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The World Bank
B.A.(LLB), Section B
The World Bank had much influence in shaping
development since the second half of the twentieth
century. Immediately after the (WWII), world leaders saw a
need for international cooperation in order to rebuild the
devastated countries in Europe. It consists of five closely
associated institutions, including the International Bank for
Reconstruction and Development (IBRD) and the
International Development Association (IDA).
The World Bank is one of the world’s largest sources of
development assistance. There are currently 188 member
countries. Voting power is linked to member’s shares, which
in turn are based on each country's relative economic
History behind the World Bank
The World Bank was created at Bretton Woods in 1944 to lend
to European countries to help them rebuild after World War II. It
was the world's first multilateral development bank, and was
funded through the sale of World Bonds. Its first loans were to
France and other European countries, but soon lent money to
Chile, Mexico and India to build power plants and railways. By
1975, the Bank also lent money to countries to help with family
planning, pollution control and environmentalism.
After the Great Depression in the 1930s there was a need for an
organization to create a system for exchange rate stability
because there was uncertainty of the value of paper money and
countries began cheating other countries in trade.
Purposes of The World Bank
• Granting reconstruction loans to war devastated
• Providing loans to governments for agriculture,
irrigation, power, transport, water supply, educations,
• Promoting foreign investment by guaranteeing loans
provided by other organizations.
• Encouraging industrial development of underdeveloped
countries by promoting economic reforms.
• Providing technical, economic and monetary advice to
member countries for specific projects.
Made up of 5 different organizations:
– International Bank for Reconstruction and
International Development Association (IDA)
International Finance Corporation (IFC)
Multilateral Investment Guarantee Agency (MIGA)
International Center for the Settlement of Investment
International Bank for Reconstruction and
• This is an institution within the World Bank that aims to
reduce poverty in middle- income and creditworthy
poorer countries by promoting sustainable development
through loans, guarantees, risk management products,
and analytical and advisory services.
• IBRD raises most of its funds on the world's financial
markets. It has become one of the most established
borrowers since issuing its first bond in 1947 to finance
the reconstruction of Europe .
• Lends to countries with relatively high per capita
• IBRD's earns an income every year from the
return on its equity and from the small margin
it makes on lending.
• The IBRD gets it money through the sale of its
bonds in international capital markets and
member’s subscriptions to its capital stock.
• The IDA is the second World Bank institution
and its main focus is helping the poorest
countries in the world by providing loans and
grants to boost economic growth, reduce
inequality and improve living conditions.
• IDA funding immunized nearly half a billion
children, provided access to better water
sources for 123 million people, and helped 65
million people receive health services.
• IDA lends money on concessional terms. This
means that IDA charges little or no interest
and repayments are stretched over 25 to 40
years, including a 5- to 10-year grace period.
• lends to countries with annual per capita
incomes of about $800 or less.
• IDA mostly gets it money from government’s
International Finance Corporation
• Established in 1956 to reduce poverty and
improve people's lives in an environmentally and
socially responsible manner.
• finances private sector investments, mobilizes
capital in international financial markets, and
provides technical assistance and advice to
governments and businesses.
• provides both loan and equity finance for
business ventures in developing countries.
Multilateral Investment Guarantee
The Multilateral Investment Guarantee Agency (MIGA)
was created in 1988 as a member of the World Bank
Group to promote foreign direct investment into
developing countries to support economic growth,
reduce poverty, and improve people’s lives. It fulfills
this mandate by offering political risk insurance to
investors and lenders.
International Center for the
Settlement of Investment Disputes
• The International Centre for Settlement of
Investment Disputes (ICSID) provides international
facilities for conciliation and arbitration of
• Established in 1966 to promote increased flow of
• Provides facilities for the reconciliation of disputes
between governments and foreign investors.
Contribution to India’s Economic
The World Bank has made a significant
contribution to India's planned economic
development through its direct as well as
indirect assistance. Important aspects of the
Bank's assistance are as follows:
• Assistance from IDA
•Assistance from Aid India Club
World Bank has consistently pushed a neoliberal agenda imposing policies on developing
countries which have been damaging,
destructive and anti developmental. It is also
considered as an instrument for promotion of
western interests in certain regions of the
Concluding, despite of some flaws, helping
various nations by the World Bank can never be