What Is the World Bank and What Does It Do?

Summary

The World Bank, established in 1944, is a powerful institution with a $400 billion portfolio, focusing on reconstruction and development in post-war countries to reduce global poverty. It operates as an international organization with 189 member countries, each holding shares that translate into voting power. The US, with the largest voting power, traditionally appoints the Bank's president. The Bank Group consists of five institutions, including the IBRD and IDA, which offer low-interest loans and grants to developing countries. Despite its significant role in global development, the World Bank faces criticisms regarding corruption, environmental impact, and policy imposition.

Takeaways

• 🏦 The World Bank was established in 1944 to aid in the reconstruction and development of countries after World War II, with a focus on reducing global poverty.
• 🌐 It is an international organization with 189 member countries, which are also its shareholders, influencing its decision-making through voting power based on their economic size.
• 💼 The World Bank's mission has evolved from post-war reconstruction to promoting development in areas like infrastructure, with a current focus on ending extreme poverty and promoting shared prosperity.
• 💵 It offers financial assistance to developing countries, primarily through low-interest loans, which are made possible by its AAA credit rating and financial reserves.
• 📈 The United States has the largest voting power in the World Bank, followed by Japan, and then China, Germany, the UK, and France, reflecting their economic influence.
• 🔝 The presidency of the World Bank has traditionally been held by an American, as part of an informal agreement made during the Bretton Woods Agreement.
• 💼 The World Bank Group consists of five institutions, with the IBRD and IDA being the most well-known, focusing on lending to low and very low-income countries, respectively.
• 📊 The IDA provides interest-free loans or grants to the poorest countries, often with a repayment start delayed by up to 10 years after loan issuance.
• 🌱 The World Bank also offers advice and expertise in various fields including agriculture, education, climate change, and food security, aiming to tackle a broad range of global issues.
• ⚖️ Despite its goals, the World Bank has faced criticisms and controversies, including allegations of corruption, harmful environmental impacts, and criticisms of its operational practices.

Q & A

What is the primary purpose of the World Bank?

The primary purpose of the World Bank is to end extreme poverty and promote shared prosperity by providing financial and technical assistance to developing countries.

When was the World Bank established and why?

The World Bank was established in 1944 in response to the Second World War, with the aim of helping with the reconstruction and development of war-torn countries and reducing global poverty.

What is the total lending commitment of the World Bank over its history?

Over its history, the World Bank has taken on over 13,500 projects with total lending commitments exceeding a trillion dollars.

How does the World Bank differ from a typical bank?

The World Bank differs from a typical bank in that it is an international organization focused on development and poverty reduction rather than personal banking services. It provides loans and grants to countries for development projects.

How many member countries does the World Bank have, and what are they called?

The World Bank has 189 member countries, which are referred to as shareholders because they hold shares in the organization.

What determines the voting power of a country within the World Bank?

A country's voting power within the World Bank is determined by the number of shares it owns, which is based on the fees it has paid to the World Bank, largely dependent on the size of its economy.

Which country has the largest voting power in the World Bank, and why?

The United States has the largest voting power in the World Bank with 15.85 percent, primarily due to its significant share ownership and an informal agreement made during the establishment of the World Bank.

What is the role of the International Bank for Reconstruction and Development (IBRD) within the World Bank Group?

The IBRD provides loans to middle-income and creditworthy low-income countries for development projects and programs, offering them valuable financial assistance at relatively low-interest rates.

What assistance does the International Development Association (IDA) offer to the poorest countries?

The IDA offers interest-free loans, or grants, to the poorest countries, defined as those with a per-capita income below $885 per year, and may allow repayment to start up to 10 years after the loan issuance.

What are the criticisms and controversies surrounding the World Bank?

The World Bank has faced criticisms and controversies, including allegations of corruption, harmful operational effects, increasing poverty in some cases, detrimental environmental impacts, and pushing policies that impose damage on public health and diversity.

What is the twin goal of the World Bank, and by when does it aim to achieve them?

The World Bank's twin goals are to end extreme poverty by 2030 and to boost the shared prosperity of the poorest 40 percent of the population in all countries.