International Political Institution: World Bank

(Along with Reforms)

1. Introduction
i. The World Bank is an international financial institution
that provides loans to developing countries for capital
programs.
ii. It comprises two institutions: the International Bank for
Reconstruction and Development (IBRD) and the International
Development Association (IDA).
iii. The World Bank is a component of the World Bank Group, and
a member of the United Nations Development Group.
iv. The World Bank's official goal is the reduction of poverty.
Established in 1944, the World Bank Group is headquartered in
Washington, D.C. they have more than 10,000 employees in more
than 120 offices worldwide.
v. According to its Articles of Agreement, all its decisions must
be guided by a commitment to the promotion of foreign
investment and international trade and to the facilitation of
Capital investment.
vi. Jim Yong Kim2012ñpresent current president, nationality from
United States, Former Chair of the Department of Global Health
and Social Medicine at Harvard, president of Dartmouth College.
2. Goals
i. The World Bank Group has set two goals for the world to
achieve by 2030:
i. End extreme poverty by decreasing the percentage of
people living on less than $1.25 a day to no more than 3%
ii. Promote shared prosperity by fostering the income growth
of the bottom 40% for every country
ii. Millennium Development Goals targets for 2015
i. Eradicate Extreme Poverty and Hunger
ii. Achieve Universal Primary Education
iii. Promote Gender Equality
iv. Reduce Child Mortality
v. Improve Maternal Health
 vi. Combat HIV/AIDS, Malaria, and Other Diseases
vii. Ensure Environmental Sustainability
viii. Develop a Global Partnership for Development
3. Financial Products and Services
i. low-interest loans, zero to low-interest credits, and grants
to developing countries
ii. support a wide array of investments in such areas as
education, health, public administration, infrastructure,
financial and private sector development, agriculture, and
environmental and natural resource management.
iii. Some of the projects are cofinanced with governments,
other multilateral institutions, commercial banks, export
credit agencies, and private sector investors
iv. provide or facilitate financing through trust fund
partnerships with bilateral and multilateral donors.
4. Innovative Knowledge Sharing
i. support to developing countries through policy advice,
research and analysis, and technical assistance.
ii. analytical work often underpins World Bank financing and
helps inform developing countriesí own investments.
iii. support capacity development in the countries, sponsor, host, or
participate in many conferences and forums on issues of
development, often in collaboration with partners.
iv. Key priorities include:
i. Results:
ii. Reform: working to improve every aspect of the work:
iii. Open Development: offer a growing range of free, easy-to-
access tools, research and knowledge to help people
address the world's development challenges. For example,
the Open Data website offers free access to comprehensive,
downloadable indicators about development in countries
around the globe.
v. Membership
i. There are 184 member countries that are shareholders
in the IBRD
 ii. To become a member, however, a country must first join
the International Monetary Fund (IMF)
iii. The size of the World Bank's shareholders, like that of
the IMF's shareholders, depends on the size of a country's
economy. Thus, the cost of a subscription to the World
Bank is a factor of the quota paid to the IMF.
iv. There is an obligatory subscription fee, which is
equivalent to 88.29% of the quota that a country has to
pay to the IMF
v. a country is obligated to buy 195 World Bank shares
(US$120,635 per share, reflecting a capital increase made
in 1988)
vi. Of these 195 shares, 0.60% must be paid in cash in U.S.
dollars while 5.40% can be paid in a country's local
currency, in U.S. dollars, or in non-negotiable non-interest
bearing notes.
vii. The balance of the 195 shares is left as "callable capital,"
meaning the World Bank reserves the right to ask for the
monetary value of these shares when and if necessary.
viii. A country can subscribe a further 250 shares, which do not
require payment at the time of membership but are left as
"callable capital."
ix. The president of the World Bank comes from the
largest shareholder, which is the United States, and
members are represented by a Board of Governors.
x. Throughout the year, however, powers are delegated
to a board of 24 executive directors (EDs).
xi. The five largest shareholders - the U.S., U.K., France,
Germany and Japan - each have an individual ED, and the
additional 19 EDs represent the rest of the member states as
groups of constituencies.
5. How World Bank Operates
i. The IBRD was the original arm of the World Bank that
was responsible for the reconstruction of post-war
Europe.
ii. Before gaining membership in the WBG's affiliates (the
International Finance Corporation, the Multilateral
Investment
 Guarantee Agency and the International Center For Settlement of
Investment Disputes), a country must be a member of the IBRD.
iii. International Development Association offers loans to the
world's poorest countries. These loans come in the form of
"credits," and are essentially interest-free. They offer a 10-year
grace period and hold a maturity of 35 years to 40 years.
iv. The International Finance Corporation (IFC) works to
promote private sector investments by both foreign and
local investors.
v. The Multilateral Investment Guarantee Agency (MIGA) supports
direct foreign investment into a country by offering security
against the investment in the event of political turmoil.
vi. the International Center for Settlement of Investment
Dispute facilitates and works towards a settlement in the
event of a dispute between a foreign investor and a local
country.
6. Adapting to the Times
i. sometimes as a nation develops, it requires more aid to work its
way through the development process.
ii. This has resulted in some countries accumulating so much
debt and debt service that payments become impossible to
meet.
iii. Many of the poorest countries can receive accelerated debt
relief through the Heavily Indebted Poor Countries scheme,
which reduces debt and debt service payments while
encouraging social expenditure.
iv. The WBG has also been focusing on reducing the risk of projects
by means of better appraisal and supervision mechanisms as well
as a multidimensional approach to overall development.
v. The Bank encourages all of its clients, which number over 100,
to implement policies that promote sustainable growth, health,
education, social development programs focusing on governance
and poverty reduction mechanisms, the environment, private
business and macroeconomic reform.
7. Opposition to the Bank
i. The globalization of market forces, vigorously promoted by
the World Bank, creates greater inequality.
ii. The World Bank is wrong in arguing that economic growth
will solve the problems we face.
 iii. The system allows the largest shareholders to
dominate the vote, resulting in WBG policies being
decided by the rich but implemented by the poor.
iv. The real function of institutions such as the World
Bank is not to promote "development" but rather to
integrate the ruling elites of third world countries
into the global system of rewards and
punishments.
v. opponents have observed that developing
countries often have to put health, education and
other social programs on hold in order to pay
back their loans.
vi. Evidence from many countries shows that the
policies promoted by the World Bank are
disastrous.
vii. The World Bank's emphasis on expanding
exports has been disastrous for the environment.
viii. The "free market" economic model being
pushed on third world governments is not one the
industrial countries used to develop themselves.
ix. Globalization-from-above is being rejected and
millions of people all over the world are struggling to
build globalization-from-below.
8. Reform: An Easy Way to Pressure the World Bank for
Change
i. The World Bank gets most of its capital by
selling bonds to wealthy investors.
ii. If we could pressure large institutional funds
(e.g., university endowments and state worker
pension funds) to stop buying World Bank
bonds as a way to protest the Bank's
destructive policies, we could exert serious
pressure on the Bank.
iii. Opposition groups have protested by boycotting
World Bank bonds such as the huge impact the
divestment campaign had on South Africa's white
 minority rulers during the closing days of apartheid
9. Conclusion