World Bank

The History and Services of World Bank

One of the notable effects of World War II is the creation of different groups and organizations. These organizations are not just focused on specific countries but their program is on providing worldwide support for those who really need immediate assistance. As the world has recently experienced one of the most devastating wars, they have to work together to find a fast solution to the world’s economic woes and destruction. Different groups and organizations were set-up and one of those entities that were created after World War II was the World Bank.

History of the World Bank

After the 2nd World War, representatives from 44 allied countries met in New Hampshire from July 1 to 22, 1944. Their main agenda was to set-up programs that would establish international monetary system and finance which was almost destroyed during the war. This meeting is properly called the “United Nations Monetary and Financial Conference” but it’s also known as the Bretton-Woods Conference referring to the hotel where the conference was held. This three-week meeting resulted to the establishment of the World Bank. Its main role is to provide financial assistance to countries that needs funds for further development.

Entities Under World Bank

The World Bank is composed of the following institutions:

• International Bank for Reconstruction and Development – established in 1944, its initial role after WWII was to provide financial assistance to countries that would require funds to spend for structural reconstruction. Its current role has significantly expanded as they are now dispensing loans to countries in order to finance programs dealing with poverty and hunger. IBRD is mainly focused on developing countries as some countries are considered “graduate” because of their economic progress.
• International Development Association – the IDA was established in 1960. The institution has a very specific task. While the IBRD is focused on developing countries requiring funds for reconstruction, the IDA was established to help the 80 poorest countries in the world. They are tasked in dispensing interest-free loans to these countries so that they will have enough funds not only for construction but also for basic provisions and social services such as education, job creation as well as construction.

The IDA works with IBRD along with three other institutions:

• International Finance Corporation – Set in 1956, the institution was established to aid private companies in developing countries. Through IFC, local companies who wanted to develop locally could be assisted. With a developed local business, local employment is increased which could lead to a well developed economy.
• Multilateral Investment Guarantee Agency – MIGA was established in 1988 and its main role was to promote developing countries for increase in foreign investment. Aside from aiding local companies for further development, increase in foreign investment could also mean additional local employment and even transfer of knowledge and technology.
• International Centre for Settlement of Investment Disputes – Established in 1966, the group works as an arbiter between member countries that are currently in investment dispute. It also works with private companies coming from different member countries. The existence of the said institution could help smaller companies to properly compete with bigger international companies.

Helping the World’s Poorest

With the help of IDA, the World Bank has helped the poorest countries around the world. But they don’t just hand out funds for countries in need. Aside from providing financial assistance, the World Bank conducts detailed studies of the financial, economic and political standing of the country. This allows them to develop recommendations on which problems should be tackled first and possibly provide concrete actions on how to tackle the said problem. Funding for assisting these countries came from pledges from rich countries that are also members of the World Bank.

Support for Clean Technology

The World Bank was also tasked to handle the funding to support clean technology in developing countries. The World Bank is in charge of handling the Clean Technology Fund which is used to establish renewable sources of energy. These actions were made to directly compete with coal-fired energy plants which cause different environmental problems. However, their handling of CTF is strongly criticized because the World Bank is also an investor in coal-fired power plants. The conflicting interests could easily derail push for clean technology as World Bank’s investments is seen as more important as this could lead to additional funding that could be used for different purposes.

Criticism of World Bank

While World Bank has been helpful in many ways to different countries around the world, it also has some critiques particularly on the way the World Bank is administered as well as policies on trade. World Bank supports free trade which is seen as a disadvantage for developing and poor countries. In free trade, countries that have better funding could easily overtake the business in poorer countries because of their access to better technologies and even manpower. Although arbitration is a possibility and the World Bank pushes for foreign investments in poor countries, free trade ultimately places the poor at a disadvantage because of their inability to compete.

Another criticism is on how the World Bank is administered. Even though World Bank currently has 187 members, voting powers are very limited in some countries. Rich countries have more voting power since they can provide more donations for the World Bank. This means the economic and political decisions of the World Bank is greatly influenced by the interests of the rich countries.