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World Bank Roles and Impact

The World Bank lends between $20-30 billion annually to low and middle-income countries for projects and policy reforms aimed at reducing poverty. However, the poverty focus of these investments is often questionable. The World Bank influences development globally not just through lending but also by shaping the discourse as the top publisher on development issues and acting as a gatekeeper for other funding sources. It imposes controversial conditions on borrowers that can force reforms impacting public spending, policies, and regulations in recipient countries. The World Bank is made up of two institutions that work to advance inclusive and sustainable globalization, with IBRD lending to middle income and poorer creditworthy countries and IDA focusing on the poorest.

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114 views5 pages

World Bank Roles and Impact

The World Bank lends between $20-30 billion annually to low and middle-income countries for projects and policy reforms aimed at reducing poverty. However, the poverty focus of these investments is often questionable. The World Bank influences development globally not just through lending but also by shaping the discourse as the top publisher on development issues and acting as a gatekeeper for other funding sources. It imposes controversial conditions on borrowers that can force reforms impacting public spending, policies, and regulations in recipient countries. The World Bank is made up of two institutions that work to advance inclusive and sustainable globalization, with IBRD lending to middle income and poorer creditworthy countries and IDA focusing on the poorest.

Uploaded by

prankyaquarius
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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World Bank (IBRD & IDA)

Overview

The World Bank’s mission is to reduce poverty


– an important commitment to which the Bank
should be held and against which its activities
should be evaluated. In its first year of
operation, 1946, the Bank lent less than $500
million. Today, the World Bank provides
between $20 and $30 billion annually for
activities ranging from agriculture to trade
policy, from health and education to energy and
mining.
The World Bank is among the largest sources of
public financing in the world. However its
various roles as lender, knowledge broker, and
gatekeeper to development finance collectively
serve another purpose: to steer investor dollars
and aid flows to targeted countries and sectors.
The poverty focus of these investments is often
questionable.
The World Bank as lender
The World Bank lends money to low and
middle-income governments for two general
uses: investment projects and policy reforms.
Investment project lending typically supports
public works such as water systems, roads and
schools. The World Bank also lends money for
economic, institutional or other policy reforms,
often known as “structural adjustment” or
“development policy” lending. These reforms
can influence the amount and composition of
public spending in your country and the design
of your government’s economic and social
policies, affecting things like the cost of
electricity and water, labor laws and investment
regulations.
World Bank lending can take the form of loans
or grants, and the poorest countries often receive
both. In recent years, the Bank has increased the
proportion of its financing provided through
grants.
The Bank typically requires certain actions of
borrowing countries in advance of loan/grant
approval and/or in the course of a project’s
implementation - known as “conditions” or
“conditionality.” Conditions can range from
requiring a government to privatize its state-
owned companies or adopt lower trade tariffs, to
mandating new budget and procurement
procedures. The Bank’s imposition of
controversial conditions on borrowing
governments has been heavily criticized over
the years, as a violation of a country’s
sovereignty and an undemocratic way to force
reforms that can have substantial consequences
on people and planet.
The World Bank as knowledge broker
The Bank has cornered the market on
development research, publishing numerous
books and reports that frame the debate on
development issues. In the absence of
alternative sources of information, many
countries get their information about economic
policies and development models from the
World Bank. In 2000, the World Bank created
its own research and training group – the World
Bank Institute (WBI) – to directly influence
development discourse. The WBI conducts
trainings of government officials, including
parliamentarians, and civil society
representatives on various dimensions of
development policy and planning.
The World Bank as gatekeeper to
development finance
Finally, the World Bank influences the overall
amount and composition of development
financing available to countries. Both the World
Bank’s own lending and other donors’ decisions
are shaped by the Bank’s research and analysis
– in particular, by Bank studies like the Country
Policy and Institutional Assessments (CPIA)
and Investment Climate Assessments (ICA),
which rate countries largely on the basis of their
economic policies and openness to foreign
investment. Since many donors take their lead
from the Bank, the institution’s financing
decisions and evaluations of country
development strategies affect borrowing country
access to capital from a broad spectrum of
sources. The Bank’s gatekeeper role is much
stronger for aid-dependent countries without
credit ratings than for countries that have access
to international capital markets.
World bank is made up of two unique
development institutions owned by 187
member countries: IBRD(International Bank
for Reconstruction &Development)
& IDA (International development
Association).
Each institution plays a different but
collaborative role in advancing the vision of
inclusive and sustainable globalization. The
IBRD aims to reduce poverty in middle income
and creditworthy poorer countries, while IDA
focuses on the world’s poorest countries.

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