World Bank Group

1818 H Street, North West
Washington, District of Columbia 20433
U.S.A.
Telephone: (202) 477-1234
Fax: (202) 477-6391
Web site: http://www.worldbank.org

Private Institution
Incorporated: 1946 as the International Bank for Reconstruction and Development
Employees: 9,000
Total Assets: $23 billion (1999)
NAIC: 522293 International Trade Financing; 52211 Commercial Banking

The World Bank Group, created towards the end of World War II, provides loans, soft loans, and guarantees for development projects around the world. A multilateral institution, it calls five billion people its clients; most of them live on less than two dollars a day. Its mix of financial support and advice is credited, for example, with saving India’s agriculture system after World War II. The World Bank derives its support from 180 member nations and pitches bond offerings to the world’s capital markets. Critics question the necessity of its leagues of highly-paid advisers and the social and environmental responsibility of some of its development projects. At the beginning of the millennium, the group was concentrating on harmonizing its private and public sector efforts into comprehensive “Country Assistance Strategies.”

World War II Origins

The International Bank for Reconstruction and Development was the first “Multilateral Development Bank.” Before World War II had ended, Harry Dexter White, assistant secretary of the U.S. Treasury, and the eminent British economist John Maynard Keynes had been among those conceptualizing an international institution to stabilize exchange rates and provide a source of financing for reconstruction and development among countries ravaged by the war.

Forty-four countries sent representatives to Bretton Woods, New Hampshire, to discuss the bank in July 1944. The bank’s sister institution, the International Monetary Fund (IMF) was also created at Bretton Woods. The new bank received most of its funds from the New York investment community. However, at United States insistence, the bank was headquartered in Washington, D.C. The United States also insisted that executive directors have full-time, competitively salaried positions. The United States dominated the multilateral institution from the beginning: it provided one-third of the start-up capital.

Thirty-eight countries were members of the bank, which had an initial staff of 72. The U.S. government picked Eugene Meyer, a 70-year-old retired investment banker, to lead the new institution, which officially opened on June 25, 1946. Meyer had previously been involved in European famine relief and had extensive government experience. However, he resigned six months later after a dispute with U.S. executive director Emilio Collada, who was pressing for a stronger board. New York lawyer John J. McCloy succeeded Meyer as president. He emasculated the board and staffed management with New York cronies, like Chase Bank’s Eugene Black, who replaced Collada.

The bank made its first, general reconstruction loans to France, the Netherlands, Denmark, and Luxembourg in 1947. The French loan of $250 million was the largest it would ever make, in real terms. As the U.S. government shouldered more of the burden for reconstruction under the Marshall Plan, launched in June 1947, the IBRD looked towards lending development funds to Third World countries. Physical infrastructure accounted for most of its lending in this area. The IRBD’s bond issues began showing consistent profits in 1948, earning the bank an outstanding credit rating. That year also marked the first loan to a developing country—$13.5 million for a hydroelectric project in Chile.

When McCloy left the bank after two years to accept an ambassador’s post in Germany, Black was named president. Robert Garner, whom McCloy had recruited from General Foods, remained vice-president. Under Black, the bank specialized in more focused project lending. It was then lending about $400 million a year.

The bank’s first bond offering abroad, worth £5 million, came in London in 1951. That year, the bank negotiated with the British and Iranian governments over oil issues. Later, it helped resolve the Indus water dispute between India and Pakistan. It also unsuccessfully attempted to secure Western funding for the Aswan Dam project in Egypt. This type of involvement led to the creation of the International Center for the Settlement of International Disputes (ICSID) in 1966.

The bank was reorganized on geographical lines in 1952. Three years later, it founded the Economic Development Institute, a staff college. By this time the bank had 500 employees.

Although the IBRD’s managers sought to promote private enterprise, they needed to obtain government guarantees of any loans they made to the private sector. The International Finance Corporation (IFC) was created in 1956 specifically to make private sector loans. Robert Garner served as its first president.

Soft Loans in the 1960s

The “World Bank Group” first came into being in the 1960s. Although the success of the IBRD allowed it to more than double its authorized capital to $25 billion in 1959, its services were out of reach of the many developing nations unable to pay commercial rates. The International Development

Association (IDA) was established in 1960 specifically to handle assistance to such high-risk borrowers. This program of concessional lending had been brewing for several years before Senator Mike Monroney was able to sell the Eisenhower administration on it. It gave its first credit to Honduras for highway construction. (The IDA’s funds are periodically replenished by more than 30 of the richest nations and by World Bank profits.)

George Woods, another New York banker, became president in January 1963. His prime interest was macroeconomics, and he favored intervention in the politics of recipient nations. However, agricultural (land ownership) reform was a touchy subject among such newly-established governments, and remained a stumbling block in efforts to reduce poverty in the mostly rural Third World. Under Woods, the IFC became responsible for industrial loans. He also led the IFC to cooperate with United Nations agricultural and educational agencies as never before.

Robert McNamara—the former auto executive who had helped shaped U.S. policy during the Vietnam War—took over the IBRD presidency on April 1, 1968. He greatly increased the rate of the bank’s lending and focused efforts on finding ways to help owners of small farms become more productive; such agricultural improvements proved more successful in Asia than in Africa. McNamara also boosted the bank’s search for capital beyond the U.S. market and increased support for research activities. An early 1970s reorganization was also on McNamara’s agenda.

Oil Crises in the 1970s

With the Yom Kippur War and the corresponding quadrupling of oil prices by the Organization of Petroleum Exporting Countries (OPEC), 1973 was a year that shaped economic policies around the world. OPEC nations, newly flush with cash, set up their own sources of development financing. Further, the World Bank felt impelled to take measures to offset higher fuel prices in oil-importing developing countries while the Ford administration capped its loans at $5.8 billion.

Population control and pollution control were two new areas of funding in the early 1970s. In the last half of the decade, the bank became more involved in urban development. It also softened its reluctance to deal with government-owned businesses, instead evaluating the independence of management as a criterion for investment.

However, by this time, the People’s Republic of China had become involved in World Bank programs. The bank’s low-key approach produced much success in that country, which used IDA loans for agriculture and education projects while oil wells were financed with IBRD loans. Nations eligible for IDA loans were those with per capita incomes of less than $750 per year (the majority of this population was concentrated in China and India). Agricultural loans, called “the key to improving the living standards of the bulk of the poor,” accounted for a third of IBRD/IDA loans. Unfortunately, inflation reduced the real value of IDA loans by nearly 25 percent in 1977.

Company Perspectives:

The World Bank is the world’s largest source of development assistance, providing nearly $30 billion in loans annually to its client countries. The Bank uses its financial resources, its highly trained staff, and its extensive knowledge base to individually help each developing country onto a path of stable, sustainable, and equitable growth. The main focus is on helping the poorest people and the poorest countries, but for all its clients the Bank emphasizes the need for: investing in people, particularly through basic health and education; protecting the environment; supporting and encouraging private business development; strengthening the ability of the government to deliver quality services, efficiently and transparently; promoting reforms to create a stable macroeconomic environment that is conducive to investment and long-term planning; focusing on social development, inclusion, governance, and institution building as key elements of poverty reduction.

The Bank is also helping countries to strengthen and sustain the fundamental conditions they need to attract and retain private investment. With Bank support —both lending and advice—governments are reforming their overall economies and strengthening banking systems. They are investing in human resources, infrastructure, and environmental protection, and thus enhancing the attractiveness and productivity of private investment. Through World Bank guarantees and MIGA ’s political risk insurance, and in partnership with IFC’s equity investments, investors are minimizing their risks and finding the comfort to invest in developing countries and countries undergoing transition to a market-based economy.

After another round of oil price increases, interest rates rose dramatically at the end of 1979, trapping the bank in fixed rates set when credit was relatively inexpensive. The bank moved to issue loans with floating interest rates in 1982. Otherwise, its terms remained inflexible, fortified with cross-default clauses. The bank began to press for more reforms among borrowing nations through structural adjustment loans (SALs), mostly in Africa and Latin America.

Debt Crisis in the 1980s

The Reagan years were ones of heavy defense buildup and deficit spending. Commercial banker A.W. Clausen succeeded McNamara upon his retirement in 1981. He was soon confronted with the Latin American debt crisis. A few years later, former U.S. Senator Barber Conable became the first professional politician to lead the World Bank in 1986. One of his first tasks was to trim the budget and streamline the staff somewhat. However, managers were then freed to hire their subordinates right back. Some 300 workers received “golden handshakes” in an exercise that cost the bank $200 million. In spite of the uncertainty these measures produced, Conable won the support of both employees and shareholders: in 1988, the IBRD landed its largest ever general capital increase (GCI) from the U.S. government.

Conable attempted to shift the bank’s focus from infrastructure to business ventures. One area of concern was the relatively low levels of private sector investment of IFC-financed projects. China increased pressure on foreign investors in the mid-1980s and Yugoslavia, the IFC’s largest borrower, saw its private sector production collapse. The Wall Street Journal reported that many borrowers that the IFC had reported as privately-owned in fact had substantial government ownership.

Poverty per se again became a leading part of the bank’s agenda, as defined by such measurements as daily caloric intake. Broadly-defined environmental concerns also became increasingly important as the bank struggled to harmonize its efforts with nongovernmental organizations (NGOs). However these were difficult to square with development enterprises such as those in Thailand that critics alleged produced deforestation.

The Multinational Investment Guarantee Agency (MIGA) was established in 1988 to encourage private investment in the Third World by attenuating some of the risks of operating in politically and economically unstable environments. Although its charter stated it should be “apolitical,” by this time the question of “governance” issues dominated World Bank thinking about lending in Africa, and work in China was suspended following the Tiananmen Square massacre. The IBRD made nominally its largest ever loan to Mexico in 1990: $1.26 billion to support debt reduction. The debt crisis had finally subsided by this time, helped in part by falling interest rates.

Competing in the 1990s

Conable stepped down in 1991. His successor, Lewis Preston, was an eminent commercial banker. Upon taking over, Preston set up a management structure similar to the one at J.P. Morgan. By this time, the bank had begun lending to newly-liberated Eastern Europe and Russia itself.

As the bank approached its golden anniversary, a new headquarters was under construction. Meanwhile, pundits rallied under the slogan “Fifty years is enough.” The Wapenhans Report in 1992 criticized the bank’s bias towards project lending, while two years later a team of outside observers criticized one of the bank’s dam projects on India’s Narmada River. Many believed the World Bank was simply too rich and too bloated. It employed 6,000 high-paid staff (at $150,000 a head, according to The Economist) and 1,000 consultants, only a fraction of them based inside poor countries. By 1995, the World Bank had more than 9,000 employees and a $1 billion payroll. While administrative expenses grew 60 percent in the mid-1990s, loan disbursements were flat.

The United States considered changing the articles of the IBRD to allow it to lend directly to the private sector to help the group as a whole meet a target of making half its loans in the private sector, which was becoming more important in the post-Communist world. However, many at the World Bank were uneasy about making the institution’s top credit rating susceptible to the additional commercial risks of lending to private enterprises. The IFC, led by Sir William Ryrie, was then calling for an additional $1.3 billion in capital to maintain its annual growth rate.

South Korea became the first country to progress from IDA borrowing all the way to becoming a donor. Emerging markets as a whole were attracting unprecedented amounts of private capital, $244 billion in 1996 versus 1990’s $44 billion. This entrepreneurial interest in development provided some competition to the World Bank itself, which saw its market share fall from 50 percent to ten percent in just a few years.

The U.S. Congress resisted the IDA’s requests for capital replenishment. Other rich countries followed suit, claiming hard times of their own. The political risk insurance of MIGA proved very popular, and that agency also strained for additional capital to meet demand. The IFC, however, saw its total financing nearly double to $8 billion between 1994 and 1996. It had a harder time obtaining sovereign guarantees on infrastructure projects as local governments were taking over more of them.

Key Dates:

1946:

World Bank founded along with sister institution, the International Monetary Fund.

1956:

International Finance Corporation created to support private ventures.

1960:

International Development Association created to give “soft loans” to very poor countries.

1988:

The new Multilateral Investment Guarantee Agency insures against political risks.

1995:

South Korea becomes the first to transform from IDA borrower to World Bank donor.

Savvy Australian-born investment banker James D. Wolfensohn became the bank’s president in June 1995. He inherited a slew of challenges. At least one former World Bank executive criticized the institution for diluting its strengths in infrastructure development in favor of “boutique” investments. By the late 1990s, the emerging markets investment bonanza was over, making private capital prohibitively expensive again for World Bank clientele.

Principal Operating Units

International Bank for Reconstruction and Development; International Development Association; International Finance Corporation; Multilateral Investment Guarantee Agency; International Centre for Settlement of Investment Disputes.

Principal Competitors

European Bank for Reconstruction and Development; J.P. Morgan & Co.; Salomon Brothers International; CS First Boston; Emerging Markets Partnerships; Darby Overseas Investments.

Further Reading

Adkisson, Richard V., Review of Bankers with a Mission: The Presidents of the World Bank, 1946-91, by Jochen Kraske, William H. Becker, William Diamond, and Louis Galambos, Journal of Economic Issues, March 1998, pp. 256-57.

Bovard, James, “World Bank Unit’s Lip Service to Private Sector,” Wall Street Journal, June 21, 1988, p. 1.

Bray, Nicholas, “World Bank Arm’s New General Seeks to Deploy All Assets—Peter Woicke Will Leverage Expertise, Prestige, Funds of International Finance,” Wall Street Journal, October 12, 1998, p. 16A.

Crane, David, “New World Bank Head Not an Ordinary Banker,” Toronto Star, October 12, 1995, p. 2D.

Fidler, Stephen, “U.S. Seeks to Raise World Bank’s Private Profile,” Financial Times, May 1, 1991.

Fitzgerald, Peter F., “Money for Power,” China Business Review, November/December 1993, p. 30.

Gopinath, Deepak, “Identity Crisis,” Infrastructure Finance, September 1997, pp. 27-34.

Harris, Anthony, “World Bank Strives for Agility in the Markets,” Financial Times, April 14, 1988.

“A Job for Atlas and Hercules Combined,” The Economist, March 30, 1991, p. 71.

Kapur, Devesh, John P. Lewis, and Richard Webb, eds., The World Bank: Its First Half Century, 2 vols., Washington, D.C.: Brookings Institution, 1997.

Keefe, Victoria M., “The World Bank Group as Private-Sector Catalyst,” Journal of Project Finance, Winter 1996, pp. 46-52.

Kraske, Jochen, et al., Bankers with a Mission: The Presidents of the World Bank, 1946-1991, Oxford: Oxford University Press, World Bank, 1996.

Lawrence, Richard, “World Bank Eases Access for Business,” Journal of Commerce, August 14, 1996, p. 1A.

Mendelsohn, M.S., “Changes at the World Bank,” Banker, August 1982, p. 35ff.

——, “IDA: Gift-Giver of the World Bank; Cut in U.S. Aid to Soft-Loan Affiliate Could Hurt Poor Nations,” American Banker, September 28, 1983, p. 1.

Millner-Adams, Michelle, The World Bank: New Agendas in a Changing World, London and New York: Routledge, 1999.

Murphy, Craig N., Review of The World Bank Group: A Guide to Information Sources, by Carol R. Wilson, Business History Review, Winter 1992, p. 827.

Owen, Henry, “The World Bank: Is Fifty Years Enough?” Foreign Affairs, September/October 1994, p. 97.

Rowen, Hobart, “World Bank to Widen Role—With Blessings from Carter,” Washington Post, September 19, 1977, p. 14D.

Rowley, Anthony, “Urgently Needed: New Financial Architecture,” Banker, October 1998, pp. 28-30.

Sankaran, Sundaram, “The Humane Conversion of Barber Conable,” Asian Finance, September 15, 1991, p. 56.

“U.S. versus the World Bank,” Financial Times, May 13, 1991.

Wolfensohn, James D., “We Must Have Sustainable Prosperity: The Challenge of Inclusion,” Vital Speeches of the Day, October 15, 1997, pp. 5-9.

“World Bank—Footing the Progress Bill,” Far Eastern Economic Review, September 24, 1992, p. 50.

“World Bank Group at Bay,” Financial Times, September 26, 1994, p. 19.

The World Bank: Knowledge and Resources for Development, Washington, D.C.: The World Bank, September 1999.

Wuliger, Robert, “A World Economy: Paradigms Lost and Found,” Challenge, January/February 1992, p. 4.

—Frederick C. Ingram

WORLD BANK

Ensuring adequate levels of basic health and nutrition lies at the heart of poverty reduction and economic development, which are the cornerstones of the World Bank's mission. While much of the world has experienced notable health gains, the health, nutrition, and population challenges for most developing countries remain great in the twenty-first century:

• Six communicable diseases—HIV/AIDS (human immunodeficiency virus/acquired immunodeficiency syndrome), malaria, tuberculosis, measles, diarrheal disease, and acute respiratory infection—account for more than half of the global communicable disease burden.
• HIV/AIDS threatens the future progress of many countries, particularly in Africa where health care systems are stretched beyond their limits.
• Two million children die each year from vaccine-preventable diseases, and over half of the child mortality in low-income countries is linked to malnutrition.
• Cancer, heart disease, and injuries represent a growing proportion of the disease burden in many countries, and tobacco-related illness and death threaten more people, particularly women and young people.
• More than 500,000 maternal deaths occur each year, and more than one-third of all pregnancies are believed to be unwanted or mistimed.
• Environmental degradation poses a serious threat to health in much of the world, and the ability of populations to fight poverty and improve well-being.

Addressing these challenges requires approaches which transcend regional or organizational boundaries and embrace the active participation of communities. Together with sustained improvements in education (particularly for girls), the environment, and the availability of roads and safe water supplies, better health care can be achieved.

The World Bank's objectives for its work in health, nutrition, and population (HNP) are to assist countries in improving the HNP outcomes of poor people and protecting the population from the impoverishing effects of illness, malnutrition, and high fertility; enhancing the performance of health care systems; and securing sustainable health care financing.

The bank works together with countries in achieving these objectives in several complementary ways. First, the World Bank is the single largest source of HNP financing for developing countries. From 1970 through 2000, the bank has offered $16 billion in loans to more than one hundred countries. Second, the World Bank provides technical and policy advice on a wide range of topics in HNP, from health-system reform to maternal and child health and nutrition. The bank also supports governments in the formulation of poverty-reduction strategies that stress the role of human capital in general, and health status in particular, in fighting poverty. Third, the bank mobilizes and maintains partnerships with countries, nongovernmental organizations (NGOs), private enterprises, bilateral donors, foundations, and other agencies. Fourth, knowledge management and sharing, including dissemination of the bank's analytical work, are also critical.

The bank's work in health emphasizes the interconnectedness between ill health and poverty. Recent work has supported improvements in the equity and efficiency of health systems through changing how health care providers are paid, how resources are allocated, and engaging private providers in publicly funded service provisions. Support is also directed towards upgrading infrastructure and equipment, training health personnel, and strengthening policymaking and capacity building.

In public health, the bank focuses on five priority areas: HIV/AIDS, malaria, tuberculosis, maternal/child health and nutrition, and tobacco control. Recent work in the economics of tobacco control is helping to demonstrate to governments that taxation, together with other measures such as advertising bans, can significantly reduce smoking and save lives without permanent negative effects on the economy. Support for immunization programs continues to expand through the bank's partnership with the Global Alliance for Vaccines and Immunization.

Recognizing that malnutrition takes an enormous toll on health and well-being, the bank committed about $2 billion to support nutrition activities from 1976 through 2000. The multisectoral approach adopted in these activities encompasses community-and school-based programs, with an emphasis on communication for behavior change, food fortification programs, and food policy reforms.

From 1970 through 2000, the bank supported more than 239 population and reproductive health projects in 87 countries. These activities help to address the impoverishing effects of unplanned pregnancy and maternal mortality, and to ensure that the vital needs of women, children, and adolescents are met. The bank's work links population policy with poverty reduction and human development through an approach which integrates family planning, maternal health, and the prevention and treatment of sexually transmitted infections, including HIV/AIDS.

Sabrina Huffman

(see also: Family Planning Behavior; HIV/AIDS; International Development of Public Health; International Nongovernmental Organizations; Maternal and Child Health; Poverty; Reproduction )

Bibliography

World Bank (2001). World Development Report 2000–2001: Attacking Poverty. New York: Oxford University Press.

—— (2001). The World Bank Annual Report 2000. Washington, DC: Author

World Bank Group (1997). Health, Nutrition, and Population Sector Strategy Paper. Washington, DC: Author.

WORLD BANK

The international organization lends to developing countries of the Middle East.

The World Bank is based in Washington, D.C. It includes the International Bank for Reconstruction and Development (IBRD) and the International Development Agency (IDA). IBRD has two affiliates, the International Finance Corporation (IFC) and the Multilateral Guarantee Agency (MIGA).

IBRD was established in 1945 and is owned by 152 countries. The bank's resources come from its capital, retained earnings, and very large loans from the world financial markets (US$8.9 billion in 1994). Its high creditworthiness allows it to borrow

at the most competitive rates. IBRD lends to the more advanced developing countries on creditworthy and productive projects. Pricing is based on the cost of funds to the bank. Loans are made to governments or are guaranteed by governments. Total IBRD loans made in 1994 totaled US$20,836 million. IFC, established in 1956, and MIGA, established in 1984, deal with the private sectors of the developing countries. MIGA is mandated to encourage private equity investments by providing noncommercial risk guarantees. IDA lends interest free to the very poor countries with an annual per capital GNP of US$650 or less per year. The loans have very long maturities and up to a ten-year grace period.

The World Bank's executive board is responsible for the general operations of the bank. The board approves projects, funding programs, and general management of both the IBRD and the IDA. The board is composed of twenty-four members. Each member represents and votes for his country as per its percentage contribution to the capital of either IBRD or IDA. Certain countries also will represent blocs of smaller members and vote on their behalf. The largest vote belongs to the United States, which contributes 17.42 percent of IBRD capital and 15.67 percent of IDA capital. Saudi Arabia has the largest single Arab state representation on the World Bank board with 2.79 percent of the votes of the IBRD.

In the Middle East, the World Bank's stated goals are "to emphasize sustained commitment to operations and analytical work, to promote employment-led growth, to foster human resources development, and to improve natural resource management." The bank provides support to countries that agree to implement stabilization and structural reform. These conditions imply substantial efforts to reduce budget deficits, cut subsidies, allow currencies to reach their market levels, and privatize the economy.

Bibliography

Kapur, Daves; Lewis, John P.; and Webb, Richard. The World Bank: Its First Half Century. Washington, DC: The Brookings Institute, 1997.

jean-franÇois seznec

WORLD BANK

WORLD BANK, formally known as the International Bank for Reconstruction and Development, was primarily the brainchild of Henry Dexter White, the assistant secretary of the Treasury during Franklin Roosevelt's third administration. Wary of the lessons of the 1930s, White was convinced that private investors would be unable to provide adequately for postwar European reconstruction. Accordingly, White envisioned the bank as an institution to guarantee foreign securities and, if necessary, loan money directly to governments.

Plans for creating the bank existed as early as 1942. Alongside the International Monetary Fund (IMF), the bank came into being during the Bretton Woods Conference in July 1944. Forty-four nations (twenty-seven of which were considered as "developing" countries) attended the conference, but the United States, Britain, France, and Canada primarily directed it. While the IMF was the outcome of intense negotiations between the United States and Britain, the bank's creation was largely controlled by America. Once established, the bank started with a $7.6 billion treasury, nearly all of which was fronted by the United States, to help rebuild war-torn Europe as well as aid in the development of Africa, Latin America, and Asia.

When it became clear that the needs of postwar reconstruction would far exceed the resources of the bank, and as the Marshall Plan took over the job, the focus of the bank shifted to Third World development. The shift in lending to developing countries was far from smooth, however, as many countries could not afford the bank's interest rates, its financial resources were too small, and its charter forbade making direct loans to private enterprises. To offset these problems the International Finance Corporation (1956) and the International Development Association (1960) were created as affiliates of the bank, and it began to take its present-day shape.

The bank obtains its resources in three ways: money invested by member countries, issuing bonds, and net earnings on the bank's assets. In 2002 there were 138 members of the World Bank Group, each of which must also be a member of the IMF. Each member acts as a shareholder but, due to their size and resources, the United States, Japan, Germany, France, and the United Kingdom dominate policymaking. Headquartered in Washington, D.C., the bank concentrates on issuing loans for economic development in Africa, Asia, the Middle East, and Latin America. It invests money in projects designed to create stable, sustainable, equitable growth in developing countries. Project lending makes money available for tasks such as natural resource development. Loans can also be made to an entire sector of a country's economy—agriculture, for example—or can be designed to aid in reorganizing a country's institutions to orient their policies toward free trade. Finally, loans are made to temporarily relieve debt crisis.

Until the presidency of Robert McNamara (1968– 1981) the bank showed little concern with poverty itself, but McNamara redefined the idea of "development" to include the relief of poverty. While critics charge that the bank has actually done little to alleviate long-term poverty, and while the bank itself recognizes that the tasks it sets for itself are daunting, its motto is "Our Dream is a World Free of Poverty."

BIBLIOGRAPHY

Brown, Bartram, S. The United States and the Politicization of the World Bank: Issues of International Law and Policy. London: Kegan Paul, 1991; New York: Routledge, 1992.

George, Susan, and Fabrizio Sabelli. Faith and Credit: The World Bank's Secular Empire. Boulder, Colo.: Westview Press, 1994.

Gwin, Catherine. U.S. Relations with the World Bank, 1945–1992. Washington, D.C.: Brookings Institution, 1994.

Kapur, Devesh, John Lewis, and Richard Webb. The World Bank: Its First Half Century. Washington, D.C.: Brookings Institution, 1997.

ErinBlack

See alsoInternational Monetary Fund .

WORLD BANK

The International Bank for Reconstruction and Development, commonly referred to as the World Bank, is an international financial institution whose purposes include assisting the development of its member nations' territories, promoting and supplementing private foreign investment, and promoting long-range balanced growth in international trade.

The World Bank was established in July 1944 at the United Nations Monetary and Financial Conference in Bretton Woods, New Hampshire. It opened for business in June 1946 and helped in the reconstruction of nations devastated by world war ii. Since the 1960s the World Bank has shifted its focus from the advanced industrialized nations to developing third-world countries.

The World Bank consists of a number of separate institutions. The three major institutions are the International Bank for Reconstruction and Development (IBRD), the International Development Association (IDA), and the International Finance Corporation (IFC). The IBRD, the bank's most important component, lends funds directly, guarantees loans made by others, or participates in these loans. The IDA, which was established in 1960, lends to low-income countries on more favorable terms, charging a small service fee but no interest. It gets its funds from more affluent member countries. The IFC, established in 1956, provides loans to private business in developing countries.

Twenty-nine nations joined the World Bank in 1945. By 1996 the bank had 180 members. The bank is governed by an executive board and a managing director. Voting in the bank is weighted according to the initial contributions to the bank's capital, which historically has given the U.S. government a dominant voice in the bank's affairs.

In 1996 almost one-third of the bank's loans went to the world's poorest countries. However, the bank has moved away from financing large-scale infrastructure projects, such as roads, railways, and power facilities. Since the 1970s, the bank has provided an increasing number of loans to developing countries for agricultural, educational, and population programs. The goals of these loan programs have been to raise the standard of living and to increase self-sufficiency.

The World Bank also offers advisory services to countries seeking to reform their banking and finance systems. It has also launched InfoDev, an initiative to secure resources from corporations, foundations, and governments to promote reform and investment in the developing world through improved access to information technology.

In the late 1990s several coalitions of organizations and individuals formed Jubilee 2000 to campaign for debt-forgiveness for poor countries that found themselves unable to pay back the bank's loans. The World Bank and the international monetary fund responded by establishing the Heavily Indebted Poor Countries Initiative (HIPC) that sought to provide relief for the world's most heavily indebted countries. In April 2000 World Bank President James D. Wolfensohn stated that he welcomed Jubilee 2000 and continuing public involvement for their contributions toward getting creditor countries to support the HIPC.

further readings

Howarth, David, and Peter Loedel. 2003. The European Central Bank: The New European Leviathan? New York: Palgrave Macmillan.

Smith, Roy C., and Ingo Walter, eds. 2003. Global Banking. 2d ed. New York: Oxford Univ. Press.

World Bank Website. Available online at <www.worldbank.org> (accessed August 17, 2003).

cross-references

International Monetary Fund.

World Bank. Delegates to the Bretton Woods Conference of 1944 understood that creating a lending institution devoted to extending credit for postwar rebuilding and development was essential to reviving the economy of a war‐ravaged world. The result was the International Bank for Reconstruction and Development (IBRD), or World Bank. As with the simultaneously created International Monetary Fund, the IBRD primarily reflected American ideas. Since the size of a country's voting rights depended on the amount of its capital subscription, the United States as the largest contributor has had the biggest say in selecting the president, who has usually been an American. The American determination to keep the initial subscription low, however, rendered the World Bank unable to cope with the economic crises of the immediate postwar period. Instead, ad hoc American loans and the U.S.‐funded Marshall Plan paid for the recovery of western Europe.

In the decade after 1946, major World Bank loans went to war‐devastated industrial countries; thereafter the proportion of credits devoted to reconstruction plummeted. Under the presidency of Robert McNamara (1968–1981), the World Bank devoted itself to assisting the developing world, which generally lacked both internal and external private sources for development. Having initially concentrated on large‐scale infrastructure, such as dams and ports, the World Bank increasingly funded “soft projects” such as agricultural development, population control, urban sewage supply, and educational endeavors. At the end of the 1970s the World Bank Group (consisting of the IBRD, the International Finance Corporation, and the Multilateral Investment Guaranty Corporation) also began lending for some nondevelopment purposes, such as bridging a balance‐of‐payments problem. With the American electorate largely oblivious to the World Bank's activities, U.S. presidents found it highly convenient to channel increasingly unpopular foreign aid projects through this multilateral organization, thereby avoiding serious congressional or public scrutiny.
See also Foreign Relations: The Economic Dimension; Global Economy, America and the; Internationalism; World War II: Postwar Impact.

Bibliography

Devesh Kapur,, John P. Lewis,, and and Richard Webb , The World Bank: Its First Half Century, 1997.

Diane B. Kunz

World Bank (est. 1944).At the July 1944 Bretton Woods Conference in Bretton Woods, New Hampshire, forty‐four nations, including the United States, Great Britain, and the Soviet Union, agreed to establish the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (IBRD, but called the World Bank) to provide loans to governments for postwar economic reconstruction. The IBRD officially came into existence on 27 December 1945, when states holding 65 percent of the bank's shares approved the agreement. The bank's headquarters are in Washington, D.C. Each of the 179 member states has one representative on the board of governors. Each state's voting power, however, depends on the number of bank shares held by the state. The United States as the single largest investor currently holds 16.53 percent of the shares.

The World Bank's membership and objectives were affected by the Cold War. The Soviet Union never joined the bank; post–Soviet Russia, however, became a member on 1 June 1992. In 1948–52, the European Recovery Program—the Marshall Plan—superseded the IBRD as the primary reconstruction aid provider for Western Europe. The bank's main objective became making or guaranteeing loans to developing states. Since the early 1990s, aid to Eastern European countries, including member states of the former Soviet Union, has become an increasingly important aspect of the bank's work. In January 1996, the IBRD granted Bosnia a $150 million loan to aid rebuilding after the end of its civil war.

From its inception to 30 June 1998, the World Bank has granted 7,112 loans to 168 recipients, totaling $425 billion. African states received 18 percent of that amount, Asian and Pacific countries 42 percent, Near Eastern states 3 percent, European countries (including Russia) 12 percent, and Latin American and Caribbean states 25 percent.
[See also Bosnian Crisis.]

Bibliography

Robert W. Oliver , International Economic Cooperation and the World Bank, 1975.
Michael D. Bordon and Barry Eichengreen, eds., A Retrospective on the Bretton Woods System, 1993.

Georg Schild

World Bank A specialized agency of the UN, it was established as the International Bank for Reconstruction and Development (IBRD) at the Bretton Woods conference (1944), and came into operation in 1946. Its aim has been to encourage economic growth particularly of its poorer members. It derived its funds from member countries, as well as borrowing on the world money markets. After a series of reconstructional loans to help members after World War II, from 1949 it concentrated on development loans, particularly to less-developed countries. Today, the World Bank group comprises five autonomous branches. 1. The IBRD (founded 1945 to provide loans and development assistance to poorer and middle-income nations; 183 members in 2002); 2. The International Finance Corporation (founded in 1956 to assist the private sector in developing countries; 174 members); 3. The International Development Association (established 1960 to provide interest-free loans to governments in the poorest countries; 161 members); 4. The Multilateral Investment Guarantee Agency (established in 1988 to assist developing countries in attracting foreign investment; 154 members); 5. The International Centre for Settlement of Investment Disputes (established 1966 to assist in the conciliation of investment disputes between governments and foreign investors; 134 members). Under President James D. Wolfensohn (since 1995), the World Bank has tried to become more transparent and effective. It endeavoured to meet mounting criticism by enhanced cooperation with non-governmental organizations and by trying to follow development projects more closely in the affected member states. Despite these marked improvements, the World Bank continued to face political pressure from two fronts: the concerns for effeciency by its largest donors, notably the US Congress, and public criticism against its ostensible subservience to capitalism even in countries where this may not be appropriate.

http://www.worldbank.org

IMF

World Bank The popular name of the International Bank for Reconstruction and Development. It was set up by the United Nations in 1945 to promote the economic development of member-nations by facilitating the investment of capital for productive purposes, encouraging private foreign investment, and if necessary lending money from its own funds. Its headquarters are in Washington, DC.

World Bank (International Bank for Reconstruction and Development, IBRD) Intergovernmental organization, a specialized agency of the United Nations (UN) since 1945. Its role is to make long-term loans to member governments to aid their economic development. The bank dervies the majority of its resources from the world's capital markets. Its headquarters are in Washington, D.C.

World Bank see International Bank for Reconstruction and Development .