The World Bank is a global financial institution which majority of the nations on the globe has affiliations with especially the low developing and third world countries. The bank was established to counter the economic depression in the 1930s. the economies of many countries during this period was nose-diving as a result of the economic depression and the collapse of the world trade and devaluation of currencies, which resulted in the formation of an international monetary fund which many individuals also refer to as the world bank. In the year 1944 countries merged and formed an agreement known as Bretton woods agreement which resulted to the establishment of a new international monetary system. The World Bank and the international monetary fund are usually referred to as Bretton woods institutions. These two institutions are intertwined but they are separated by their different functions as will be expounded in this research essay. This work will examine in detail the establishment of the World Bank and how the international monetary fund have evolved since its inception in terms f its roles, its functions and the interests it serves on the global scale. These two intertwined institutions have faced implications and criticisms over the years, the reasons behind the implications facing the international monetary fund will be portrayed and expounded at length. This essay will also shed led on the implications of the programs, projects and the policies funded and developed by the world bank in the countries of the global south whose majority comprise of developing countries in Africa, Latin America, and developing countries in Asia and the Middle East. The main objective of the World Bank is to reduce the level of poverty globally whereas the role of the international monetary fund fundamental role is stabilization of exchange rates between currencies globally. This essay will examine the World Bank from three fronts, first this work will examine the evolution of the World Bank since its inception in the 1940s, how the functions have evolved and also how the functions of institutions affiliated to it have changed over the years, secondly this essay will point out the interests that the world bank serve and which countries are targeted and lastly, this essay will look at the implications of the policies of the world bank on member states and other countries of the global south.
The World Bank was initially known as the international bank for reconstruction and development. The World Bank was conceived to rejuvenate the economies of the European countries which had been devastated by the Second World War in the 1940s (Kedar, 2012). Since its inception, the World Bank has evolved and expanded its services to capture almost all countries in the world as will be expounded in this essay. This bank was set up in 1944 and it was an institution on its own. It has evolved from being a single entity to an organization comprised of five development institutions. Its sole purpose of reconstructing and improving economies of developing countries has still remained and is the fundamental objective of this global institution. This institution was based solely in Washington DC where all its operations and businesses were conducted, back in the 1940s; the staff of this bank was constituted by engineers and financial analysts (Kedar, 2012). Nowadays, the World Bank has sought services from wider disciplinary fields; this move has resulted to the bank employing economists, experts in policy making, social scientists and other experts in different sections of its management (HARMAN and WILLIAMS, 2014). The membership of the World Bank has drastically increased and with functions previously conducted in Washington devolved to individual countries in a move to streamline delivery of services. The World Bank was set up to help the western European countries to rebuild their economies after the effects of the Second World War. The World Bank main objective was to help the western European countries by helping them with loans to revive their dwindling economies. The first loan was given to France on 9th may 1949; this loan was followed by other loans to other European countries namely Netherlands, Denmark and Luxembourg (HARMAN and WILLIAMS, 2014).
The bank afterward decided to extend its loans to other countries which were members mostly in Africa, Asia, and the native America( Latin) 1950s (HARMAN and WILLIAMS, 2014). In the 1950s the World Bank started to shift its focus from the reconstruction of the economies of member countries. The World Bank began to fund other projects mainly infrastructural projects which improved the welfare of the people. The bank funded dams, irrigations schemes, electricity supply and roads Africa and Latin America (HARMAN and WILLIAMS, 2014). The primary focus of the bank now shifted from the reconstruction of economies of western European countries to offering technical assistance and funds for infrastructural development to its member countries. The 1970s marked another shift in the World Bank strategies and the bank now concentrated on poverty eradication (Altiparmakov, 2015). The World Bank now focused on rural development, improving the quality healthcare services in developing countries and educating member countries on the importance of good nutrition. The bank focused on those three facets for about three decades from 1970 and later expanded its scope to include cultural heritage, education for all and promotion of good governance (Altiparmakov, 2015). This move was accompanied by the expansion of the staff by including more social scientists and public policy makers and experts. Currently, the World Bank is composed of five affiliations namely, the international development association(IDA), the international finance corporation(IFC), the multilateral guarantee agency( MIGA) and the international center for settlement of investment disputes(ICSID) (Altiparmakov, 2015). The World Bank developed a new strategy in the year 2013; this strategy encompassed all the above-named agencies of the world. The new strategy is epitomized by the following two goals namely; eradicating hunger, extreme poverty and promoting equality is distribution of wealth and prosperity opportunities.
The World Bank aimed at reducing the percentage of people living below 1USD dollar a day to 3% by the year twenty thirty (Menashy, 2013). By doing this, the World Bank would be able to achieve its first goal of eradicating poverty. The second goal would be achieved by fostering income growth and development for the 40% lower income class of the population in every low developing country globally (Menashy, 2013). The World Bank has become more advanced and has developed a scorecard to keep in check the implementation of this new strategy, the corporate scorecard is comprised of 80 indicators which are updated twice every year in June and October (Menashy, 2013). The score card sheds light on the progress of the World Bank towards the achievement of its goals. The World Bank is an institution made up of five organizations whose functions have also evolved. The IBRD was constituted in 1944 and its main purpose was to reconstruct the European countries after the Second World War. Nowadays, IBRD provides loans to the low developing countries and other technical assistance. The assistance is provided primarily to countries which have a gross national income of between 1026USD and 12475USD (Lipscy, 2015). The IBRD has 188 members and it is ranked among the highest international bond issuers. This institution offers low-interest loans to middle-income countries to alleviate poverty. Since the year 1946, IBRD has provided approximately 500 billion USD to middle-income countries (Lipscy, 2015). IBRD earns income from the returns accrued from its equity and a small percentage of the loans it lends to middle-income countries. Another institution affiliated to the World Bank is the international development association (IDA). The responsibility of the IDA is to help the poorest countries globally. These countries are 77 in number, 39 countries out of the 77 originate from Africa (Lipscy, 2015).
IDA was set up in 1960; the sole purpose of this institution was to reduce poverty by the providence of low-interest financial assistance to middle-income countries to help such nations to alleviate its citizens from poverty (An and Fan, 2015). This institution offers friendly loans which also have a grace period of 5 to 10 years, this enables middle-income countries to improve education, healthcare services, agriculture and transport infrastructure (An and Fan, 2015). This institution nowadays has extended its services and now it offers assistance during crises and emergencies for example Ebola outbreak in West Africa. IDA also provides debt reliefs to countries sinking in debt in a bid to help the economies of such nations to recover. IBRD sources its funds from worlds financial markets whereas IDA sources its funds from the contributions from its 173 member countries which meet after every three years to review its policies and to replenish its resources (An and Fan, 2015). The international finance corporation (IFC) is a part of the World Bank which was created in the year 1956. This branch of the World Bank is focused largely on the private sector. The first investment of IFC was 2million USD to the Siemens firm affiliation which was situated in Brazil (Kedar, 2012). The financial base of IFC has increased from 100million USD in 1956 to 22billion USD in the year 2014 (Altiparmakov, 2015). The major aim of IFC is to help low-income developing countries to achieve economic growth and development by investing in the private sectors for example agribusiness, telecommunications, tourism and manufacturing and industrial firms. Currently, the international finance corporation has one hundred and eighty-four member countries.
The World Bank is also composed of the multilateral investment guarantee agency (MIGA) which was constituted in the year 1988 (Kedar, 2012). MIGA has existed for twenty-eight years and its mission has evolved from providing and complimenting private and public investment with insurance against risks which are primarily non-commercial to promoting and providing direct investments and funds to developing countries (Altiparmakov, 2015). MIGA nowadays provide foreign aid to developing countries for the purpose of alleviating poverty and improving the social welfare of the citizens in developing countries (Menashy, 2013). MIGA further provides insurance to cross-border investments against political risks and other risks such as terrorism, none- honoring financial obligations and expropriation. MIGA has 181 member countries and since its inception, it has issued around 28 billion USD to cover political risks for cross-border investments globally (Menashy, 2013). The last affiliation of the World Bank is the international center for settlement and of investment disputes (ICSID). ICSID was set up in 1966 for the sole purpose of settling investment disputes between countries and investors. ICSID has 152 member countries (Menashy, 2013). ICSID settles disputes through legal processes for example arbitration and conciliation. The main role of the ICSID is maintaining a balance between the interest of the host states and the interests of the investors. ICSID through its arbitral tribunal has administered 550 cases since its inception (Menashy, 2013). The five institutions mentioned above and whose functions have been highlighted are affiliated with the World Bank and are encompassed in it together with the internation...
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