What Is the World Bank?
The World Bank is an international organization that helps emerging market countries to reduce poverty. Its first goal is to end extreme poverty. It wants no more than 3% of people to live on $ a day or less by Its second goal is to promote shared prosperity. Jul 06, · The World Bank is an international organization that offers developmental assistance to middle-income and low-income countries. Founded in .
Read this article to learn about the organisation, structure, capital resources, objectives and function of world bank! It opened for business in June and helped in the reconstruction of nations devastated by World War II. Since s the World Bank has shifted its focus from the advanced industrialized nations to developing third-world countries. The organization of the bank consists of the Board of Governors, the Board of Executive Directors and the Advisory Committee, the Loan Committee and the president and other staff members.
All the powers of the bank are vested in the Board of Governors which is the supreme policy making body of the bank. The board consists of one Governor and one Alternative Governor appointed for five years by each member country.
Each Governor has the voting power which is related to id financial contribution of the Government which he represents. The rest of jain 15 members are elected by the remaining countries. Whzt Executive Director holds voting power in proportion to purpoae shares held by his Government. The board of Executive Directors meets regularly once a month to carry on the routine working of the bank.
The president of the bank is pointed by the Board of Executive Directors. He is the Chief Executive of the Bank and he is responsible for the conduct of the day-to-day business of the bank. The Advisory committees appointed by the Board of Directors.
It consists of 7 members who are expects in different branches of banking. There is also another body known as the Loan Committee. This qhat is consulted by the bank before any loan is extended to a member how to turn the volume down on kindle fire. The authorized capital of the Bank has been increased from us to time with the approval of member countries.
Member countries repay the share amount to the World Bank in the following ways:. To induce long-run capital investment for assuring Balance of Payments BoP equilibrium and balanced development what are the noises in your stomach international trade.
To provide guarantee for loans granted to small and large units and other projects of member countries. To ensure the implementation of development projects so as to bring about a smooth transference from a war-time to peace economy. World Bank is playing main role of providing loans for development works to member countries, especially to underdeveloped countries. The World Bank provides long-term loans for various development projects of 5 to 20 years duration.
World Bank provides mxin technical services to the member countries. The quantities of whay, interest rate and terms and conditions are determined by the Bank itself. Generally, Bank grants loans for a particular project duly submitted to the Bank by the member country. The debtor nation has to hhe either in reserve currencies or in the currency in which the loan was sanctioned. Bank also provides loan to ks investors belonging to member countries on its own guarantee, but for this loan private investors have to seek prior permission from those counties where this amount will be collected.
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Its Purpose, History, Duties, and Mission
The World Bank is an international organization dedicated to providing financing, advice, and research to developing nations to aid their economic advancement. The bank predominantly acts as an. Providing the loan for Western European countries to reconstruct and rebuild after World War 2 is primary purpose of the World Bank. Besides that, invested in developing countries is another purpose of World Bank. World Bank is still the largest source for assisting development although the lending reconstruction ended in The International Bank for Reconstruction and Development (IBRD), commonly referred to as the World Bank, is an international financial institution whose purposes include assisting the development of its member nation’s territories, promoting and supplementing private foreign investment and promoting long-range balance growth in international trade.
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Develop and improve products. List of Partners vendors. Today, the World Bank functions as an international organization that fights poverty by offering developmental assistance to middle-income and low-income countries. By giving loans and offering advice and training in both the private and public sectors, the World Bank aims to eliminate poverty by helping people help themselves.
Joining the IMF comes with a variety of responsibilities that help it carry out its functions. There is an obligatory subscription fee, which is equivalent to Of these shares, 0. The balance of the shares is left as "callable capital," meaning the World Bank reserves the right to ask for the monetary value of these shares when and if necessary.
A country can subscribe to a further shares, which do not require payment at the time of membership but are left as "callable capital. The president of the World Bank comes from the largest shareholder, which is the United States, and members are represented by a board of governors.
Of these 19, however, China, Russia, and Saudi Arabia have opted to be single-country constituencies, which means that they each have one representative within the 19 EDs. This decision is based on the fact that these countries have large, influential economies, requiring that their interests be voiced individually rather than diluted within a group.
The World Bank gets its funding from rich countries, as well as from the issuance of bonds on the world's capital markets. The IBRD offers assistance to middle-income and poor, but creditworthy, countries. It also works as an umbrella for more specialized bodies under the World Bank.
The International Development Association offers loans to the world's poorest countries. These loans come in the form of "credits" and are essentially interest-free. They offer a year grace period and hold a maturity of 35 years to 40 years. The International Finance Corporation IFC works to promote private sector investments by both foreign and local investors.
It provides advice to investors and businesses, and it offers normalized financial market information through its publications, which can be used to compare across markets.
The IFC also acts as an investor in capital markets and will help governments privatize inefficient public enterprises. The Multilateral Investment Guarantee Agency MIGA supports direct foreign investment into a country by offering security against the investment in the event of political turmoil.
These guarantees come in the form of political risk insurance, meaning that MIGA offers insurance against the political risk that an investment in a developing country may bear. Finally, the International Centre for Settlement of Investment Disputes facilitates and works toward a settlement in the event of a dispute between a foreign investor and a local country. As mentioned earlier, the main function of the WBG is to eliminate poverty and to provide assistance to the poor by offering loans, policy advice, and technical assistance.
As such, the countries receiving aid are learning new ways to function. Over time, however, it has been realized that sometimes as a nation develops , it requires more aid to work its way through the development process. This has resulted in some countries accumulating so much debt and debt service that payments become impossible to meet.
Many of the poorest countries can receive accelerated debt relief through the Heavily Indebted Poor Countries scheme, which reduces debt and debt-service payments while encouraging social expenditure. This includes not only lending but also support for legal reform, educational programs, environmental safety, anti-corruption measures, and other types of social development.
The Bank encourages all its clients to implement policies that promote sustainable growth, health, education, social development programs focusing on governance and poverty reduction mechanisms, the environment, private business, and macroeconomic reform. While WBG strives to create a poverty-free world, there are groups that are passionately opposed to the international patron. These opponents believe that the fundamental structure of the Bank only exacerbates the already existing imbalance between the world's rich and poor.
The system allows the largest shareholders to dominate the vote, resulting in WBG policies being decided by the rich, but implemented by the poor. This can result in policies that are not in the best interests of the developing country receiving assistance, whose political, social, and economic policies will often have to be molded around WBG resolutions. Moreover, even though the Bank provides training, assistance, information, and other means that may lead to sustainable development, opponents have observed that developing countries often have to put health, education, and other social programs on hold in order to pay back their loans.
Opposition groups have protested by boycotting World Bank bonds. These are the bonds that the WBG sells on global capital markets to raise money for some of its activities. These opposition groups also call for an end to all practices that require a country to implement structural adjustment programs including privatization and government austerity measures , an end to the debt owed by the poorest of the poor, and an end to environmentally damaging projects such as mining or building dams.
It is not surprising that there is a clash of opinion over how aid is given. Indeed, those that offer assistance are going to want to have a say in how the loans are used and what kind of economic policies are fostered in a country's developmental process. Many developing and poor nations, however, are stuck in a quagmire of debt and impoverishment, no matter how much assistance they receive.
Given this, we may need to remember that the process of aid is also a developing state, in which both the giver and the receiver should be helping each other reach a poverty-free world. The World Bank. Accessed April 8, International Finance Corporation. Multilateral Investment Guarantee Agency. International Centre for Settlement of Investment Disputes. Bretton Woods Project.
Accessed April 9, World Development Movement. Center for Economic Justice. Monetary Policy. Your Privacy Rights. To change or withdraw your consent choices for Investopedia. At any time, you can update your settings through the "EU Privacy" link at the bottom of any page. These choices will be signaled globally to our partners and will not affect browsing data. We and our partners process data to: Actively scan device characteristics for identification.
I Accept Show Purposes. Your Money. Personal Finance. Your Practice. Popular Courses. Economy Economics. What Is the World Bank Group? Key Takeaways The World Bank is an international organization that offers developmental assistance to middle-income and low-income countries.
Founded in , the World Back has member nations and aims to reduce poverty in the developing world. While WBG strives to create a poverty-free world, there are groups that are passionately opposed to the international patron as critics feel that its efforts actually make things worse. Article Sources. Investopedia requires writers to use primary sources to support their work.
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Partner Links. World Bank Definition The World Bank is an international organization dedicated to providing financing, advice, and research to developing nations to aid economic advancement. First World "First world" is a term that describes industrialized, democratic countries with relatively low poverty levels. Investopedia is part of the Dotdash publishing family.