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WORLD BANK - AN INTRODUCTION
The World Bank is a bank 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. 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)
The World Bank Group comprises these two in addition to three more: • • • International Finance Corporation (IFC) Multilateral Investment Guarantee Agency (MIGA) International Centre for Settlement of Investment Disputes (ICSID)
The World Bank was created following the ratification of the United Nations Monetary and Financial Conference (Bretton Woods agreement). The concept was originally conceived in July 1944 at the United Nations Monetary and Financial Conference. Two years later, the Bank issued its first loan: US$250 million to France for post-war reconstruction, the main focus of the Bank's work in the early post-World War II years. Over time, the "development" side of the Bank's work has assumed a larger share of its lending, although it is still involved in postconflict reconstruction, together with reconstruction after natural disasters, response to humanitarian emergencies and post-conflict rehabilitation needs affecting developing and transition economies. The World Bank is one of the two Bretton Woods Institutions which were created in 1944 to rebuild a war-torn Europe after World War II. Later, largely due to the contributions of the Marshall Plan, the World Bank was forced to find a new area in which to focus its efforts. Subsequently, it began attempting to rebuild the infrastructure of Europe's former colonies. Since then it has made a variety of changes regarding its focus and goals. From 1968-1981 it focused largely on poverty alleviation. In the 1980s and 1990s its main focus was both debt management and structural adjustment.
The President of the Bank, currently Robert B. Zoellick, is responsible for chairing the meetings of the Board of Directors and for the overall management of the Bank. The International Bank for Reconstruction and Development (IBRD) has 185 member countries, while the International Development Association (IDA) has 168 members. Each member state of IBRD should also be 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).
ACTIVITIES OF THE WORLD BANK
MILLENIUM DEVELOPMENT GOALS
The World Bank's current focus is on the achievement of the Millennium Development Goals (MDGs), lending primarily to "middle-income countries" at interest rates which reflect a small mark-up over its own (AAA-rated) borrowings from capital markets. While the IDA provides low or no interest loans and grants to low income countries with little or no access to international credit markets, the IBRD is a market based non-profit organization, using its high credit rating to make up for the relatively low interest rate on its loans.
FIVE KEY FACTORS
The World Bank sees the five key factors necessary for economic growth and the creation of an enabling business environment as:
1. Building capacity: Strengthening governments and educating government
officials. 2. Infrastructure creation: Implementation of legal and judicial systems for the encouragement of business, the protection of individuals and property rights and the honouring of contracts. 3. Development of Financial Systems: The establishment of strong systems capable of supporting endeavours from micro credit to the financing of larger corporate ventures. 4. Combating corruption: Support for countries' efforts at eradicating corruption. 5. Research, Consultancy and Training: These are open for those who are interested from academia, students, government and non-governmental organization (NGO) officers etc.
The Bank offers two basic types of loans: investment loans and development policy loans. The former are made for the support of economic and social development projects, whereas the latter provide quick finance to support countries’ policy and institutional reforms.
The Bank also distributes grants for the facilitation of development projects through the encouragement of innovation, cooperation between organizations and the participation of local stakeholders in projects. IDA grants are predominantly used for: • • • Debt burden relief in the most indebted and poverty struck countries Amelioration of sanitation and water supply Combating the HIV/AIDS pandemic
The Bank not only provides financial support to its member states, but it also provides analytical and advisory services to facilitate the implementation of the lasting economic and social improvements that are needed in many under-developed
countries, as well as educating members with the knowledge necessary to resolve their development problems while promoting.
AREAS OF OPERATION
The World Bank is active in the following areas • • • • • • • • • • • • • Agriculture and Rural Development Conflict and Development Development Operations and Activities Economic Policy Education Energy Environment Financial Sector Gender Governance Health, Nutrition and Population Industry Information and Communication Technologies Information, Computing and Telecommunications • • • • • • • • • • • • • • • Law and Justice Macroeconomic and Economic Growth Mining Poverty Reduction Poverty Private Sector Public Sector Governance Rural Development Social Development Social Protection Trade Transport Urban Development Water Resources Water Supply and Sanitation
WORLD BANK INSTITUTE The World Bank Institute (WBI) creates learning opportunities for countries, World Bank staff and clients, and people committed to poverty reduction and sustainable development. WBI's work program includes training, policy consultations, and the creation and support of knowledge networks related to international economic and social development. GLOBAL DEVELOPMENT LEARNING NETWORK The Global Development Learning Network (GDLN) is a partnership of over 120 learning centers (GDLN Affiliates) in nearly 80 countries around the world. GDLN Affiliates collaborate in holding events that connect people across countries and regions for learning and dialogue on development issues. Offering a combination of distance learning tools such as interactive videoconferencing and the internet, GDLN Affiliates enable individuals, teams, and organizations working on development issues around the world to communicate, share knowledge, and learn from each others’ experiences in a timely and cost-effective manner. GDLN ASIA PACIFIC The GDLN in the East Asia and Pacific region has experienced rapid growth and Distance Learning Centers now operate, or are planned in 20 countries: Australia, Mongolia, Cambodia, China, Indonesia, Singapore, Philippines, Sri Lanka, Japan, Papua New Guinea, South Korea, Thailand, Laos, Timor Leste, Fiji, Afghanistan, Bangladesh, India, Nepal and New Zealand. With over 180 Distance Learning
Centers, GDLN is the largest development learning network in the Asia and Pacific region. The Secretariat Office of GDLN Asia Pacific is located in the Center of Academic Resources of Chulalongkorn University, Bangkok, Thailand.
COMPREHENSIVE DEVELOPMENT FRAMEWORK
According to the World Bank, in virtually all successful assistance projects the country itself is the driving factor. The Bank, therefore, strives to help governments lead and implement their own development strategies and thus take a stronger hand in their own future development. The strategy was initiated by the former president of the bank, James Wolfensohn. Since 1999, it has followed a set of philosophies known as the Comprehensive Development Framework. These philosophies state that: • • • • Development strategies should be comprehensive and shaped by a long-term vision Development goals and strategies should be “owned” by the country, based on local stakeholder participation in shaping them Countries receiving assistance should lead the management and coordination of aid programs through stakeholder partnerships Development performance should be evaluated through measurable results on the ground in order to adjust the strategy to outcomes and a changing world
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 economical 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. The Bank supports certain kinds of poor people's organisations such as the SelfEmployed Women's Union and Shack/Slum Dwellers International. Forty-five countries pledged US$25.1 billion in "aid for the world's poorest countries", aid that goes to the World Bank International Development Association (I.D.A.) which distributes the gifts to eighty poorer countries. While wealthier nations sometimes fund their own aid projects, including those for diseases, and although I.D.A. is the recipient of criticism, Robert B. Zoellick, the president of the World Bank, said when the gifts were announced on December 15, 2007, that I.D.A. money "is the core funding that the poorest developing countries rely on".
CLEAN TECHNOLOGY FUND MANAGEMENT
The World Bank has been assigned temporary management responsibility of the Clean Technology Fund (CTF), focused on making renewable energy cost-competitive with coal-fired power as quickly as possible, but this may not continue after UN's Copenhagen Climate Change Conference in December, 2009, because of its continued
investment in coal-fired power plants. However, this is of extreme importance in the current global scenario involving issues like global warming and ozone hole depletion, because of which the bank has been continuously striving to put forth an effort in this direction.
WORLD BANK’S POVERTY ANALYSIS
Regional aggregation using 2005 PPP and $1.25/day poverty line
*** 2005 *** Poverty H(%) PG(%) SPG(%) line East Asia and Pacific Europe and Central Asia Latin America and the Caribbean Middle East and North Africa South Asia Sub-Saharan Africa Total 38.0 16.78 38.0 38.0 38.0 3.65 8.22 3.60 4.04 1.05 2.75 0.78 10.29 20.74 7.5 1.40 0.47 1.46 0.30 3.64 11.05 3.22 Num.of poor(m) 316.21 17.29 45.25 10.99 595.58 388.38 1373.69 Num.of poor(m) 506.83 21.73 56.59 10.3 615.86 389.76 1601.07 Population(m ) 1884.42 473.6 550.43 305.23 1476.4 762.88 5452.96 Population(m ) 1836.99 473.44 529.39 289.32 1406.07 708.27 5243.48
38.0 40.34 38.0 50.91 38.0 25.19
*** 2002 *** Poverty H(%) PG(%) SPG(%) line East Asia and Pacific Europe and Central Asia Latin America and the Caribbean Middle East and North Africa South Asia Sub-Saharan Africa Total 38.0 27.59 38.0 4.59 7.97 1.25 3.61 0.69 11.49 23.42 9.55 3.13 0.51 1.86 0.24 4.15 12.88 4.2
38.0 10.69 38.0 3.56
38.0 43.80 38.0 55.03 38.0 30.53
*** 1999 *** Povert H(%) PG(%) SPG(%) y line East Asia and Pacific Europe and Central Asia Latin America and the Caribbean Middle East and North Africa 38.0 35.51 38.0 5.13 10.67 1.58 3.76 0.84 4.34 0.78 2.00 0.28 Num.of Population(m poor(m) ) 635.06 24.28 55.29 11.54 1788.39 473.22 507.73 273.53
38.0 10.89 38.0 4.22
Povert H(%) PG(%) SPG(%) y line South Asia Sub-Saharan Africa Total 38.0 44.13 38.0 58.37 38.0 33.73 11.74 25.83 10.84 4.30 14.65 4.88 Num.of Population(m poor(m) ) 588.92 382.66 1697.74 1334.51 655.57 5032.95
Some critics of the World Bank believe that the institution was not started in order to reduce poverty but rather to support the United States' business interests, and argue that the bank has actually 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 "neo-liberal" agenda, imposing policies on developing countries which have been damaging, destructive and anti-developmental. Some 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 output functions to blame the poor for their condition. The World Bank supported from the beginning the Brazilian Castello Branco’s authoritarian-rightist government, supplying it with a $80 million loan for power projects. Criticisms of the structure of the World Bank refer to the fact that the President of the Bank is always a citizen of the United States, nominated by the President of the United States (though subject to the approval of the other member countries). There have been accusations that the decision-making structure is undemocratic, as the U.S. effectively has a veto on some constitutional decisions with just over 16% of the shares in the bank; moreover, decisions can only be passed with votes from countries whose shares total more than 85% of the bank's shares. A further criticism concerns internal governance and the manner in which the World Bank is alleged to lack transparency to external publics. In 2008, a World Bank report which found that biofuels had driven food prices up 75% was not published. Officials confided that they believed it was withheld from publication to avoid embarrassing the President of the United States, George W. Bush. The World Bank also plays an important role in many conspiracy theories such as the New World Order, where it is accused to be a catalyst for the growing global social disparity aiming at the financial enslavement of the western world, matching conditions with the third world, through the control of global monetary policies.
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International Business-Competing in the Global Marketplace By Charles W L Hill & Arun K Jain The McGraw Hill Companies
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