Unit 5

World Bank
It is an international financial institution that provides loans
to countries of the world for capital projects. It was
originally created as International Bank for Reconstruction
and Development (IBRD) in 1944 along with its twin IMF.
When it was set up it was decided that this international
bank would assist in economic reconstruction of the World
War- II damaged European economies.
 
The World Bank Group
consists of four organizations:
The International Development Association
• The International Development Association (IDA)
provides interest-free loans — called credits — and
grants to governments of the poorest countries.
The International Finance Corporation
• The International Finance Corporation (IFC) is the largest
global development institution focused exclusively on the
private sector. We help developing countries achieve
sustainable growth by financing investment, mobilizing
capital in international financial markets, and providing
advisory services to businesses and governments.
The Multilateral Investment Guarantee Agency
• The Multilateral Investment Guarantee Agency (MIGA) was
created in 1988 to promote foreign direct investment into
developing countries to support economic growth, reduce
poverty, and improve people’s lives. MIGA fulfills this
mandate by offering political risk insurance (guarantees) to
investors and lenders.
The International Centre for Settlement of Investment Disput
es
• The International Centre for Settlement of Investment
Disputes (ICSID) provides international facilities for
conciliation and arbitration of investment disputes
Functions of World Bank
• To assist in the construction and development of territories of
its member countries,
• To arrange loans made or guaranteed by it, so that more useful
and urgent projects receive preferences.
• To provide finance to projects from its own capital, funds raised
by it and by participating with other member countries.
• To promote private investment and long run balanced growth of
international trade and BOP equilibrium.
• To provide advice and expertise on institutional technical
assistance and infrastructural assistance.
Objectives:
Purpose and objectives of World Bank are constantly changing.
• Initially it concentrates on infrastructural build-up.
• During 1960-1970s- went on financing agricultural projects- particularly
in promotion of cash crops.
• Late 1970s- WB emphasised on alleviation of poverty in less developed
countries.
• Now it works with developing economies with the focus of helping the
poorest countries.

Through its loans, policy advice and technical assistance, WB supports

range of programmes aimed at reducing poverty and improving living
standards in developing world.
IMF- International Monetary
Fund
• It is an international organisation was formed in 1945 at
Bretton Woods Conference, headquartered in Washington D.C
consisting of 189 countries working to foster global monetary
cooperation, secure financial stability, facilitate international
trade, promote high employment and sustainable economic
growth, and reduce poverty around the world.
• IMF currently plays a central role in management of balance of
payments difficulties and international financial crises.
• The member countries pool in funds through a quota system
from which countries facing BOP difficulties can borrow
money.
Objectives:
• To promote international monetary co-operation

• To encourage international trade

• To bring up employment rate

• To bring exchange rate stability

• To promote sustainable economic growth

Functions
• To foster global growth and economic stability by providing
policy
• To advice and finance member countries

• To help developing nations achieve economic stability and

reduce poverty.
• To finance countries with BOP difficulties
Globalisation
• Globalization is the process of interaction and integration
among people, companies, and governments worldwide. 
• Globalization is the connection of different parts of the world
resulting in the expansion of international cultural, economic,
and political activities. It is the movement and integration of
goods and people among different countries.
• Globalization refers to all those processes by which the
peoples of the world are incorporated into a single world
society, global society
Impact of Globalization on
Indian Economy- Positive
• Increase in Foreign Trade

• Increase in Foreign Investment

• Increase in Foreign Exchange Reserve

• Increase in Foreign Collaboration

• Expansion of Market

• Technological development

• Development of Capital market

Negative Effect
• Loss of domestic industries

• Problem of unemployment
• Exploitation of labour

• Increase in inequalities
• Bad effect on culture and value system
India’s trade with foreign
countries
Exports Imports
• Agriculture and Allied • Fertilizers
Products
• Petroleum Crude
• Engineering Goods
• Pearls, Precious and
• Gems and Jewellery
Semi-Precious Stones
• Textiles
• Capital Goods
• Chemicals and Related
Products • Organic and
• Handicrafts and Carpets Inorganic Chemicals
• Cotton Raw • Gold & Silver