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World Bank Group
[Note: the World Bank is a component of the World Bank Group]
The World Bank Group (WBG) is a family of five international organizations that make leveraged loans to developing countries. It is the largest and most famous development bank in the world and is an observer at the United Nations Development Group. The bank is based in Washington, D.C. and provided around $30 billion in loans and assistance to "developing" and transition countries in 2012. The bank's stated mission is to achieve the twin goals of ending extreme poverty and building shared prosperity. Its five organizations are the International Bank for Reconstruction and Development (IBRD), the International Development Association (IDA), the International Finance Corporation (IFC), the Multilateral Investment Guarantee Agency (MIGA) and the International Centre for Settlement of Investment Disputes (ICSID)...
All of the 193 UN members and Kosovo that are WBG members participate at a minimum in the IBRD. Most of them also participate in some of the other 4 organizations: IDA, IFC, MIGA, ICSID...
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 1965, 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, primarily to the private sector.
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 Institute is the capacity development branch of the World Bank, providing learning and other capacity-building programs to member countries...
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.
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 harms 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...
At its annual meeting in Tokyo in 2012, the World Bank launched a two-year process to rewrite environmental and social standards. Civil society organisations hope that this Safeguard Review will strengthen the rules, but they also have reason to fear that the opposite may happen.
The Bank has already begun to hold consultations with governments, the private sector and civil society. While the topic may sound rather abstract, the debate on the Safeguards deserves broad public attention. World Bank Safeguards matter far beyond the Bank itself because they serve as guidelines for many other multilateral, bilateral and private-sector institutions.
The Safeguards are inextricably linked to poverty reduction because they have very practical implications for the lives of poor people. Unless these rules are enforced stringently, unintended consequences of development funding all too often include social abuses, gross injustice and irreversible environmental damage. Examples are the damage done to people and the environment when large hydroelectric dams are built, when industrial-scale agribusinesses expand or when mining companies dig for mineral resources.
"The Bank is stepping up its lending through financial intermediaries, which also has a bearing on environmental and social matters. For good reason, even its Independent Evaluation Group wants the Bank to adopt a consistent approach across all types of lending."
Poor monitoring and reporting
The World Bank’s Safeguard Policies grew organically from 1989 on. Unfortunately, the World Bank has done a poor job in monitoring their implementation. Its reporting on the environmental and social impacts of its programmes is mostly inadequate. The Safeguard Review must address these fundamental problems. At the same time, it must establish structures and incentives to ensure that Safeguards are not only considered when projects are being prepared. They must be implemented throughout a project’s life.
The Safeguards only apply to two branches of the World Bank Group: the International Bank for Reconstruction and Development (IBRD), which lends to middle-income countries, and the International Development Association (IDA), which lends to low-income countries. Both IBRD and IDA lend mostly to the public sector, but mixed public-private sector funding is on the rise. There are separate environmental and social standards for the World Bank Group’s private sector lending windows, the International Finance Corporation (IFC) and the Multilateral Investment Guarantee Agency (MIGA). The IFC and MIGA standards have already been reviewed, and they now cover more subjects than the Safeguards do, including, for example, core labour standards, which are missing from the World Bank Safeguards.
The crucial weakness of the IFC/MIGA standards, however, is that they rely largely on these institutions’ private-sector clients to monitor the undesired impacts of their action without third party verification or adequate reporting....