World Bank

Question 1

What is the World Bank?

Answer 1

• Established as part of the Bretton Woods system 1944.
• Shaped by the Washington Consensus.
• Founding objective = reconstruction of states whose infrastructures and economies were destroyed by WW2 via the Marshall Plan.

Question 2

Aims in the 1980s

Answer 2

• Shifted focus to the developing world outside Europe.
• Sympathised with market-orientated thinking like the IMF.
• Used SAPs as part of its conditions for lending.

Question 3

Aims of the World Bank in the 1990s

Answer 3

• Accepted reform - moved from encouraging economic recovery to emphasise human and social development.
• Emphasised on environmental costs of industrialisation, urbanisation and anti-corruption - moving away from neoliberal ideas of a limited government.

Question 4

Objectives of the World Bank

Answer 4

• Provides technical and financial assistance to support reconstruction and development - allocates $20 billion of loans annually.
• Growing emphasis on ending poverty and boosting shared prosperity, linking strongly to the MDGs and SDGs).
• Carries out analytical work on development matters - made freely available to states and NGOs, adding to global research on the factors that aid and impede development.

Question 5

Membership of the World Bank

Answer 5

• 189 World Bank member states - membership of the World Bank and IMF is linked but the country must be a member of the IMF before the World Bank.
• Decides by a member vote but voting power is weighted according to their contribution amount.

Question 6

Two key institutions of the World Bank

Answer 6

• The International Bank for reconstruction and Development = provides loans and assistance to middle-income countries - some loans include conditionality and elements of SAPs.
• The International Development Association = provides loans to the poorest countries - tends to have very low to no interest rates.

Question 7

Success and impact of the World Bank

Answer 7

• Responsible for major infrastructure projects in the developing world - 2011-18 = the IDA financed the immunisation of 274 million children and provided clean water access for 86M.
• Since CC likely hits the poorest, it is at the forefront of efforts - e.g 2013-17 = annually committed $2 billion to help the poor countries adapt.
• Gender equality strategy = projects encourage female education and work (e.g in sub-Saharan Africa, girls attending primary school rose to 95% in 2017).
• Focusses on direct grants to poorer states (not IMF) which prevents the creation of additional debt pressures on poorer states.
• 2007-09 Financial crisis = boosted capital to $86 billion and gave an additional seat on the Board of Directors to sub-Saharan Africa.
• Developing states’ voting powers increased to 47% post-1990s.

Question 8

Criticisms of the World Bank: Contributions are dwarfed by those of private investors

Answer 8

• $900 billion for China and India in 2011 whilst its resources only reached $8 billion that same year.
• Argued that the World Bank should only focus on the poorest or most conflict-ridden states that are unattractive to private investors.

Question 9

Criticisms of the World Bank: Lack of democracy

Answer 9

• Imbalance in voting powers is outdated in an increasingly globalised world economy
• Rising powers such as China, Brazil and India have less than a third of the voting powers of the USA (e.g United States (15%), Japan (6.84%), UK (3%)..

Question 10

Other failures of the World Bank

Answer 10

• Conditional loans for developing countries adopting free-market reforms challenges their sovereignty AND which might be inappropriate to their development stage. As Hajoon Chang argues that states may remain peripheral states trapped in neocolonial dependency, so they must protect their economies until they are powerful enough to compete fairly with core states.
• Free-markets reforms often require dramatic cuts in public spending to stabilise a currency to attract foreign investment but it may hurt the poorest people in society.
• 2004-13 = settlement adjustment programmes led to 3.4 million people being involuntarily resettled.
• China being the second biggest recipient of WB loans is controversial given that it is the world’s second biggest economy (2919).