Week 1 Flashcards
(26 cards)
Main mission World Bank
To reduce poverty and encourage economic development.
How has the World Bank grown over the years?
By providing loans for sectors and for broader economic policy reform in addition to offering interest-free loans and grants to the poorest countries.
Main purpose of the Bretton Woods conference?
To create an international monetary fund to promote currency stabilization.
How was the World Bank like a private bank after the Bretton Woods conference?
It would, first, make or guarantee loans primarily for postwar reconstruction,
and second for development. Like a private bank, its loans would have interest rates
and would have to be repaid, and the institution would be able to issue bonds
Main aspects of the IBRD that differs from a private bank
- It shareholders would only be governments
- It would not receive deposits
- It was set up on a non-profit basis
- It loans typically would contain more conditionality than a private sector bank
- It could only lend to governments or to public or private actors with a government guarantee or repayment.
Projects of the IBRD are identified in these ways
Appraisal by bank staff
Approval by the bank board
Signature, disbursement and payment of the loan
Membership between the World Bank and the IMF were linked for two reasons
- The founders believed that stable monetary conditions - addressed by the IMF - were necessary for bank lending - addressed by the WB - to be successful
- IMF membership required countries to take on certain obligations, which were not
required for membership in the WB.
Three tier governance structure for the WB and IMF
Board of governors
Board of directors
Institution management
Board of governors
Highest decision-making body at both organizations, as it addresses big strategic issues. Consist of finance ministers of MS
Board of directors
Directly responsible for considering and approving loans and policies
The WB’s lending activities, policies, organizational structure, and driving ideas have changed many times over the years, influenced by:
- The global economic and political environment in which it worked
- Internal leaders
- Politics and interest among shareholders
- External criticism
- The evolution of thinking about what development is and how it should be achieved
Main changes in the WB missions
(1) The shift from lending to Western Europe to a focus on lending to developing
countries;
(2) The creation of subsidiaries, which include lending to poor countries and private
sectors;
(3) A shift beyond infrastructure to include rural development, agricultural development,
and a rapid expansion in the scale of lending in the 1970s;
(4) Structural adjustment lending (= to correct macroeconomic problems) in the
1980s;
(5) Lending and policies on issues like environment and gender in the
1980s-1990s;
(6) The Comprehensive Development Framework of the 1990s;
(7) Millennium Development Goals (2000) and Sustainable Development Goals (2015);
Two current specific goals of the WB
(1) To globally end extreme poverty;
(2) To promote shared prosperity;
The first few years of WB were far from successfull because:
- Truman had a difficult time to find a president of the bank
- The Marshall Plan
- The bank did not made their first loan until 11 months after starting.
In the 1950s and 1960s, one impact of changing views on development was the creation of three new affiliates to address gaps unaddressed by the IBRD’s work.
- International Finance Corporation (IFC)
- International Development Association (IDA)
- International Centre for the Settlement of Investment Disputes (ICSID)
- Multilateral Investment Guarantee Agency (MIGA)
World Bank
IBRD and IDA
World Bank Group
WB, IFC, ICSID, MIGA
The WB responded to criticism in a number of ways:
- It developed new policies on information disclosure
- It continued to expand its staff and safeguard policies in environmental and
social areas - It created an inspection panel to increase accountability by investigating
complaints - It took on a greater leadership role in global environmental governance
- It also created new oversight mechanisms to monitor projects
- Along with the IMF, it launched a new process by which highly indebted
countries would develop and implement their own poverty reduction policies as a
condition for debt relief.
The Comprehensive Development Framework (CDF) included:
- Called for countries to take responsibility for their development agenda;
- Called for strong partnerships between donors, borrowers, society, and private-sector actors;
- Called for a transparent development agenda;
- Called for development to advance on all fronts (e.g. infrastructure, health and
economy)
Millennium Development Goals (MDG’s)
(1) Eradicate Extreme Poverty and Hunger
(2) Achieve Universal Primary Education
(3) Promote Gender Equality and Empower
(4) Reduce Child Mortality
(5) Improve Maternal Health
(6) Combat HIV/AIDS, Malaria and Other Diseases
(7) Ensure Environmental Sustainability
(8) A Global Partnership for Development
Zoellick’s priorities
- Better encourage sustainable growth
- Better assist the private sector
- Continue to promote good governance and to reduce corruption;
- To use the bank as leverage to bring in other sources of financing
- To democratize development
Changing focus of the WB
- From post-war reconstruction to focus on developing countries
- From infrastructure to poverty reduction
- From project funding to program funding
Criticisms WB
- Developed and promoted development orthodoxy based on the Washington Consensus, in parallel with IMF.
- Abuse of policy leverage to promote preferred policies in international development regime.
- Considerably normative influence, criticized for pro-Western bias.
New multilateral development banks
- Asian Infrastructure Investment Bank (AIIB) Focus on infrastructure, big Chinese influence
- New Development Bank (NDB) founded by BRICS
