Introduction
The World Bank Group is a family of five multilateral institutions engaged in various economic development activities, whose overarching mission is global poverty reduction. Established by Western powers in 1944, the World Bank was originally tasked with rebuilding the economies of postwar Europe. More than seventy years later, it has expanded its reach into nearly all of the world’s developing countries. Today the bank maintains more than 2,600 projects.
Dr. Jim Yong Kim, a U.S. public health expert and former head of Dartmouth College, has served as president of the bank since July 2012. Some critics claim Kim’s appointment encapsulated the bank’s outmoded embrace of a Western-dominated order. Others suggest the bank may have outlived its usefulness altogether, citing the increase in private capital flows available to the developing world. Supporters of the bank contend that it can still make an enduring contribution to global economic development as an arbiter of best practices.
Bretton Woods
The World Bank, along with its sister organization, the International Monetary Fund, was created at the Bretton Woods Conference in New Hampshire in 1944. The Allied powers, led by the United States and the United Kingdom, sought to restore European prosperity and prevent a recurrence of the economic malaise of the 1920s and 30s that helped fuel the rise of totalitarianism. The IMF, which through tacit agreement would be led by a European, was charged with managing the global regime of exchange rates and balance of payments. The World Bank, to be led by an American, would provide member countries with postwar reconstruction loans. While the fund would focus on “firefighting” short-term macroeconomic problems, the bank would concentrate on long-term, on-the-ground development.
In recent decades, the bank’s primary focus has shifted from partnering with middle-income nations on growth-related programs and trade liberalization toward an emphasis on global poverty alleviation. These efforts take place in the world’s poorest countries—particularly those in Africa—and in middle-income countries, such as China and India, where many of the world’s poor reside. In 2013, the bank set a goal to end extreme poverty, experienced by people living on $1.25 or less per day, by 2030. Other priorities for the bank include postconflict nations and global commons issues, such as public health and the environment.
Organization and Operations
The World Bank Group is composed of five separate institutions: the International Bank for Reconstruction and Development (IBRD), the International Development Association (IDA), the International Finance Corporation, the Multilateral Investment Guarantee Agency, and the International Center for Settlement of Investment Disputes. Each agency is owned and operated as a cooperative by its member countries.
Together, the IBRD and the IDA are commonly referred to as the World Bank. As of 2017, the bank’s six largest shareholders—out of its 189 members—were the United States, Japan, China, Germany, France, and the UK, respectively.
Ultimate policymaking authority at the bank rests with the board of governors, often made up of senior finance or development officials from member countries. The board of governors, in turn, delegates certain powers to the board of directors, which is composed of twenty-five executives and the World Bank president.
The International Bank for Reconstruction and Development. The IBRD was established in 1944 as the bank’s charter institution. Through loans, guarantees, and other services, the IBRD works with middle-income and creditworthy low-income nations to fight poverty. Projects span the globe and vary from digitizing health systems in Belarus to reducing air pollution in Colombia to generating solar power in Pakistan.
The International Development Association. As a complement to the IBRD, the IDA was established in 1960 to promote broad-based development work in the world’s poorest countries by offering interest-free credits and grants. The IDA currently has programs in sixty-nine countries, of which thirty-seven are in Africa, with a focus on education, health, and sustainable environmental practices.
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