World Bank Group

World Bank Group is a group of five international organizations responsible for providing finance and advice to countries for the purposes of economic development and eliminating poverty. The Bank came into formal existence on 27 December 1945 following international ratification of the Bretton Woods agreements, where the United Nations Monetary and Financial Conference that led to their establishment took place (1 July - 22 July 1944). Commencing operations on 25 June 1946, it approved its first loan on 9 May 1947 ($250m to France for postwar reconstruction, in real terms the largest loan issued by the Bank to date). Its five agencies are:
• International Bank for Reconstruction and Development (IBRD)
• International Finance Corporation (IFC)
• International Development Association (IDA)
• Multilateral Investment Guarantee Agency (MIGA)
• International Centre for Settlement of Investment Disputes (ICSID)
The World Bank's activities are focused on developing countries, in fields such as human development (e.g. education, health), agriculture and rural development (e.g. irrigation, rural services), environmental protection (e.g. pollution reduction, establishing and enforcing regulations), infrastructure (e.g. roads, urban regeneration, electricity), and governance (e.g. anti-corruption, legal institutions development). The IBRD and IDA provide loans at preferential rates to member countries, as well as grants to the poorest countries. Loans or grants for specific projects are often linked to wider policy changes in the sector or the economy. For example, a loan to improve coastal environmental management may be linked to development of new environmental institutions at national and local levels and to implementation of new regulations to limit pollution.
The activities of the IFC and MIGA include investment in the private sector and providing insurance respectively.
Organizational structure
Together with four affiliated agencies created between 1956 and 1988, the IBRD is part of the World Bank Group. The Group's headquarters are in Washington, D.C. It is an international organization owned by member governments; although it makes profits, these profits are used to support continued efforts in poverty reduction.
Technically the World Bank is part of the United Nations system, but its governance structure is different: each institution in the World Bank Group is owned by its member governments, which subscribe to its basic share capital, with votes proportional to shareholding. Membership gives certain voting rights that are the same for all countries but there are also additional votes which depend on financial contributions to the organization. The President of the World Bank is nominated by the President of the United States and elected by the Bank's Board of Governors.
As a result, the World Bank is controlled primarily by developed countries, while clients have almost exclusively been developing countries. Some critics, notably including former World Bank Chief Economist Joseph Stiglitz, argue that a different governance structure would take greater account of developing countries' needs. As of November 1, 2006 the United States held 16.4% of total votes, Japan 7.9%, Germany 4.5%, and the United Kingdom and France each held 4.3%. As major decisions require an 85% super-majority, the US can block any such major change.
World Bank Group agencies
The World Bank Group consists of
• the International Bank for Reconstruction and Development (IBRD), established in 1945, which provides debt financing on the basis of sovereign guarantees;
• the International Finance Corporation (IFC), established in 1956, which provides various forms of financing without sovereign guarantees, primarily to the private sector;
• the International Development Association (IDA), established in 1960, which provides concessional financing (interest-free loans or grants), usually with sovereign guarantees;
• The Multilateral Investment Guarantee Agency (MIGA), established in 1988, which provides insurance against certain types of risk, including political risk, primarily to the private sector.
• The International Centre for Settlement of Investment Disputes (ICSID), established in 1966, which works with governments to reduce investment risk.
The term "World Bank" generally refers to the IBRD and IDA, whereas the World Bank Group is used to refer to the institutions collectively.
Governments can choose which of these agencies they sign up to individually. The IBRD has 185 member governments, and the other institutions have between 140 and 176 members. The institutions of the World Bank Group are all run by a Board of Governors meeting once a year. Each member country appoints a governor, generally its Minister of Finance. On a daily basis the World Bank Group is run by a Board of 24 Executive Directors to whom the governors have delegated certain powers. Each Director represents either one country (for the largest countries), or a group of countries. Executive Directors are appointed by their respective governments or the constituencies. The agencies of the World Bank are each governed by their Articles of Agreement that serve as the legal and institutional foundation for all of their work. The Bank also serves as one of several Implementing Agencies for the UN Global Environment Facility (GEF).
Presidency
The World Bank Group is headed by Paul Wolfowitz, appointed on June 1, 2005. Wolfowitz, a former United States Deputy Secretary of Defense and well-known neo-conservative, was nominated by George W. Bush to replace James D. Wolfensohn. By convention, the Bank President has always been a US citizen, while the Managing Director of the IMF has been a European. Although nominated by the US Government, the World Bank President is subject to confirmation by the Board of Directors. The President serves a term of five years, which may be renewed.
The World Bank has long been criticized by a range of non-governmental organizations and academics, notably including its former Chief Economist Joseph Stiglitz, who is equally critical of the International Monetary Fund, the US Treasury Department, and US and other developed country trade negotiators. Another critic is Heather Marquette. The Bank's own internal evaluations have drawn negative conclusions. It has been accused of being a US or Western tool for imposing economic policies that support Western corporate interests. Critics argue that the so-called free market reform policies - which the Bank advocates in many cases - in practice are often harmful to economic development if implemented badly, too quickly ("shock therapy"), in the wrong sequence, or in very weak, uncompetitive economies.[7] In Russia, for example, shock therapy has raised poverty from 2 million to 60 million, a 3000% increase. UNICEF noted that this resulted in 500,000 'extra' deaths per year.
The World Bank has been criticized because of a perceived conflict between their stated goals and their actual goals. Critics argue that the adverse effects created by the World Bank are apparent when observing the numerous countries on the African continent which are in essence “owned” by the World Bank and IMF. Crushing national debt is common in many African countries, especially those being “helped” by the World Bank. This is due in part to the economic ideals used to work in this extremely impoverished region. Water and sanitation are needed, yet the companies that bring that to the poorest people in the world are large westernized companies out to make profit. Because the World Bank supports these enterprises, critics cite that the organization makes the poor poorer and the rich richer. Following decolonization, many African countries were ruled by dictators. These corrupt dictators stole much of the financial support lent by the World Bank, IMF, and other lenders, leaving an enormous national debt to their successors.
Despite harsh criticisms, the World Bank is one of the most highly-regarded financial institutions in the world, especially in the field of development economics and related research. In addition, World Bank standards and methods have been adopted in many areas such as transparent procedures for competitive procurement and environmental standards for project evaluation. World Bank also engages in funding the education of a few promising young people from developing countries through its graduate scholarship programs.
Although relied upon by poor countries as a contributor of development finance, the World Bank is often criticized, primarily by opponents of corporate "neo-colonial" globalization. These advocates of alter-globalization fault the bank for undermining the national sovereignty of recipient countries through various structural adjustment programs that pursue economic liberalization and de-emphasize the role of the state.
A related critique is that the Bank operates under essentially "neo-liberal" principles. In this perspective, reforms born of "neo-liberal" inspiration are not always suitable for nations experiencing conflicts (ethnic wars, border conflicts, etc.), or that are long-oppressed (dictatorship or colonialism) and do not have stable, democratic political systems.
One general critique is that the Bank is under the marked political influence of certain countries (notably, the United States) that would profit from advancing their interests. In this point of view, the World Bank would favor the installation of foreign enterprises, to the detriment of the development of the local economy and the people living in that country. Furthermore, it is frequently suggested that the Bank intervenes in order to salvage irresponsible loans from private institutions to governments in developing countries, and thus shifts the risk from the original risk-takers to the public of the rich countries, who ultimately back the Bank. This may be referred to as a problem of moral hazard, if private lenders believe that public lenders will not allow the borrower to fail.
In her book Masters of Illusion: the World Bank and the Poverty of Nations (1996), author Catherine Caufield makes a sharp criticism of the assumptions and structure of the World Bank operation, arguing that at the end it harms southern nations rather than promoting them. In terms of assumption, Caufield first criticizes the highly homogenized and Western recipes of “development” held by the Bank. To the WB, different nations and regions are indistinguishable, and ready to receive the “uniform remedy of development”. The danger of this assumption is that to attain even small portions of success, western approaches to life are adopted and traditional economic structures and values are abandoned. A second assumption is that poor countries cannot modernize without money and advice from abroad. This generates a cycle of indebtedness that with the payment of interest means currently a net transfer from the poor to the rich nations of $1.7 billion yearly. In terms of the structure of the bank, Caufield criticizes two elements. First, the structure of repayment; the Bank is a lender of foreign currency and demands to be repaid in the same currency. The borrower countries, in order to obtain the currencies to repay the loans, must sell to the rich countries more than they buy from them. However, the rich countries want to be net exporters, not importers. This generates “the transfer problem”, often the only way of repaying loans is to engage in other loans, resulting in an accumulation of debts. Second, she criticizes the high influence of the bank over national sovereignty. As a condition of the credit, the Bank offers advice on how countries should manage their finances, make their laws, provide services, and conduct themselves in the international market. The Bank has great power of persuasion, because if it decides to ostracize a borrower, other major international powers will follow the lead. On top of this, by excessive lending, the Bank has added to its own power and depleted that of its borrowers, generating a blatant inconsistency with its stated mission.
John Perkins in Confessions of an Economic Hit Man sees the World Bank as an instrument of American imperial policy, providing loans to developing countries for projects that enormously benefit a ruling elite as well as American companies and making such countries subject to American influence and pressure. This picture is vigorously disputed.
Defenders of the World Bank contend that no country is forced to borrow its money. The Bank provides both loans and grants. Even the loans are concessional since they are given to countries that have no access to international capital markets. Furthermore, the loans, both to poor and middle-income countries, are at below market-value interest rates. The World Bank argues that it can help development more through loans than grants, because money repaid on the loans can then be lent for other projects. Finally, it has made a major effort in recent years to address criticism, particularly regarding the environment and corruption, as well as to the legitimacy of its enormous influence and power.
Leadership
The President of the Bank, currently Robert Zoellick, is responsible for chairing the meetings of the Boards of Directors and for overall management of the Bank. 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.
Areas of operation (http://en.wikipedia.org/wiki/World_B...s_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
• International Economics and Trade
• Labor and Social Protections • 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