World Bank Definition

Short Note on World Bank

Table of Contents

• INTRODUCTION:
• SOME FACT:
• WORLD BANK GROUP
• OBJECTIVE OF WORLD BANK
• SIMILARITY BETWEEN IMF & WORLD BANK

INTRODUCTION:

The World Bank is an international financial institution that provides loans and grants to the governments of poorer countries for the purpose of pursuing capital projects. It comprises two institutions: the International Bank for Reconstruction and Development (IBRD), and the International Development Association (IDA).

Motto: working for a world free of poverty

Headquarters: Washington, DC, US.

Membership: 189 countries (IBRD), 

                              173 countries (IDA).

Formation: July  1944

President: David Malpass

SOME FACT:

• IBRD and its associates institutions as a group are known as the world bank. 
• In 1945 it was realized to concentrate on reconstructing the war-affected economies.
• IBRD was established on 5th December 1945 with IMF on the basis of the recommendations of the Bretton wood conference.
• That is the reason why IMF& IBRD is called Bretton wood twins.
• Difference between IMF and IBRD are world bank provides long term loans for promoting balanced economic development, while the IMF provides short term loans to member countries for eliminating BOP disequilibrium.
• The eminent world economist George Schultz had suggested in American economic association conference in Jan 1995 for the  merger of IMF & world bank.
• Every country of the IMF automatically becomes a member of the world bank.
• If a country leaving the membership of the IMF can continue its membership with world bank if 75% of members of their banks give their vote in their favor.
• IBRD started functioning in June 1946.
• World Bank and IMF are complementary institutions.
• Aims to reduce poverty in middle Income& creditworthy poorer countries by promoting sustainable development.
• India is a member of four constituents of the world bank group i.e IBRD, IFC, IDA & MIGA.
• Each member has 250 votes plus one additional vote for every 100,000 shares of the capital stock held.
• World bank also provides technical services to the member countries for this, the bank has established the Economic Development.
• Institute & staff college in Washington.
• In 1958 bank played an important role in establishing India Aid club for providing special economic assistance to India now its  called India Development forum.
• India borrow from IBRD & IDA.
• PESTEL- Political, economic, socio-cultural, technological, environment & legal.
• CAGE- Cultural, administrative, geographic & Economic.
• Organization structure are Board of governors, executive directors, president act as a chairman of executive directors.
• World Bank provides 30% of total loans to the power sector, 30 % to the transport sector and the remaining 40% to agriculture, fisheries, mining, forestry, The industrial sector, technical assistance, population control, tourism, urbanization drainage etc.

• The World Bank Group today consists of four closely associated institutions propitiating the role of development in the member nations in different areas. These four are: 

WORLD BANK GROUP

1.     IBRD (International Bank for reconstructions and development): the IBRD IS AN international financial institution that offers loans to middle-income developing countries.

2.   IDA (International development association):- IDA is the part of the World Bank that helps the poor countries to reduce poverty by providing interest-free loans and grants for programs aimed at boosting economic growth and improving living conditions.

3.   IFC (International finance corporations): IFC came into force in 1956, as an autonomous body. Its main objective was to assist private enterprises in developing countries by providing them with risk capital. Since the world bank does not provide risk capital, it provides only loan capital.

4.   MIGA (Multilateral investment guarantee agency): the MIGA came into force in April 1988. It provides political risk insurance to investors and lenders in developing countries.

5.    ICSID (International center for settlement of investment disputes): ICSID came into force in October 1966. It settles investment disputes between foreign investors and their host countries.

OBJECTIVE OF WORLD BANK

·       To provide long-run capital to member countries for economic reconstruction & development (for rehabilitating war ruined economies % peace requirement).

·       For assuring a balance of payment equilibrium & balanced development of international trade.

·       To promote capital Investment.

·       To provide a guarantee for loans granted to small & large units and other projects member countries.

·       To ensure the implementation of a development project so as to bring about a smooth transference from a war time to a peace economy.

SIMILARITY BETWEEN IMF & WORLD BANK

1.     Owned & directed by the government of member nations.

2.   Almost every country on earth is a member of both Institutions.

3.   Both concern themselves with economic issues.

4.   Both focus on broadening & strengthening the economies of their member nations.

5.    Hold joint annual meeting.

6.   Headquarter is at Washington DC.

7.    Share joint task forces sessions& research efforts.

8.   India is a founder member of IBRD.

9.   The voting rights of member countries are determined on the basis of member country’s share the total Capital of the Banks