conclusion:
World Banks role in development and in the wider globalization of the world's economy has often been misunderstood. On one hand, this occurred because WB did not explain the Bank's mission or its work very well. On the other, critics tried to blame the bank for any or all of the perceived problems associated with globalizationthe growing integration of economies and societies around the world resulting from increased flows of goods, services, capital, technology, and ideasan economic force that the Bank does not control. Also, protests drew worldwide attention to the problem of extremely high multilateral debt levels carried by very poor countries, which high-income countries ultimately agreed were unsustainable and stifled the ability of poor countries to both pay those debts and combat poverty. This led the Bank and International Monetary Fund to form the Debt Initiative for Heavily Indebted Poor Countries (HIPC) and to further financial pledges by high-income countries to assist the Bank to carry out debt-relief efforts for heavily indebted poor countries.

9. Bibliography
I. II. III.
WORLD BANK: History, Formation and controversies

www.google.com http://data.worldbank.org/ <http://www.bicusa.org/en/Institution.5.aspx?gclid=CKv5l5zP86kCFQx66wodNFoaA > Class note of Bank Fund Management < http://en.wikipedia.org/wiki/World_Bank#Poverty_reduction_strategies>

IV. V.