World Bank: The World Bank is an international organization which is dedicated to providing financing, advice and research to developing nations in order to assist in their economic advancement.
What is the World Bank?
The World Bank is an international financial institution. Its main objective is to provide loans, advice and research to both public and private sectors of developing nations. The developing nations can use the money and insight for capital programs aimed at improving their economy.
The two main segments of the World Bank is the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA). These two segments essentially make up the World Bank.
In addition, the World Bank is part of the World Bank Group, which also includes the International Finance Corporation (IFC), the Multilateral Investment Guarantee Agency (MIGA), and the International Centre for Settlement of Investment Disputes (ICSID).
What is the main goal or objective of the World Bank?
The main goal of the World Bank is to reduce the poverty level, especially in middle-income and low-income countries. The World Bank is also committed to the promotion of foreign investment and international trade. In order to help facilitate that, the World Bank provides loans to these countries, so that they may improve investment in their capital programs and eradicate extreme poverty within their borders.
How and when was the World Bank formed?
From 1 to 22 July 1944, the United Nations Monetary and Financial Conference was held at the Mount Washington Hotel, located at Bretton Woods, New Hampshire, United States. However, the conference is informally and more commonly is known as the Bretton Woods Conference. At the conference, delegates from 44 Allied nations signed to set up the International Bank for Reconstruction and Development (IBRD), the General Agreement on Tariffs and Trade (GATT), and the International Monetary Fund (IMF).
At the time of its forming, the main objective of IBRD was to help finance the reconstruction of European nations which were devastated by World War II. Eventually, the IBRD grew out of its scope.
In 1960, the International Development Association (IDA) was created. The main goal of the IDA was to offer concessional loans and grants to the world's poorest developing countries.
Eventually, the IBRD and IDA were clubbed together under the World Bank, as they follow the same executive leadership and operate with the same staff. The World Bank also affiliates with the IFC, MIGA, and ICSID; all of which together are categorized under the World Bank Group.
Who are the members of the World Bank?
The International Bank for Reconstruction and Development (IBRD), which is a major part of the World Bank, currently has 188 member countries. The International Development Association (IDA), the other part of the World Bank has 172 members.
However, in order to become a member of the IBRD, the country must first be a member of the International Monetary Fund (IMF). Furthermore, only the countries that are a member of the IBRD can join other organizations that are part of the World Bank, such as the IDA.
What are the functions of World Bank?
Functions of World Bank:
- Help eradicate extreme poverty
- IBRD aims to reduce poverty in middle-income and creditworthy poorer countries
- IDA focuses exclusively on the world’s poorest countries
- Providing low-interest loans, interest-free credits, and grants to developing countries
- Providing loans for economic and social development of developing countries
- Providing loans for reconstruction of war devastated countries
- Providing loans for reconstruction of countries effected by natural disasters
- Providing loans to improve and support education, health, public administration, infrastructure, financial and private sector development, agriculture, and environmental and natural resource management.
- Providing loans to private sectors for specified projects which will help reduce poverty
- Promoting foreign investment by guaranteeing loans provided by other organizations
- Providing technical, economic and monetary advice to member countries for specific projects
- Encouraging industrial development of underdeveloped countries by promoting economic reforms
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