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World Bank

An Overview and History of the World Bank

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World Bank President`

Jim Yong Kim, President of the World Bank speaks during the Clinton Global Initiative September 23, 2012 in New York City.

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Updated February 10, 2013
The World Bank is an international organization with a goal of reducing poverty in middle income nations and supporting the growth of the world's developing nations. In order to meet these goals the World Bank's members have formed an international financial institution that works to provide loans and support to these nations.

The World Bank is made up of 188 member countries that comprise the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA). The IBRD is an institution within the World Bank that "aims to reduce poverty in middle- income and creditworthy poorer countries by promoting sustainable development through loans, guarantees, risk management products, and analytical and advisory services" (IBRD, 2011). The IDA is the second World Bank institution and its main focus is helping the poorest countries in the world by providing loans and grants to boost economic growth, reduce inequality and improve living conditions (What is IDA, 2012).

Together the IBRD and the IDA make up the World Bank, which when combined with three other financial institutions create a larger body called World Bank Group. The World Bank Group consists of the IBRD, the IDA, the International Finance Corporation (IFC), the Multilateral Investment Guarantee Agency (MIGA) and the International Center for Settlement of Investment Disputes (ICSID).

History of the World Bank

The World Bank was created in 1944 in an effort to aid post-World War II reconstruction and development. In its early years the World Bank provided few loans but France eventually became the first nation to receive aid from the bank. Early World Bank loans were mainly allocated for projects such as ports and highway systems so that loans could be paid back easily.

Beginning in 1968 the World Bank began to focus its efforts on providing aid to people in the developing world and until 1980 the number of loans in this area increased dramatically. Throughout the 1980s the World Bank began to change its policies on loans and focus on what it called "structural adjustment" (Wikipedia.org). Many critics claimed that the structural adjustment changes were detrimental developing nations. As a result by 1989 the World Bank again changed its policies to better support the growth of developing nations and reduce poverty.

Today the World Bank has six strategic themes that drive its many different policies to reach its main goal - reducing global poverty. The World Bank's strategic themes include work in the world's poorest countries to reduce poverty and increase the quality of life, work in post-conflict and fragile states, work in middle-income countries to help grow their economies, work in global public goods (this area focuses on the environment, controlling diseases, and promoting open trade), work in the Arab world, and the promoting of knowledge and learning worldwide (About Us - Our Work, 2012).

How the World Bank Works

In order to accomplish its six strategic themes, the World Bank has a complex system of leadership and organization. Most importantly though, it is an international institution made up of 188 member states, each of which are represented by a Board of Governors. The Board of Governors are the policy makers for the World Bank. The governors for each member state are generally that country's minister of finance or minister development and the World Bank's Board of Governors meets annually (About Us - Leadership, 2012).

For day-to-day operations of the World Bank the Board of Governors delegates duties to 25 Executive Directors who meet twice a week to review the approval of loans, new policies, and the administrative budget to name a few. According to the World Bank, the five largest shareholders (France, Germany, Japan, the United Kingdom and the United States) each appoint an executive director. The other member states are represented by elected executive directors.

In addition to the Executive Directors, the World Bank operates under the leadership of a president. The president is responsible for chairing the Board of Directors' meetings and managing the bank. The World Bank's president has traditionally been nominated by the United States as it is the bank's largest shareholder, but the nominee has to be approved by the Board of Directors (Wikipedia.org). The Bank President serves a five year, renewable term. As of this writing in February 2013 the World Bank's president is Jim Yong Kim. He was elected in April 2012.

World Bank Millennium Development Goals

In addition to its six strategic themes the World Bank focuses its policies around achieving eight Millennium Development Goals by 2015. The World Bank claims that the goals "provide [it] with targets and yardsticks for measuring results" and working toward its ultimate goal of reducing global poverty and growing developing nations (About Us - Our Work, 2012).

The goals are as follows:

1) Eradicate extreme poverty and hunger
2) Achieve universal primary education
3) Promote gender equality and empower women
4) Reduce child mortality
5) Improve maternal health
6) Combat HIV/AIDS, malaria and other diseases
7) Ensure environmental sustainability
8) Develop a global partnership for development

Criticisms of the World Bank

Despite its many goals and successes, the World Bank has been criticized by non-governmental organizations (NGOs) mainly because of its form of government. Critics claim that although the World Bank has 188 member states, it is largely governed by just a few of the world's most economically powerful countries (Wikipedia.org). Other critics say that the World Bank focuses too much on loans instead of forcing countries to take concrete steps in their development.

These are just a few criticisms of the World Bank and in spite of the critics the World Bank continues to work toward its six strategic themes, achieve its Millennium Development Goals and reduce overall global poverty.

To learn about the World Bank, visit its official website.

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