The Interesting Instrument of the World Bank

The interesting instrument of the World Bank

The World Bank was founded, along with the International Monetary Fund, at the Bretton Woods Monetary and Financial Conference in July 1944. The Bank is an international cooperative institution with 74 member countries. Its objectives are implicit in its official title -- the International Bank for Reconstruction and Development; the urgent problems of reconstruction were its most important concern in the immediate postwar years, but since then its efforts have been concentrated on aiding the economic growth of its less developed member countries. The Bank is associated with the United Nations as a specialized agency. The Bank obtains funds for its operations from the following sources: capital subscribed by its 74 member countries, which include 19 of the Republics of Latin America; sales of Bank bonds in the various capital markets of the world; and net earnings on its operations. In addition, sales of portions of Bank loans to other investors and repayments of loans permit the Bank to recover its funds, and thereby serve to reduce the amount which the Bank must obtain from other sources for its lending operations.

We live in a world so rich that global income is more than $31 trillion a year. In this world, the average person in some countries earns more than $40,000 a year. But in this same world, 2.8 billion people--more than half the people in developing countries--live on less than $700 a year. Of these, 1.2 billion earn less than $1 a day. So with out a

doubt the goal of the world bank is to decrease poverty in the world. The World Bank works to bridge this divide and turn rich country resources into poor country growth. One of the world's largest sources of development assistance, the World Bank supports the efforts of developing country governments to build schools and health centers, provide water and electricity, fight disease, and protect the environment.

The governing structure of the world bank consists of a Board of Governors, Executive directors, Alternate executive directors, Office of the President, Bank staff, and 184 membership countries. Although the process is very involved to apply for a loan, the bank has made provisions and set guidelines within vested leadership roles for loan applications to be submitted for review and approval. Usually through government initiation, member countries apply for loans with outlined detail plans for economic development and improvement projects. The bank approves or denies loans mostly because of development needs. When approved, adjustable interest rates are rates are set based on the bank's borrowing cost. Also, per capital income is a determining factor for setting interest rates to the poorest countries. In some cases, loans are forgiven when the bank determines the countries inability to repay. When this is done the bank directs the debt relief savings to fund specific welfare programs for the country's poor. There are huge swings in per capital income throughout the world. These swings statistically enhanced the levels of poverty among developing countries. The divide between rich and poor nations is acknowledged by the UN as an opportunity to offer resource assistance for the sake of saving lives and developing people to improved standards of living. In this regard, "the world bank takes on the role of working to develop local governments, building schools and healthcare facilities with agencies for fighting diseases, channel clean water and electricity, and improve and protect the environment.

The world bank functions as a UN parent organization made up of five closely associated institutions and 184 member countries and shareholders. There are complex formal steps with an application process that a country must become a member of the bank. One requirement is that a country must become a member of the international bank for reconstruction and development before it can become a member of the bank. Review and consultation from authorities determine conformation of the prospective member counrty's acceptance. Under the leadership of the board of governors, a voting process takes place that leads to affirmation or denial of a country's membership. The oldest of the world bank is the United States and the United Kingdom, the newest members are Gaza and the west bank joining in 2003.

The board of governors is usually made up of government officials such as ministers for the representative country. For example, the minister of France, ministers of development and so on, serves on the board of governors. Each member country appoints a governor and an alternate governor to serve a five year term ( may be re-appointed ) in accordance with the bank's "articles of agreement". The board of governors are charged to meet once a year at the bank's annual meeting ( traditionally held in Washington D.C. two out of three years and every third year in a different country) where it's role is to operate as ultimate policy makers in world bank.

The board of governors has delegated powers and duties to the executive directors. The 24 member of executive directors are responsible