World Bank Group

World Bank
World Bank Logo
Formation	27 December 1945
Type	International organization
Legal status	Treaty
Purpose/focus	Economic development, poverty elimination
Membership	187 countries
President	Jim Yong Kim
Main organ	Board of Directors
Website	worldbank.org

The World Bank Group (WBG) is a family of five international organizations that makes leveraged loans, generally to poor countries.

The WBG came into formal existence on 27 December 1945 following international ratification of the Bretton Woods agreements, which emerged from the United Nations Monetary and Financial Conference (1–22 July 1944). It also provided the foundation of the Osiander Committee in 1951, responsible for the preparation and evaluation of the World Development Report. Commencing operations on 25 June 1946, it approved its first loan on 9 May 1947 (US$250M to France for postwar reconstruction, in real terms the largest loan issued by the Bank to date).

Its five agencies are:

• International Bank for Reconstruction and Development (IBRD)
• International Development Association (IDA)
• International Finance Corporation (IFC)
• Multilateral Investment Guarantee Agency (MIGA)
• International Centre for Settlement of Investment Disputes (ICSID)

The term " World Bank" generally refers to just the IBRD and IDA, whereas the term World Bank Group or WBG is used to refer to all five institutions collectively.

The World Bank's (the IBRD and IDA's) activities are focused on developing countries, in fields such as human development (e.g. education, health), agriculture and rural development (e.g. irrigation, rural services), environmental protection (e.g. pollution reduction, establishing and enforcing regulations), infrastructure (e.g. roads, urban regeneration, electricity), and governance (e.g. anti-corruption, legal institutions development). The IBRD and IDA provide loans at preferential rates to member countries, as well as grants to the poorest countries. Loans or grants for specific projects are often linked to wider policy changes in the sector or the economy. For example, a loan to improve coastal environmental management may be linked to development of new environmental institutions at national and local levels and the implementation of new regulations to limit pollution.

The activities of the IFC and MIGA include investment in the private sector and providing insurance respectively.

The World Bank Institute is the capacity development branch of the World Bank, providing learning and other capacity-building programs to member countries. Two countries, Venezuela and Ecuador, withdrew from the World Bank.

The World Bank is also an observer on the United Nations Development Group.

Membership

All of the 193 of the UN members and Kosovo that are WBG members participate as a minimum in the IBRD. Most of them also participate in some of the other 4 organizations: IDA, IFC, MIGA, ICSID.

WBG members by the number of organizations where they participate are the following:

1. only in IBRD: San Marino
2. IBRD and one other organization: Suriname, Tuvalu, Brunei
3. IBRD and two other organizations: Antigua and Barbuda, Sao Tome and Principe, Namibia, Bhutan, Myanmar, Qatar, Marshall Islands, Kiribati
4. IBRD and three other organizations: Canada, Mexico, Belize, Jamaica, Dominican Republic, Venezuela, Brazil, Bolivia, Uruguay, Ecuador, Dominica, Saint Vincent and the Grenadines, Cape Verde, Guinea-Bissau, Niger, Equatorial Guinea, Angola, South Africa, Comoros, Seychelles, Libya, Somalia, Ethiopia, Eritrea, Djibouti, Bahrain, Iran, Iraq, Malta, Montenegro, Bulgaria, Romania, Moldova, Poland, Russia, Lithuania, Belarus, Kyrgyzstan, Tajikistan, Turkmenistan, India, Thailand, Laos, Vietnam, Palau, Vanuatu, Samoa, Maldives
5. All five WBG organizations: the rest of the 127 WBG members

Non-members are:

• one Pacific island nation – Nauru,
• two communist states – Republic of Cuba, Democratic Peoples Republic of Korea
• two New Zealand dependencies – Cook Islands, Niue
• four European microstates – Principality of Andorra, Principality of Monaco, Principality of Liechtenstein, State of Vatican City
• and states with limited recognition – Republic of Abkhazia, the Republic of China, State of Palestine, Sahrawi Arab Democratic Republic, Republic of Somaliland, Republic of South Ossetia, Pridnestrovian Moldavian Republic, [Russian republic of Armenia]

Organizational structure

Together with four affiliated agencies created between 1957 and 1988, the IBRD is part of the World Bank Group. The Group's headquarters are in Washington, D.C. It is an international organization owned by member governments; although it makes profits, these profits are used to support continued efforts in poverty reduction.

Technically the World Bank is part of the United Nations system, but its governance structure is different: each institution in the World Bank Group is owned by its member governments, which subscribe to its basic share capital, with votes proportional to shareholding. Membership gives certain voting rights that are the same for all countries but there are also additional votes which depend on financial contributions to the organization. The President of the World Bank is nominated by the President of the United States and elected by the Bank's Board of Governors. As of 15 November 2009 the United States held 16.4% of total votes, Japan 7.9%, Germany 4.5%, the United Kingdom 4.3%, and France 4.3%. As changes to the Bank's Charter require an 85% super-majority, the US can block any major change in the Bank's governing structure.

World Bank Group agencies

The World Bank Group consists of

• the International Bank for Reconstruction and Development (IBRD), established in 1945, which provides debt financing on the basis of sovereign guarantees;
• the International Finance Corporation (IFC), established in 1956, which provides various forms of financing without sovereign guarantees, primarily to the private sector;
• the International Development Association (IDA), established in 1960, which provides concessional financing (interest-free loans or grants), usually with sovereign guarantees;
• the International Centre for Settlement of Investment Disputes (ICSID), established in 1966, which works with governments to reduce investment risk;
• the Multilateral Investment Guarantee Agency (MIGA), established in 1988, which provides insurance against certain types of risk, including political risk, aw primarily to the private sector.

The IBRD has 185 member governments, and the other institutions have between 140 and 176 members. The institutions of the World Bank Group are all run by a Board of Governors meeting once a year. Each member country appoints a governor, generally its Minister of Finance. On a daily basis the World Bank Group is run by a Board of 24 Executive Directors to whom the governors have delegated certain powers. Each Director represents either one country (for the largest countries), or a group of countries. Executive Directors are appointed by their respective governments or the constituencies. The agencies of the World Bank are each governed by their Articles of Agreement that serve as the legal and institutional foundation for all of their work. The Bank also serves as one of several Implementing Agencies for the United Nations Global Environment Facility (GEF).

Presidency

Traditionally, the Bank President has always been a U.S. citizen nominated by the President of the United States, the largest shareholder in the bank. The nominee is subject to confirmation by the Board of Governors, to serve for a five-year, renewable term.

Current President

On 30 May 2007, US President George W. Bush nominated former deputy secretary of state Robert Zoellick to succeed Paul Wolfowitz as President of the World Bank Group. The Executive Directors unanimously approved Zoellick, effective 1 July 2007, as the 11th President of the Bank for a five-year term. Robert Zoellick is the former Deputy Secretary of the U.S. State Department and the former Chairman of Goldman Sachs' Board of International Advisors. He graduated magna cum laude from Harvard Law School and Phi Beta Kappa from Swarthmore College.

Zoellick announced in October, 2007 that his priorities for the World Bank included increasing efforts to reduce poverty in the world's poorest countries, increasing support for neglected Arab countries, increasing support for countries emerging from violent conflicts, addressing poverty in "emerging" economies like India and China, increasing emphasis on environmental issues (especially global warming), and improving access to treatments for HIV and malaria.

During this same period, the Bank’s failure to adequately consider social environmental factors was most evident in the 1976 Indonesian Transmigration program (Transmigration V). This project was funded after the establishment of the Bank’s OESA (environmental) office in 1971. According to the Bank critic Le Prestre, Transmigration V was the “largest resettlement program ever attempted... designed ultimately to transfer, over a period of twenty years, 65 million of the nation’s 165 million inhabitants from the overcrowded islands of Java, Bali, Madura, and Lombok...” (175). The objectives were: relief of the economic and social problems of the inner islands, reduction of unemployment on Java, relocation of manpower to the outer islands, and to “strengthen national unity through ethnic integration, and improve the living standard of the poor” (Le Prestre 175).

Putting aside the political aspects of such a project, it otherwise failed as the new settlements went out of control; local populations fought with the migrators and the tropical forest was devastated (destroying the lives of indigenous peoples). Also, “[s]ome settlements were established in inhospitable sites, and failures were common;” these concerns were noted by the Bank's environmental unit whose recommendations (to Bank management) and analyses were ignored (Le Prestre, 176). Funding continued through 1987, despite the problems noted and despite the Bank’s published stipulations (1982) concerning the treatment of groups to be resettled.

More recent authors have pointed out that the World Bank learned from the mistakes of projects such as Transmigration V and greatly improved its social and environmental controls, especially during the 1990s. It has established a set of "Safeguard Policies" that set out wide ranging basic criteria that projects must meet to be acceptable. The policies are demanding, and as Mallaby (reference below) observes: "Because of the combined pressures from Northern NGOs and shareholders, the Bank's project managers labor under "safeguard" rules covering ten sensitives issues...no other development lender is hamstrung in this way" (page 389). The ten policies cover: Environmental Assessment, Natural Habitats, Forests, Pest Management, Cultural Property, Involuntary Resettlement, Indigenous Peoples, Safety of Dams, Disputed Areas, and International Waterways.

On April 16, 2012, President Barack Obama announced that Jim Yong Kim would be the next President of the World Bank Group. Kim assumed office on July 1, 2012.

Independent Evaluation group

The Independent Evaluation Group (IEG) (formerly known as the Operations Evaluation Department (OED)) plays an important check and balance role in the World Bank. Similar in its role to the US Government's Government Accountability Office (GAO), it is an independent unit of the World Bank that reports evaluation findings directly to the Bank's Board of Executive Directors. Caroline Heider is the Director-General, Evaluation, whose evaluations provide an objective basis for assessing the results of the Bank's work, and ensuring accountability of World Bank management to the member countries (through the World Bank Board) in the achievement of its objectives.

Extractive Industries Review

After longstanding criticisms from civil society of the Bank's involvement in the oil, gas, and mining sectors, the World Bank in July 2001 launched an independent review called the Extractive Industries Review (EIR – not to be confused with Environmental Impact Report). The review was headed by an "Eminent Person", Dr. Emil Salim (former Environment Minister of Indonesia). Dr. Salim held consultations with a wide range of stakeholders in 2002 and 2003. The EIR recommendations were published in January 2004 in a final report entitled "Striking a Better Balance". The report concluded that fossil fuel and mining projects do not alleviate poverty, and recommended that World Bank involvement with these sectors be phased out by 2008 to be replaced by investment in renewable energy and clean energy. The World Bank published its Management Response to the EIR in September 2004. following extensive discussions with the Board of Directors. The Management Response did not accept many of the EIR report's conclusions. However, the EIR served to alter the World Bank's policies on oil, gas and mining in important ways, as has been documented by the World Bank in a recent follow-up report. One area of particular controversy concerned the rights of indigenous peoples. Critics point out that the Management Response weakened a key recommendation that indigenous peoples and affected communities should have to provide 'consent' for projects to proceed – instead, there would be 'consultation'. Following the EIR process, the World Bank issued a revised Policy on Indigenous Peoples.

Impact evaluations

In recent years there has been an increased focus on measuring results of World Bank development assistance through impact evaluations. An impact evaluation assesses the changes in the well-being of individuals that can be attributed to a particular project, program or policy. Impact evaluations demand a substantial amount of information, time and resources. Therefore, it is important to select carefully the public actions that will be evaluated. One of the important considerations that could govern the selection of interventions (whether they be projects, programs or policies) for impact evaluation is the potential of evaluation results for learning. In general, it is best to evaluate interventions that maximize the possibility of learning from current poverty reduction efforts and provide insights for midcourse correction, as necessary.

Access to Information

The World Bank Policy on Access to Information sets forth a ground-breaking change in how the World Bank makes information available to the public. Now the public can get more information than ever before—information about projects under preparation, projects under implementation, analytic and advisory activities, and Board proceedings.

Over the past 15 years, the World Bank’s policy on disclosing information has evolved gradually. Until now, the World Bank’s approach has been to spell out what documents the World Bank discloses. The new World Bank Policy on Access to Information effective 1 July 2010, is a pivotal shift in the World Bank’s approach to making information available to the public. Under the new policy, the World Bank will disclose any information in its possession that is not on a list of exceptions. This policy positions the World Bank as a leader in transparency and accountability among international institutions.

Allegations of corruption

The World Bank's Integrity Vice Presidency (INT) is charged with investigation of internal fraud and corruption, including complaint intake, investigation and investigation reports.

Effectiveness

The World Bank has long been criticized by a range of non-governmental organizations and academics, notably including its former Chief Economist Joseph Stiglitz, who is equally critical of the International Monetary Fund, the US Treasury Department, and US and other developed country trade negotiators. Critics argue that the so-called free market reform policies – which the Bank advocates in many cases – in practice are often harmful to economic development if implemented badly, too quickly (" shock therapy"), in the wrong sequence, or in very weak, uncompetitive economies. World Bank loan agreements can also force procurements of goods and services at uncompetitive, non free-market, prices.

In Masters of Illusion: The World Bank and the Poverty of Nations (1996), Catherine Caufield argues that the assumptions and structure of the World Bank operation ultimately harm developing nations rather than promoting them. In terms of assumption, Caufield first criticizes the highly homogenized and Western recipes of "development" held by the Bank. To the World Bank, different nations and regions are indistinguishable, and ready to receive the "uniform remedy of development". The danger of this assumption is that to attain even small portions of success, Western approaches to life are adopted and traditional economic structures and values are abandoned. A second assumption is that poor countries cannot modernize without money and advice from abroad.

A number of intellectuals in developing countries have argued that the World Bank is deeply implicated in contemporary modes of donor and NGO driven imperialism and that its intellectual contribution functions, primarily, to seek to blame the poor for their condition.

Defenders of the World Bank contend that no country is forced to borrow its money. The Bank provides both loans and grants. Even the loans are concessional since they are given to countries that have no access to international capital markets. Furthermore, the loans, both to poor and middle-income countries, are at below market-value interest rates. The World Bank argues that it can help development more through loans than grants, because money repaid on the loans can then be lent for other projects.

AIDS controversy

The World Bank is a major source of funding for combating AIDS in poor countries. In the past six years, it has committed about US$2 billion through grants, loans and credits for programs to fight HIV/AIDS. Its critics, however, claim these financial expenditures to be insufficient.

List of presidents

• Eugene Meyer (June 1946 – December 1946)
• John J. McCloy (March 1947 – June 1949)
• Eugene R. Black, Sr. (1949–1963)
• George D. Woods (January 1963 – March 1968)
• Robert McNamara (April 1968 – June 1981)
• Alden W. Clausen (July 1981 – June 1986)
• Barber Conable (July 1986 – August 1991)
• Lewis T. Preston (September 1991 – May 1995)
• James Wolfensohn (May 1995 – 30 June 2005)
• Paul Wolfowitz (1 July 2005 – 30 June 2007)
• Robert Zoellick (1 July 2007 – 30 June 2012)
• Jim Yong Kim (1 July 2012)

List of chief economists

• Hollis B. Chenery (1972–1982)
• Anne Osborn Krueger (1982–1986)
• Stanley Fischer (1988–1990)
• Lawrence Summers (1991–1993)
• Michael Bruno (1993–1996)
• Joseph E. Stiglitz (1997–2000)
• Nicholas Stern (2000–2003)
• François Bourguignon (2003–2007)
• Justin Yifu Lin (June 2008–2012)

List of World Bank Directors-General of Evaluation

• Christopher Willoughby, Successively Unit Chief, Division Chief, and Department Director for Operations Evaluation (1970–1976)
• Mervyn L. Weiner, First Director-General, Operations Evaluation (1975–1984)
• Yves Rovani, Director-General, Operations Evaluation (1986–1992)
• Robert Picciotto, Director-General, Operations Evaluation (1992–2002)
• Gregory K. Ingram, Director-General, Operations Evaluation (2002–2005)
• Vinod Thomas, Director-General, Evaluation (2005–2011)
• Caroline Heider, Director-General, Evaluation (2011–present)