Aim Of The World Bank Is Reduce Poverty Economics

Table of Content

The World Bank is an international fiscal establishment that provides fiscal and proficient aid to developing states for development plans ( e.g. Bridgess, roads, schools, etc. ) with the declared end of cut downing poorness.

The World Bank differs from the World Bank Group, in that the World Bank comprises merely two establishments:

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International Bank for Reconstruction and Development ( IBRD )

International Development Association ( IDA )

Whereas the latter incorporates these two in add-on to three more: [ 3 ]

International Finance Corporation ( IFC )

Multilateral Investment Guarantee Agency ( MIGA )

International Centre for Settlement of Investment Disputes ( ICSID )

The World Bank was created following the confirmation of the United Nations Monetary and Financial Conference of the Bretton Woods understanding. The construct was originally conceived in July 1944 at the United Nations Monetary and Financial Conference. Two old ages subsequently, the Bank issued its first loan: US $ 250 million to France for post-war Reconstruction, the chief focal point of the Bank ‘s work in the early post-World War II old ages. Over clip, the “ development ” side of the Bank ‘s work has assumed a larger portion of its loaning, although it is still involved in post-conflict Reconstruction, together with Reconstruction after natural catastrophes, response to human-centered exigencies and post-conflict rehabilitation demands impacting development and passage economic systems. There were unfavorable judgments of the consequences of the World Bank ‘s “ development strategies ” taking to corruptness and widespread development by the corporations who are given monopolies of developing states ‘ resources.

The World Bank is one of the two Bretton Woods Institutions which were created in 1944 to reconstruct a war-worn Europe after World War II. Later, mostly due to the parts of the Marshall Plan, the World Bank was forced to happen a new country in which to concentrate its attempts. Subsequently, it began trying to reconstruct the substructure of Europe ‘s former settlements. Since so it has made a assortment of alterations sing its focal point and ends. From 1968-1981 it focused mostly on poorness relief. In the 1980s and 1990s its chief focal point was both debt direction and structural accommodation.

World Bank focal point:

A World Free of Poverty

The World Bank ‘s undertakings and operations are designed to back up low-income and middle-income states ‘ poorness decrease schemes. Countries develop schemes around a scope of reforms and investings likely to better people ‘s lives from cosmopolitan instruction to passable roads, from quality wellness attention to improved administration and inclusive economic growing. In analogue, the Bank strives to aline its aid with the state ‘s precedences and harmonise its assistance plan with other bureaus to hike assistance effectivity.

The World Bank besides strives to undertake planetary challenges from international trade to climate alteration and debt alleviation. It does so within each state ‘s specific socio-economic context, accommodating plans to state capacity and demands.

Millennium Development Goals

The World Bank ‘s current focal point is on the accomplishment of the Millennium Development Goals ( MDGs ) , imparting chiefly to “ middle-income states ” at involvement rates which reflect a little mark-up over its ain ( AAA-rated ) adoptions from capital markets ; while the IDA provides low or no involvement loans and grants to low income states with small or no entree to international recognition markets. The IBRD is a market based non-profit organisation, utilizing its high recognition evaluation to do up for the comparatively low involvement rate on its loans, while the IDA is funded chiefly by periodic “ refillings ” ( grants ) voted to the establishment by its more flush member states.

World Bank Mission:

The Bank ‘s mission is to help developing states and their dwellers to accomplish development and the decrease of poorness, including accomplishment of the MDGs, by assisting states develop an environment for investing, occupations and sustainable growing, therefore advancing economic growing through investing and enabling the hapless to portion the fruits of economic growing. The World Bank sees the five cardinal factors necessary for economic growing and the creative activity of an enabling concern environment as:

Build capacity: Strengthening authoritiess and educating authorities functionaries.

Infrastructure creative activity: execution of legal and judicial systems for the encouragement of concern, the protection of single and belongings rights and the observance of contracts.

Development of Financial Systems: the constitution of strong systems capable of back uping enterprises from micro recognition to the funding of larger corporate ventures.

Battling corruptness: Support for states ‘ attempts at eliminating corruptness.

Research, Consultancy and Training: the World Bank provides platform for research on development issues, consultancy and behavior preparation plans ( web based, on line, tele-/ picture conferencing and category room based ) unfastened for those who are interested from academe, pupils, authorities and non-governmental organisation ( NGO ) officers etc.

The Bank obtains funding for its operations chiefly through the IBRD ‘s sale of AAA-rated bonds in the universe ‘s fiscal markets. The IBRD ‘s income is generated from its loaning activities, with its adoptions leveraging its ain paid-in capital, plus the investing of its “ float ” . The IDA obtains the bulk of its financess from 40 giver states who replenish the bank ‘s financess every three old ages, and from loan refunds, which so become available for re-lending. –

World bank Management:

The President of the Bank, presently Robert B. Zoellick, is responsible for chairing the meetings of the Boards of Directors and for overall direction of the Bank. Traditionally, the Bank President has ever been a U.S. citizen nominated by the President of the United States, the largest stockholder in the bank. The campaigner is capable to verification by the Board of Governors, to function for a five-year, renewable term. [ 4 ]

The Executive Directors make up the Board of Directors, normally run intoing twice a hebdomad to supervise activities such as the blessing of loans and warrants, new policies, the administrative budget, state aid schemes and adoption and funding determinations.

The Vice Presidents of the Bank are its chief directors, in charge of parts, sectors, webs and maps. There are 24 Vice-Presidents, 3 Senior Vice Presidents and 2 Executive Vice Presidents.

World bank Area of operations:

The World Bank is active in the undermentioned countries [ 7 ]

Agribusiness and Rural Development

Conflict and Development

Development Operations and Activities

Economic Policy




Financial Sector



Health, Nutrition and Population


Information and Communication Technologies

Information, Computing and Telecommunications

International Economics and Trade

Labor and Social Protections

Law and Justice

Macroeconomic and Economic Growth


Poverty Decrease


Private Sector

Public Sector Governance

Rural Development

Social Development

Social Protection



Urban Development

Water Resources

Water Supply and Sanitation

World bank Group:

The World Bank is a critical beginning of fiscal and proficient aid to developing states around the universe. We are non a bank in the common sense. World Bank is made up of five alone development establishments owned by 185 member states. They are.

The International Bank for Reconstruction and Development ( IBRD ) .

The International Development Association ( IDA ) .

The International Finance Corporation ( IFC ) .

The Multilateral Investment Guarantee Agency ( MIGA ) .

The International Centre for the Settlement of Investment Disputes ( ICSID ) .


The International Bank for Reconstruction and Development IBRD provides loans and development aid to middle income states in Latin America, Asia, Africa and Eastern Europe. IBRD gets most of its financess by selling bonds in international capital markets.


The International Development Association IDA plays an of import function in their mission to cut down poorness. Its support is focused on the poorest states, to which it provides interest-free loans and grants. IDA depends on parts from its wealthier member states including some development states for most of its fiscal resources.


The International Finance Corporation IFC promotes growing in the underdeveloped universe by financing private-sector investings and supplying proficient support and advice to authoritiess and concerns. In partnership with private investors, IFC provides loans and equity finance for concern ventures in developing states.


The Multilateral Investment Guarantee Agency ( MIGA ) encourages foreign investing in developing states by supplying warrants to foreign investors against loss caused by non- commercial hazards. MIGA besides provides proficient support to assist developing states promote investing chances and uses its legal services to cut down possible barriers to investing.


The International Centre for the Settlement of Investment Disputes ( ICSID ) provides installations for settling investing differences between foreign investors and their host states.


All five bureaus play different functions that complement one another.


Over the old ages, they have developed different ways of run intoing the demands of developing states. They have two chief loaning subdivisions IBRD and IDA. IBRD offers middle-income states a inexpensive option for raising the financess they need to endorse reforms and public services. States that borrow from the IBRD have more clip to refund than if they borrowed from a commercial bank 15 to 20 old ages with a three- to five-year period before refunds begin. The authoritiess of developing states borrow money for specific plans, focused on poorness decrease, bringing of societal services, environmental protection and economic growing to better life criterions. IDA helps the universe ‘s poorest states cut down poorness by supplying grants and credits, which are involvement free loans that states have 35-40 old ages to refund, with a 10-year grace period before any payments are due. These states do non hold the fiscal ability to borrow from IBRD or from commercial markets. At the minute, 81 states are eligible to borrow from IDA. Together, these states are place to 2.5 billion people, doing up half of the entire population of the developing states.


Other beginnings of development support include loans or grants from wealthier states through bilateral understandings ( borrowing understandings between two states ) ; international organisations or groups of states through many-sided understandings ( understandings among more than two states ) ; export recognition bureaus ; and private concern. To assist states that are confronting immediate budget crises, the major protagonists of development set up several trust financess that they run. Trust financess may be used to back up critical investing operations, debt alleviation, proficient aid and exigency Reconstruction in the aftermath of natural catastrophe or war. Finally, by covering non-commercial hazards that the private sector and fiscal establishments are non usually prepared or willing to take on, MIGA guarantees promote private investing in developing states. The IFC works with the private sector in developing states in order to promote private investing.


Although it is chiefly a loaning establishment, they besides oversee a figure of grant installations. For illustration, the Development Grants Facility financess undertakings that test new attacks and engineerings to seek and work out development jobs. The grants have supported undertakings in the countries of rural development, wellness, instruction, economic policy, environmental protection and private-sector development.


Their advice draws on old ages of development experience, analysis, and research. It is one of the universe ‘s largest Centres for research in the countries of development economic sciences, poorness, trade, globalisation, and the environment. Besides, each undertaking has a research stage when the staff and their spouses examine many factors that are of import to a state ‘s economic and societal wellness. These factors range from economic and trade chances to poorness degrees and whether safety cyberspaces are working. They besides have specialized sections that give advice on wellness, instruction, nutrition, fiscal services, justness, jurisprudence and the environment.


In line with their end of assisting states to assist themselves, the World Bank Institute the preparation bureau offers learning and informational plans, frequently with local research and academic establishments, to better members development accomplishments. The World Bank Institute besides develops and maintains databases and webs for sharing cognition on international development.


Their chief spouses in development are the member state authoritiess. However, they besides work with organisations that are every bit experient or better placed to acquire stakeholders and local communities involved in developing states. They have built, and go on to beef up, partnerships with other many-sided development Bankss, United Nations bureaus, bilateral givers and civil society organisations. They are besides developing stronger ties with academic establishments and the private sector.


IBRD chief loaning bureau raises most of its money in the universe ‘s fiscal markets by selling their AAA-rated World Bank bonds, normally to fiscal establishments, pension financess and other institutional money directors, every bit good as to cardinal Bankss. In financial 2003, IBRD raised US $ 17 billion in fiscal markets. However, unlike other fiscal establishments, they do non run for net income. They use their high recognition evaluation to go through the low involvement they pay for their finance to their underdeveloped state borrowers. They earn involvement and fee income on the loans, and income on the liquid plus investings and capital that is paid in by their member state stockholders. These net incomes, every bit good as the financess raised on the capital markets and portion of the paid-in capital and militias, are used to do loans to their member states and to cover their administrative disbursals. IDA financess, which account for about one-fourth of all of their loaning, provide the poorest states with interest-free loans and grants. Some 40 donor states replenish the IDA installation the universe ‘s largest beginning of interest-free aid to hapless states every three old ages, leting them to go on their plans. IDA besides helps mobilise and organize assistance from donor states and other international organisations. The fund was replenished most late in 2002, with about US $ 23 billion to hapless states over the three-year period which began on July 1, 2002. About half of the financess came from givers, with the remainder coming from non-donor resources including IDA refunds and net income transportations from IBRD. Donors decided at that T clip that more of this money up to fifth part will be given as grants which do n’t hold to be paid back, alternatively of interest-free loans. The grants will do it easier for states to cover with development crises such as the HIV/AIDS epidemic. Outside of IDA, really small of the income is provided by member states 5 per centum of IBRDs financess around US $ 13 billion have come from parts of rich states, paid in when they joined the Bank. MIGA is capitalized by its member states and receives runing capital from the Bank. The bureau besides charges fees for some of its services. IFC provides a mix of funding loans, equity finance, hazard direction merchandises, and intermediary finance, among others for each of its undertakings. However, most of its support, every bit good as leading and direction duty, comes from private sector proprietors. IFC operates on a commercial footing. It invests merely in for-profit undertakings and charges market rates for its merchandises and services.


Their chief occupation is to utilize the money in ways that benefit developing states. They provide these financess at zero or low-interest rates, or as grants to states that have no entree to international markets. Member states besides come for economic research, policy advice, and proficient aid in planing and transporting out development undertakings. The states design their ain plans with proficient support from the staff. However, the plans must hold specific development marks such as cut downing poorness, and presenting societal services, among others. The type of funding available to a underdeveloped state depends on its degree of demand. States that borrow from IBRD are by and large in-between income states, where income for each individual is less than US $ 5185 a twelvemonth. Seventy-five per centum of the universe ‘s hapless people those who live on less than US $ 1 a twenty-four hours unrecorded in these states, which can merely borrow from the private markets at unfavourable rates. IBRD offers them loans at better footings and with longer refund periods. The universe ‘s hapless states those where income for each individual is

US $ 875 or less receives grants and interest-free loans from for undertakings to supply basic services. In the instance of the loans, states have 35 to 40 old ages to refund, with a 10- twelvemonth grace period. Grosss from the operations go into militias, which have a high degree of fiscal protection and aid to fund major beginnings of aid, such as IDA and debt alleviation. By making IFC and MIGA, IBRD tried to do things fairer for developing states and do them more attractive to investors. IFC works with the private sector in developing states. It takes a minority interest in a private company in order to pull private investors. MIGA guarantees insure investors and loaners against fiscal and political hazard in developing states, offering screen against non-commercial hazards such as war and civil perturbation.


They offer two basic types of loans: investing loans for goods, work and services to back up economic and societal development undertakings in a wide scope of sectors ; and adjustment loans to support policy and institutional reforms. During loan dialogues, they agree with the borrower on the development aim of the undertaking or plan, end products, public presentation indexs to mensurate the impact and success of the undertaking and a program to set it all into pattern. Once they approve the loan and it becomes effectual, the borrower puts the undertaking or plan into pattern harmonizing to the footings agreed with them.

They supervise how each loan is used and measure the consequences. All loans are governed by the operational policies, which make certain that operations they fund are economically, financially, socially and environmentally sound.

Chapter 2: World Bank and Trade

Trade refers to the voluntary exchange of goods, services, or both. Trade is besides called commercialism or dealing. The original signifier of trade was barter, the direct exchange of goods and services. Subsequently one side of the swap was the metals, cherished metals ( poles, coins ) , measure, paper money. Modern bargainers alternatively by and large negotiate through a medium of exchange, such as money. Trade has both benefits for one state and costs, but for most of the clip we can state the benefits of trade outweighs the cost. From the theories of Smith, Ricardo, Hecksher-Ohlin we see the benefits that the universe can have through trading. If we want to show a few benefits so we can state,

Trade — — — — — — — — — — — —

Creates occupations

Boosts incomes

Improves our life criterions

Benefits local parts

World Bank although works largely on bettering the substructure of a state it besides helps to ease trade between states through it ‘s loans and grants. In this chapter we have focused on few of those states in which World Bank has worked to better the trade & A ; commercialism.

Chapter 3: World Bank and Programs for Trade

World Bank has initiated many plans for trade facilitation They are

1. Trade Facilitation Facility ( TFF )

2. Global Facilitation Partnership for Transport and Trade ( GFP )

3. Trade and Transit Facilitation Program

4. Trade and Transport Facilitation Audit ( TTFA )

In here we focus on these plans

1. Trade Facilitation Facility ( TFF ) : The Trade Facilitation Facility ( TFF ) is a multi-donor trust fund that was launched in April 2009 to assist developing states improve their fight through concrete betterments in their trade facilitation systems and by cut downing trade costs. It is designed to react quickly to authorities petitions for aid in bettering substructure, establishments, services, policies, processs, and market-oriented regulative systems that enable houses to carry on international trade on clip and at lower costs. The TFF brings together expertness from across the World Bank Group to scale up the establishment ‘s trade facilitation-related activities to back up trade for development. The TFF can besides play an of import function in assisting developing states implement trade facilitation commissariats of international trade understandings, including a WTO Trade Facilitation Agreement, and sup-porting regional trade establishments across the universe. This new plan makes an of import part to helping developing states in this clip of economic crisis.

Focus of Activities: TFF undertakings will take action to originate and prolong reforms that lead to concrete – and mensurable – trade facilitation betterments. TFF aid will be delivered through proficient consultative services and through edifice capacity for undertaking readying. Examples of expected TFF activities include support for execution of regulative and policy reforms, new boundary line direction systems, and modernisation of criterions and proficient control systems. The TFF will besides back up little investings ( e.g. , around $ 1-2 million ) every bit good as build capacity to fix larger substructure undertakings that address critical trade constrictions ( for illustration, those identified in trade facilitation audits, WTO needs appraisals, and Integrated Framework action matrices ) . The TFF will finance activities at planetary, regional, and national degrees.

State Focus: The TFF will concentrate ab initio on low-income states and states in sub-Saharan Africa. Work in lower-middle income states is eligible where this addresses trade facilitation jobs of neighbouring low-income states ( for illustration, theodolite, corridor or other regional trade facilitation undertakings ) . As resources in the TFF addition, it is expected that eligibility will be expanded to other developing states.

Organization and processs: The TFF is managed by a dedicated squad of trade facilitation experts in the World Bank ‘s International Trade Department. The TFF will react on a rolled footing to petitions from authoritiess and regional organisations ( e.g. , ASEAN, COMESA, SADC, etc. ) . Decisions on proposals will be made through a fast-track procedure. Depending on the nature of aid requested, the execution period for TFF undertakings could be short-run ( e.g. , two-three months ) , medium-term, or long-run ( e.g. , two old ages ) . The executing of TFF undertakings will mostly be undertaken by state squads in the World Bank ‘s Regional sections, but besides by other units such as FIAS, the International Trade Department, and the Transport Department. Undertakings can besides be executed by authoritiess and other receivers. A joint donor-World Bank/IFC maneuvering commission will supervise the TFF plan.

Coherence with other Aid for Trade Activities: The TFF is linked to the Aid for Trade docket and other enterprises to contend poorness through the engine of international trade. It can supply critical inputs into the design of trade-related investing undertakings funded by bilateral givers, regional development Bankss, IDA/IBRD, and developing states ‘ ain budgets. In least-developed states, for illustration, the TFF complements the Enhanced IF by supplying extra resources to assist LDC authoritiess address trade facilitation precedences in IF action matrices. The TFF will besides turn to regional trade outwardnesss ( e.g. , those related to pass through through gateway states ) or support undertakings in non-LDCs that provide presentation effects for IF states — activities that are beyond the range of the IF. The TFF will besides complement bing trust financess at the World Bank and IFC. Many of these cover a wide scope of trade issues. These other support beginnings support chiefly research and analytical work that has been of import in spread outing cognition about trade issues. The TFF will utilize that cognition to make full the spread between placing trade facilitation restraints and assisting authoritiess design undertakings and policies to get the better of those restraints. The World Bank Aid for Trade Coordination Council will organize the TFF, the Multi-Donor Trust Fund for Trade and Development, and other assistance for trade trust financess that may be established at the World Bank to guarantee that these plans complement each other.

Funding Support: The TFF purposes to mobilise an initial $ 40 million in trust fund resources over the following four old ages. Sweden and the United Kingdom have committed to supplying support for the TFF and treatments are presently ( as of August 2009 ) underway with the Netherlands.

2. Global Facilitation Partnership for Transportation and Trade ( GFP ) : GFP was established In 1999, a web of 250 public and private spouses ( core spouses include the WCO, UNCTAD, UNECE, UNIDO, IRU, and TIACA ) . The GFP has become the mention forum on trade and conveyance facilitation where participants work together to plan and set about specific plans, create cognition, and support trade facilitation preparation chances. It aims at drawing together all interested parties, public and private, national and international, who want to assist accomplish important betterments in conveyance and trade facilitation in World Bank member states. The Partners have together agreed to plan and set about specific plans towards run intoing this aim, doing usage of their several comparative advantage in the capable affair in a co-ordinated manner.

3. Trade and Transit Facilitation plan: The World Bank launched the Trade and Transit Facilitation plan to turn to the specific jobs of overland theodolite trade, particularly in the context of landlocked states. It involves UNECE, IRU, and UNCTAD. This plan includes research and instance surveies on the cost construction of theodolite supply ironss and trade corridor public presentation. This plan straight supports the UN enterprise for developing landlocked states, the Almaty Programme of Actions.

4. The Trade and Transport Facilitation Audit ( TTFA ) : TTFA allows an initial nosologies of restraints and has been implemented in over 40 states over the past 5 old ages. This tool is presently being updated to reflect lessons learned.

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