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History of the World Bank

History of the World Bank
The World Bank is a lending institution that funds essential infrastructural requirement, globally. This article highlights the history of the World Bank.
OpinionFront Staff
Last Updated: May 31, 2018
The World Bank is headquartered in Washington D.C. It is banked upon heavily by the governments of the world for timely dispensing of funds to support the development of major utilities and services. the outcome of the Bretton Woods Conference, held in 1944. It was launched alongside the International Monetary Fund, in the presence of a number of important world delegates, and many important policy makers from the United States of America and Britain. Initially, till 1968, the World Bank mainly lent money, following fiscal conservatism. Loan applications were very carefully screened. In this article, you will read more about the history of the World Bank.

History and Important Points

The plan of action followed at the onset was to establish the World Bank as an institution that was designed for investment as well as providing loans. Under the chairmanship of John McCloy, France was the first country to receive World Bank aid, over the rejection of Chile and Poland. The USD 250 million dollar loan was forwarded under strict repayment conditions.

In time, the emphasis for suitability was shifted and a number of non-European countries were forwarded aid, on presumption and calculation that the borrowing nation had the capacity to repay the loan in good time. Loans were forwarded to under-developed and developing nations to fund development of transportation systems and power plants.

Later, the focus shifted on poverty alleviation and enabling nations to help their people benefit from access to basic needs. The loan amount and number of loans increased as the funds were made available to also address infrastructural requirements and social services. Robert McNamara, the president in 1968 is credited with the implementation of a new technocratic management of funds.

McNamara made the funds available for building utilities and schools, hospitals, agricultural reforms, and to improve literacy rates. Investigations prior to the loan sanctions not only enabled the loan amounts to be forwarded quickly, but also increased loan volume. The bond market was used to increase capital. Through the 1980s, the focus was on structural adjustment and streamlining the economies of several developing countries.

Today, the World Bank integrates its lending practices to meet environmental and infrastructural requirements, the world over. The new 'green' focus has made capital available to a number of developing and under-developed nations to improve exports, attain economic equanimity and at the same time guarantee citizens upgraded utilities and services.

Purpose

World Bank is a financial institution designed to cater to the needs of the international community. It provides technical assistance within the highly volatile fiscal world, to enable developing countries to address important infrastructural requirements. The bank's funds target development programs to reduce poverty.

Role

World Bank comprises the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA). It is also responsible for the working of the International Finance Corporation, Multilateral Investment Guarantee Agency, and the International Center for Settlement of Investment Disputes. The primary role is the unbiased distribution of funds for economic upliftment of the international community. It bears the responsibility of ensuring aid to settle investment disputes and facilitate fiscal and infrastructural reconstruction, world wide.

Goals

The World Bank headquarters are in Washington D.C. The goals of this international organization include:
  • Achievement of the Millennium Development Goals.
  • Increase lending to middle-income countries.
  • Develop and forward easily payable interest rates.
  • Generate low or no interest loans to under-developed countries.
  • Increase periodic grant-investments by member countries.
Definition

The definition specifies: A bank with a mission to aid developing and under-developed nations of the world to:
  • Reduce poverty.
  • Develop an investment-environment.
  • Increase job opportunities.
  • Work towards sustainable economic growth.
  • Promote socioeconomic growth through investment.
  • Strengthen governments with education.
  • Empower the development of legal and judicial systems, business opportunities and protection of individual rights.
  • Benefit from micro credit as well as large corporate undertakings.
  • Combat corruption.
  • Promote research and training opportunities.
Operational Problems

The World Bank maintains funds or capital from investments made by in various operations by subsequent investment in the world financial market. This subjects the investment made to fluctuations and restrain on lending activities. Majority of the funds are got from forty donor countries. These nations replenish the lent funds every three years. The replenishment is dependent on timely loan repayment. In case of any upsets in this arena, automatically the future lending capacity of the institution is affected.

IMF and World Bank

The World Bank and the IMF or International Monetary Fund are both inter-governmental support systems that are dedicated to the improvement of the world's financial order. Both are directed by the member nation governments. Both have their headquarters in Washington, D.C. The difference lies in the fact that the latter is a development institution, while the IMF functions as a cooperative institution. While the former looks into loan requisites by underdeveloped and developing nations, the latter handles payments, repayments and receipts.

Facts about World Bank

World Bank offers two types of loans: investment and development policy. While investment loans are those that are forwarded to support economic and social development, development policy loans are offered as quick finance to support institutional reforms to reduce third world debt.

The institution provides analytical services for economic and social infrastructural improvements. It also encourages innovation and cooperation between local stakeholders to generate:
  • Debt relief in the case of very poor countries.
  • Development of sanitation and water supply.
  • Support immunization programs during epidemics.
  • Create 'green' initiatives.
The current president of the World Bank is Dr. Jim Yong Kim. He is assisted by 3 senior Vice Presidents, 24 Vice Presidents, and 2 Executive Vice Presidents.