What Is the World Bank and What Does It Do?
Summary
TLDRThe 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
- π¦ 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.
- π 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.
- πΌ 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.
- π΅ It offers financial assistance to developing countries, primarily through low-interest loans, which are made possible by its AAA credit rating and financial reserves.
- π 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.
- π 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.
- πΌ 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.
- π 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.
- π± 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.
- βοΈ 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.
Outlines
π¦ Introduction to the World Bank
The World Bank is described as one of the world's most powerful institutions, with a portfolio of nearly 400 billion dollars. Established in 1944 in response to the devastation of World War II, its original purpose was to aid in the reconstruction and development of affected countries and to reduce global poverty. The bank has since undertaken over 13,500 projects with lending commitments exceeding a trillion dollars. Despite its name, the World Bank is not a conventional bank; its mission is to end extreme poverty and promote shared prosperity, focusing on development projects such as infrastructure. It is an international organization with 189 member countries, which are also its shareholders. The voting power in the World Bank is proportional to the shares a country holds, with the United States having the largest voting power. The script also notes that China, despite its economic size, holds a relatively small percentage of shares due to its history as a major borrower rather than a lender. The presidency of the World Bank has traditionally been held by an American, following an informal agreement made during the Bretton Woods Agreement.
π The World Bank Group's Structure and Criticisms
The World Bank Group is composed of five international organizations, with the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA) being the most well-known. The IBRD offers valuable services to low-income countries by providing loans at low interest rates, backed by the strong credit ratings of the World Bank. The IDA, on the other hand, works with the poorest countries, offering interest-free loans or grants with lenient repayment terms. The remaining three agencies focus on financing private sector investments, protecting foreign investments, and settling disputes between foreign investors and host countries. In 2018, the World Bank's lending commitments reached 47 billion dollars. However, the bank has faced controversies and criticisms, including allegations of corruption and harmful environmental and social impacts. David Malpass, nominated by President Trump to lead the World Bank, has been critical of the institution's practices, particularly its large loans to China. It is suggested that Malpass may aim to reform the World Bank, which could be beneficial for its long-term future.
Mindmap
Keywords
π‘World Bank
π‘Reconstruction and Development
π‘Triple-A Credit Rating
π‘Member Countries
π‘Voting Power
π‘International Bank for Reconstruction and Development (IBRD)
π‘International Development Association (IDA)
π‘Bretton Woods Agreement
π‘Controversies and Criticisms
π‘David Malpass
Highlights
The World Bank is one of the world's most powerful institutions with a total portfolio of almost $400 billion.
It was created in 1944 in response to the Second World War to aid reconstruction and development of war-torn countries.
The World Bankβs mission is to end extreme poverty and promote shared prosperity.
The organization has 189 member countries who are shareholders, with voting power based on the number of shares owned.
The US holds the largest voting power with 15.85%, followed by Japan, China, Germany, the UK, and France.
China, despite being a large economy, has relatively smaller voting power because it was historically a borrower rather than a lender.
The US traditionally appoints the president of the World Bank due to an informal agreement from the Bretton Woods Agreement.
The World Bank Group consists of five organizations, with the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA) being the most referenced.
The World Bank issues bonds (World Bank bonds) to raise capital and then lends money to developing countries at low interest rates.
IDA works with the poorest countries, offering interest-free loans or grants, with many loans having deferred repayment periods of 10 years.
Three lesser-known agencies of the World Bank Group include the International Finance Corporation (IFC), Multilateral Investment Guarantee Agency (MIGA), and the International Centre for Settlement of Investment Disputes (ICSID).
In 2018, the World Bank's lending commitments amounted to $47 billion.
The World Bank also offers expertise and advice on issues like agriculture, education, climate change, and conflicts.
The World Bank aims to end extreme poverty by 2030 and boost the shared prosperity of the poorest 40% of the population.
The World Bank has faced criticisms related to corruption, environmental harm, and imposing policies that may increase poverty.
David Malpass, a critic of the World Bank's large loans to China and lack of accountability, was nominated by President Trump as the head of the World Bank, with likely reforms in the future.
Transcripts
we're talking about one of the world's
most powerful institutions with a total
portfolio of almost 400 billion dollars
it's one of the world's largest sources
of funding for developing countries and
it has a triple-a credit rating we are
of course talking about the World Bank
but the question is what exactly is the
World Bank and what does it do the World
Bank was created in 1944 in response to
the second world war since so many
countries were shattered by the war the
organization was established to try to
help with the reconstruction and
development of these countries and to
reduce global poverty the intention was
to provide temporary loans to low-income
countries which were unable otherwise to
get these loans on their own since that
point in time at the World Bank has now
taken on over 13,500 projects with total
lending commitments over this time of
over a trillion dollars now although the
World Bank clearly has the word Bank in
its name it's not your typical style of
bank I think this can best be seen if we
take a look at its mission which is to
end extreme poverty and to promote a
shared prosperity the main focus is
therefore shifted from reconstruction
after the war to development of
countries in areas such as roads
electrical infrastructure and irrigation
systems now essentially the World Bank
is an international organization with
189 member countries these member
countries are referred to as
shareholders since they actually hold
shares in the organization the number of
shares that our country owns will depend
on the fees that they've paid to the
World Bank and those fees will largely
depend on the size of the economy these
shares that are owned by the countries
translates into voting power I'm sure
you're familiar with the concept of one
share counting for one vote similar to a
company and this is for most of the
organizations that make up the World
Bank Group that one share will equal one
vote so this means that the US has the
largest voting power with 15 points 85
percent
this is then followed by Japan with 6.84
percents that's a big gap and then China
Germany and the UK and France are quite
equal with each other now something that
you may have picked up on there is that
China is obviously a huge economy but
they only have a relatively small
percentage of the boats and shares one
of the big reasons for this is that they
were actually one of the big
beneficiaries of the lending they were a
borrower rather than a lender although
that seems to now be changing a bit and
that's partly thanks to the US which
strongly objected to so much money being
lent to China and you know what the u.s.
says and things about the World Bank is
going to be very influential
first of all books they obviously own
the most shares and voting power but
also because of something else as well
you see the board of directors for the
bank consists of a president and 25
executive directors and that president
has traditionally always been an
American and this is due to an informal
agreement that was made when the
organization was established so
basically the World Bank and the IMF the
International Monetary Fund's were both
created as part of the Bretton Woods
Agreement and following this agreement
an informal agreement was made which is
that the US would choose the head of the
World Bank and Europe would choose the
head of the IMF so it sounds kind of
fair right so that's why the president
is usually always going to be American
the World Bank group consists of five
international organizations when people
refer to the World Bank rather than the
World Bank Group
they usually reference just two of these
which are the IBRD
and the ID a so the IBRD stands for the
International Bank for Reconstruction
and Development for a poverty-stricken
country this institution offers an
invaluable service
you see these countries would really
struggle to take on a traditional loan
since it would be practically impossible
with interest payments being extremely
high instead the World Bank has step in
and really helped them out with this the
World Bank has one of the strongest
triple-a ratings with the credit rating
agencies thanks to the fact that their
death instruments are backed up by the
capital commitments of the member
countries and the
fact that they have large financial
reserves this means that they can borrow
money from the capital markets
relatively cheaply mainly through
sell-off bonds which are known as World
Bank bonds and then channel this money
through to developing countries at an
extremely low interest rates making
borrowing more affordable for these
countries that really need it and in
fact the rate is usually below the rate
that the bank is paying to its
bondholders so to offset this there will
also sometimes lend money at a higher
rate to more wealthy countries who will
pay a higher rate of interest
the second institution I mentioned the
ID a is the International Development
Association this is similar to the one
that we just discussed except this
agency works with the really poorest
countries like to be in this group the
country must have an average income per
person otherwise known as per-capita
income below 885 dollars per year now
let's put that in perspective in the US
the per capita income is around $60,000
per year so you can see there's a huge
gap there now the countries in this
group can receive interest-free loans or
grants and in many cases the borrower
country may not even have to start
repayment until 10 years after the loan
has been issued the final three agencies
out of the five are less well known and
these include the International Finance
Corporation which promotes growth
through financing private sector
investments the multilateral investment
guarantee agency which helps to promote
foreign investment by protecting
investors from losses through guarantees
and finally the International Centre for
settlement of investment disputes which
deals with disputes between foreign
investors and host countries in 2018 the
banks lending commitments were 47
billion dollars however it's not just
about lending big amounts of money the
bank also offers advice and expertise in
an attempt to tackle a range of issues
including agriculture education climate
change conflicts food security trade
finance the bank has a twin goal the
first one being to end extreme poverty
by the year 2030 and this
one being to boost the shared prosperity
of the poorest 40 percent of the
population in all countries now that
obviously all sounds grades but actually
the World Bank has also got his own
controversies and criticisms as well
there have been allegations of
corruption in some cases and criticisms
of the way they operates which some
people believe causes harmful effects
some analysis shows that they actually
increased poverty in some cases and were
detrimental to the environment public
health and diversity as well as pushing
an agenda which in some cases imposes
damaging policies now one particular
critic who's received a lot of media
attention especially recently is David
Malpass who president Trump has
nominated to be the next head of the
World Bank
he's been crisco of many aspects which
include the World Bank's huge loans to
China rather than to countries that
cannot secure the capital elsewhere and
what he believes to be a lack of
accountability in the organization
however rather than burning the world
bank to the ground or undermining it as
some people have been sensationally
suggesting Malpass may do based on his
previous criticisms I think it's much
more likely that he will attempt to
reform the World Bank which may actually
be good for the long-term future of this
very powerful institution so guys that
was a brief overview of the World Bank
and what it does I hope you found it
useful and if you did I'd really
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video thanks a lot for watching
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