The term World Bank refers to the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA). The term World Bank Group incorporates five closely associated entities working collaboratively to reduce poverty: the World Bank (the IBRD and IDA), the International Finance Corporation, the Multilateral Investment Guarantee Agency, and the International Centre for Settlement of Investment Disputes.
The IBRD was established in 1944 as the original institution of the World Bank Group. It seeks to reduce poverty in middle-income and creditworthy poorer countries by advocating sustainable development through loans, guarantees, risk management products, and analytical and advisory services. The IBRD is structured like a cooperative owned and operated for the benefit of its 186 member countries. The IDA, established in 1960, strives to reduce poverty through interest-free loans and grants for programs that increase economic growth, reduce inequalities, and improve people’s living conditions.
The World Bank was conceived in 1944 primarily to facilitate postwar reconstruction and development. The following year, the IBRD Articles of Agreement became effective upon signature by twenty-eight governments, and formal operations began in 1946. In 1947 the executive directors approved the bank’s first loan; this was to France for reconstruction. Since its inception, the World Bank has expanded from a single institution to an associated group of coordinated development institutions. Its mission has evolved to global poverty alleviation, and projects have broadened from focusing on heavy infrastructure investment to include work such as social sector lending projects.
The World Bank compares itself to a cooperative with member countries as shareholders. The shareholders are represented by a board of governors, the ultimate policy makers. As the governors only meet annually, they delegate specific duties to twenty-four executive directors. The five largest shareholders (France, Germany, Japan, the United Kingdom, and the United States) each appoint an executive director, while other member countries are represented by nineteen executive directors. The World Bank’s president is responsible for overall management. By tradition, the president is a U.S. national and is nominated by the United States, the bank’s largest shareholder. The president is elected by the board of governors for a five-year, renewable term.
According to Robert B. Zoellick (World Bank president as of November 2009), the World Bank Group’s vision is to contribute to inclusive and sustainable globalization. This aims to overcome poverty, enhance growth with care for the environment, and create individual opportunity and hope. Assistance is focused on the poorest countries, fragile states, the Arab world, and middle-income countries. It also seeks to solve global public goods issues and to provide knowledge and learning services.
There has been wide-ranging critique of the World Bank from various sources. This includes critics arguing that the bank reform policies can harm economic development and erode traditional economic structures and values, and a small number of economically powerful countries dominate the bank and promote their own interests. There were major protests against the World Bank during 2002 in Oslo, Norway, and Washington, DC, in 2007. The World Bank has sought to address issues that have encouraged criticism.
- Goldman, Michael. Imperial Nature: The World Bank and Struggles for Social Justice in the Age of Globalization. New Haven, Conn.: Yale University Press, 2005.
- Stone, Diane L., and Christopher Wright, eds. The World Bank and Governance: A Decade of Reform and Reaction. London: Routledge, 2006.
- World Bank Group. Working for a World Free of Poverty. 2003, http://siteresources.worldbank.org/EXTABOUTUS/Resources/wbgroupbrochure-en07.pdf.
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