CHAPTER 3 THE WORLD BANK
MARKET INTEGRATION The World Bank was created in 1944 out of The
Market Integration
It occurs when prices among different location or
related goods follow similar patterns over a long period
of time. Market integration is far more efficient than firm
integration.
INTERNATIONAL FINANCIAL INSTITUTION
Have deep institutional expertise in providing and
catalyzing investments in sustainable development and
have taken steps to align the activities with the 2030
agenda.
SUSTAINABLE DEVELOPMENT GOALS (SGD’s)
Related to financial instruments, and helping to
crowd-in public and private sources to advance global
public goods in areas such as combatting climate change.
List of International Financial Institutions
1. European Investment (EIB)
2. Inter-American Development Bank (IDB)
3. Asian Development Bank (ADB)
4. International Fund for Agricultural Development
(IFAD)
Multilateral Assistance and Developing Countries,
International lending agencies have had the following
beneficial effects:
1. They help the developing countries to design
policies conducive to attracting FDI.
2. They ensure political risk and stimulate private
capital flows to less developed countries.
3. They enhance the credibility of host country
governments.
4. They assist in regional economic integration.
5. They bail out countries on the verge of economic
collapse.
6. They assist countries to manage fiscal deficits
and BOP problems (temporary and permanent).
7. They finance infrastructure and developmental
activities, and co-finance projects.
8. They assist countries in opening up their
economies and reducing capital controls.
9. They provide concessional loans to the least
developed countries.
10. Often, they are the only source of funding for the
poorest of countries.
Bretton Agreement, is an international organization
dedicated to providing financing, advice, and research to
developing nations to aid their economic advancement.
The bank predominantly acts as an organization that
attempts to fight poverty by offering developmental
assistance to middle- and low-income countries.
Currently, the World Bank has two stated goals that it
aims to achieve by 2030.
• The first is to end extreme poverty by decreasing
the number of people living on less than $1.90 a
day to below 3% of the world population.
• The second is to increase overall prosperity by
increasing income growth in the bottom 40% of
every country in the world
The Bretton Woods Agreement components:
1. A collective international monetary system
2. The formation of the World Bank
3. The creation of International Monetary Fund
Role of World Bank
The World Bank is a provider of financial and
technical assistance to individual countries around the
globe. The bank considers itself a unique financial
institution that sets up partnerships to reduce poverty
and support economic development.
The World Bank supplies qualifying governments
with low-interest loans, zero-interest credits, and grants,
all for the purpose of supporting the development of
individual economies. Debt borrowings and cash
infusions help with global education, healthcare, public
administration, infrastructure, and private-sector.
Through the years, the World Bank has
expanded from a single institution to a group of five
unique and cooperative institutional organizations,
known as the World Banks or collectively as the
World Bank Group.
1. The first organization is the International Bank
for Reconstruction and Development (IBRD),
an institution that provides debt financing to
governments that are considered middle
income.
2. The second organization within the World
Bank Group is the International Development
Association (IDA), a group that gives interest-
free loans to the governments of poor
countries.
 3. The International Finance Corporation (IFC),
the third organization, focuses on the private
sector and provides developing countries with
investment financing and financial advisory
services.
4. The fourth part of the World Bank Group is the
Multilateral Investment Guarantee Agency
(MIGA), an organization that promotes foreign
direct investments in developing countries.
5. The fifth organization is the International
Centre for Settlement of Investment Disputes
(ICSID), an entity that provides arbitration on
international investment disputes.
THE INTERNATIONAL MONETARY FUND
The International Monetary Fund (IMF) is an
international organization that promotes global
economic growth and financial stability, encourages
international trade, and reduces poverty.
Created in 1945, the IMF is governed by and accountable
to the 189 countries that make up its near-global
membership. The IMF's primary purpose is to ensure the
stability of the international monetary system the system
of exchange rates and international payments that
enables countries (and their citizens) to transact with
each other.
Understanding the International Monetary Fund
The International Monetary Fund (IMF) is based in
Washington, D.C. The organization is currently
composed of 189 member countries, each of which has
representation on the IMF's executive board in
proportion to its financial importance.
The IMF's website describes its mission as "to
foster global monetary cooperation, secure financial
stability, facilitate international trade, promote high
employment and sustainable economic growth, and
reduce poverty around the world."
History of the IMF
The IMF was originally created in 1945 as part of
the Bretton Woods Agreement, which attempted to
encourage international financial cooperation by
introducing a system of convertible currencies at fixed
exchange rates.
The IMF also acted as a gatekeeper. Countries
were not eligible for membership in the International
Bank for Reconstruction and Development (IBRD)-a
World Bank forerunner that the Bretton Woods
agreement created in order to fund the reconstruction of
Europe after World War II-unless they were members of
the IMF.
Role of International Monetary Fund
which attempted to encourage international
financial cooperation by introducing a system of
convertible currencies at fixed exchange rates.
Surveillance
The IMF collects massive amounts of data on
national economies, international trade, and the global
economy in aggregate. The organization also provides
regularly updated economic forecasts at the national and
international levels.
Capacity Building
The IMF provides technical assistance, training,
and policy advice to member countries through its
capacity building programs. These programs include
training in data collection and analysis, which feed into
the IMF's project of monitoring national and global
economies.
Lending
The IMF makes loans to countries that are
experiencing economic distress to prevent or mitigate
financial crises. Members contribute the funds for this
lending to a pool based on a quota system.
THE EUROPEAN INTEGRATION
European integration is the product of the
selective pooling of national sovereignty, or ultimate
jurisdiction over a body politic, by postwar European
nation- states. It has yielded the European Union (EU),
the most successful experiment in international
cooperation in modern history.
Regional Integration
Intergovernmentalism
Neofunctionalism failure to explain the
slowdown of European integration in the 1970s, and the
subsequent strengthening of the "intergovernmental
elements of the European Communities, led to the
emergence of a starkly opposing theory of European
integration, known as intergovernmentalism. In direct
contrast with neofunctionalism emphasis on non-state
interests at the domestic and supranational levels,
intergovernmentalism argues that European integration
is driven by the interests and actions of the European
nation-states.
Educational and European Union
The Lifelong Learning Programme of Jean Monnet
A final strand within the Lifelong Learning
Programme is the Jean Monnet Programme. Originally
launched in 1990, it seeks to stimulate excellence in
teaching and research on European integration in higher
education institutions throughout the world. The
programme is concerned with the construction of the
European Community and its institutional, legal, political,
economic, and social development. It has projects in 61
countries across five continents and reaches up to
250,000 students a year.
The French Government
The French President, Nicolas Sarkozy advocated
immediate action and a radical solution to the Greek
problem. His stance, apart from his personality, was also
associated with his party's Gaullist tradition, with
France's leading role in the European integration process
and the postwar French political tradition regarding state
involvement in the financial system
European Union Policy
Trade Policy
• Two major economies were not included as part of
the original 23 Contracting Parties that negotiated
the launching of the GATT at the end of World War
II-West Germany and Japan. Both were eventually
allowed entry-West Germany acceded in 1951 and
Japan acceded in 1955.
Social Policy
• The extraordinary process of European integration
that began modestly in the early postwar years and
accelerated toward the sweeping treaties of the
1990s was primarily economic and secondarily
political in motivation, structure, and outcome. Yet,
an accompanying social aspect of European
unification has begun to receive scholarly attention,
namely, the nature of social policy within the
authoritative structure of the European Union (EU).
Monetary Policy
• The most conspicuous case of an MDFI supporting a
wide range of project- finance transactions in
developed countries is that of EIB. EIB was created in
1958 under the Treaty of Rome as an autonomous
body within the European Union to finance capital
investment furthering European integration by
promoting E.U. economic policies.
Structured Finance Facility.
• In 2001, EIB established a Structured Finance
Facility (SFF), under which it takes on a higher
level of project risks through providing:
1. Senior loans and guarantees under which it
will assume pre-completion and early
operating risks;
2. Mezzanine finance and guarantees ranking
ahead of shareholder equity or subordinated
debt;
3. Project-related derivatives (hedging).
THE ASEAN INTEGRATION
The Association of Southeast Asian Nations
(ASEAN) established the ASEAN Community in 2015;
comprising the ASEAN Political Security Community, the
ASEAN Economic Community (AEC), and the ASEAN
Socio- Cultural Community. Complementing the
establishment of the ASEAN Community was the
adoption of the ASEAN Community Vision 2025 and the
three successor Community Blueprints to chart ASEAN's
integration trajectory towards 2025.
ASEAN COUNTRIES
• Brunei,
• Cambodia
• Indonesia
• Laos
• Malaysia
• Myanmar
• Philippines
• Singapore
• Thailand
• Vietnam.
ASEAN Leaders therefore agreed the creation of AEC
Blueprint 2025, which aims to complete the outstanding
elements of the original Blueprint and further deepen
economic integration. The new Blueprint consists of five
pillars:
1. A highly integrated and cohesive economy.
2. Competitive, innovative and dynamic ASEAN.
3. An ASEAN with enhanced economic connectivity
and deeper sectoral cooperation.
4. A resilient, inclusive and people-oriented and
people-centered ASEAN.
5. A global ASEAN.

The AEIF 2019 highlights keynote addresses from
distinguished speakers and forum on selected sub-
themes including:
• business and human rights
• rural economic and community-based
development
• aviation industry
• entrepreneurship
• trades and investment.
There will be parallel sessions to present applied
research papers on both days. This ASEAN Economic
Integration Forum strives to feature the identification of
and proposals for bridging inter- and intra- regional
development gaps in the ASEAN region,
• to contribute to policy making that looks at
holistic and bottom-up approach within the
region,
• to promote meaningful discourse on AFC that
goes beyond economic imperatives and
• to highlight the importance of social forces in
promoting ASEAN community.
The ASEAN Report
The efforts of the AIMO to develop more
sophisticated and reliable tools to measure the
implementation of AEC Blueprint 2025. However, we
also believe that transparency is an important
component for effective monitoring, in particular for
engaging the wider public on the issues relating to
implementation of the AEC.
We furthermore believe that it is important that third
parties are involved in the process of monitoring and
evaluation, to widen engagement and the debate on
ASEAN's development.
The previous Scorecards released by the ASEAN
Secretariat were based on "self-assessment" by the
Member States and are therefore subject to concerns
relating to the independence and objectivity of the
process. In this report, therefore, we aim to provide an
external assessment of implementation of AEC Blueprint
2025.
This report is our second annual publication assessing
the progress of economic integration within ASEAN.
To prepare this report, we have sought to follow the
approach set out in the Monitoring and Evaluation
Framework prepared by the AIMO of measuring both
outcomes and compliance. The report is therefore
structured as follows:
1. Assessment of the outcomes of ASEAN
integration using a set of economic indicators.
2. Assessment of the implementation of the CSAP
using publicly available information on measures
and actions which have been implemented.
3. Commentary on the broad messages that come
out of these assessments
To help us consider the messages that arise from these
assessments, we have presented our emerging findings
at a series of Focus Group Discussions (FGDs) across
ASEAN, with experts from government, business and
academia.
The insights from these discussions were extremely
valuable, and provided much of the inputs in preparing
this report.
We hope that this report can serve as a helpful and
constructive contribution to understanding, assessing
and improving the process of ASEAN economic
integration.