World Bank Group
The World Bank Group is a group of five international organizations. The World Bank Group gives advice and finance to member countries for economic development and reducing poverty. It is a non-profit-making international organization owned by member governments. The Group has its headquarters in Washington, D.C.. It also has offices in 124 other member countries.
The World Bank Group is made of the following five organizations:
- the International Bank for Reconstruction and Development (IBRD), established in 1945,
- the International Finance Corporation (IFC), established in 1956,
- the International Development Association (IDA), established in 1960,
- the Multilateral Investment Guarantee Agency (MIGA), established in 1988 and
- the International Centre for Settlement of Investment Disputes (ICSID), established in 1966.
The World Bank Group originated at Bretton Woods, New Hampshire. Many countries met and decided to start a Bretton Woods system including an international organization to provide finance to member countries. The Bank came into existence on 27th December 1945. Its name was the International Bank for Reconstruction and Development. The Bank’s first loan was to France. The loan was of 250 million US Dollars. The purpose was to help France to again build industry and other important things like roads destroyed during the Second World War.
The activities of the World Bank Group cover many activities. Some of these activities are as follows:
- Development of health and education
- Development of agriculture and rural development
- Reduction of pollution
- Development of infrastructure, for example, development of facilities likes roads and electricity
- Development of system for good government
The World Bank Group gives loans at low rate of interest to member countries. The member countries use the money received for any one of above or some other similar activity.
In short, the World Bank Group’s main mission is 1) to fight poverty and 2) to improve the living standards of people in the developing world. Beside giving direct money and finance, the World Bank Group provides advice and assistance to developing countries on almost every aspect of economic development.
In general, the World Bank Group is part of the United Nations system. But, member countries govern it through a board. The IBRD has 184 countries as its members. Other four organizations of the Group have between 140 and 176 member countries. A Board of 24 Executive Directors controls the activities of the World Bank Group. A President heads the Board.
Many economists and people have criticized the World Bank Group for its style of functioning. Before giving loans, the Bank sometimes requires many changes in the policies of a country. This has attracted criticism as it reduces the country’s independence to run its economy in its own way. The criticism is also on account of other factors. One of them is that two or three countries have more power to decide matters. As of November 1, 2004 the United States held 16.4% of total votes, Japan 7.9%, Germany 4.5%, and the United Kingdom and France each held 4.3%. As major decisions require an 85% super-majority, the US can block any change.
In spite of several criticisms, the World Bank Group’s role in economic development and reduction of poverty has continued in many countries.