The World Bank: Structure and Policies

Background Information

The World Bank previously known as the international bank for reconstruction and development was founded at Bretton Woods. The bank was formed primarily to provide long-term financial assistance to countries affected by the Second World War and push for economic and reconstruction agenda in those countries. Initially, the World Bank was concerned with post-war rebuilding of the countries affected by the Second World War since then; World Bank has evolved into a multilateral financial institution with programs of financing projects in developing economies.

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In addition, this organization aims at changing its economic policies in supporting economic activities of the third world countries. The bank works as a financial cooperative and enjoys financial assistance from U.S. Since its creation, several changes have been effected into this institution in terms of bank’s policies and mission. However, its capital and authority structures still reflect original goals and objectives leading to its formation.

Structure and Evolution of the world bank

Structure of the World Bank reflects characteristics of a financial cooperative exhibited by the composition of its shareholdings; for instance, the bank has hooping one hundred and eighty-four total shareholders operating under a well-designed board of governors obligated with decision-making process. As Nallari and Griffith (2011) denote, five positions on the board of directors is allocated to the bank’s biggest guarantors such as Germany and United States among many other world economic powers.

In addition, the World Bank consists of five institutions that considerably ensure achievement of the targets and goals subject to time and availability of resources. Institutions such as the International Bank for Reconstruction and Development (IBRD) primarily focus on improving development plans in low and middle-income countries. The second institution is the International Development Association (IDA), which targets at improving economic growth in poor and undeveloped nations.

The creation of the International Finance Corporation (IFC) ensures an enabling business environment that attracts private investors into the economy. Thirdly, the Multilateral Investment Guarantee Agency institution encourages foreign investment by providing insurance services to firms operating under hazardous conditions (World Bank & International Monetary Fund, 2002). The last institution operating within the bank’s system is the international center for settlement of investments disputes (ICSID).

More importantly, president is the chief executive of the bank, and the office of the president is responsible for smooth management of the bank in fighting poverty and improving socioeconomic conditions of the member states. On the contrary, the informal agreement that provides that the president of the bank must come from the United States has received several attacks from critics who believe that such understanding renders World Bank a tool of the developed economies. The World Bank has drastically evolved into an international institution since its formation in 1944; the bank now predominantly focuses on alleviation of abject poverty across the world in collaboration with the International Development Association.

Economic contributions of the World Bank

Addressing various global issues requires international cooperation both in the political and economic spheres. To begin with, World Bank has a mandate of mobilizing and transferring resources to third world countries with the aim of reducing the gap between the rich and the poor. Secondly, this institution provides both professional and financial support for socioeconomic developments in less developed economies in attempts to promote stability and international economic cooperation among the member state. The World Bank provides financial support through provision of long-term loans based on the current market conditions as dictated by market forces of demand and supply.

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The delivery of low-interest rates capital financed by the World Bank encourages foreign borrowing from the developing countries that could not borrow directly from the international capital markets thereby increasing credit accessibility. What is more, the bank provides other financial services such as grants and technical services to member countries.

The five institutions discussed earlier in this paper significantly contribute to ensuring that all the primary goals such as improving living standards and reducing poverty are achievable within the set period. In summary, the World Bank contributes to economic development of member states by funding essential sectors such as education with the aim of reducing illiteracy. Furthermore, the bank heavily invests in health sector to reduce infant and maternal mortality rates, and boosting technological and infrastructural developments. For example, IDA and IBRD target at developing middle and low-income member countries across the globe whereas, the IFC increases credit accessibility to private investors.

ICSID and MIGA contribute to economic growth in the developing through provision of amicable conflict resolution measures and risk management tools in hostile environments respectively. Through MIGA, the World Bank encourages foreign direct investment by offering incentives such as insurance covers and risks management tools. World Bank policies have influenced economic liberalization of most countries across the world in several ways because its policies ensure reduction in expenditures, inflation rates, and improved economic freedoms.

World Bank Financial and Social Performance

Initially created to help in the redevelopment of countries in Europe devastated by war, the World Bank has developed into an international institution mandated to poverty reduction and development of liberal trade policies (Gilbert & Vines, 2000). The Bank transformation process has faced several obstacles and support in its commitment towards Millennium Development Goals for the last Seventy-one years since its formation. Scholars such as Bruce Rich criticized World Bank for lack of efficiency in poverty alleviation. However, the bank has received backings from scholars such as Sarwar Lateef for its positive performance geared at improving living standards across the globe.

To start with, the global policies and actions promoted by the bank have improved living standards of the poor people by combating killer diseases such as smallpox and river blindness. The implementation of environmental conservation measures has ensured sustainability thus improving human welfare. Financially, World Bank has the remarkable record in providing financial products and services such as loans, grants, and economic advisory services to its member states.

Currently, the World Bank has heavily invested in several projects aimed at empowering women, reducing high child death rates, and combating HIV and AIDS. The impact of the World Bank is significantly evident across the globe. In particular, economic progress made by Singapore validates the rationale behind the formation of World Bank. Poverty alleviation programs have lifted approximately 230 million people out of miserable poverty conditions (World Bank, 2006).

Strategies and programs initiated by the World Bank in reducing poverty in some countries have failed due to lack of efficiency. Consequently, imbalance organization at the bank has motivated skeptics in calling for immediate reforms and institutional mechanisms to address negative emerging trends in the market. For example, projects aimed at alleviating poverty on the African continent and East Asia especially Indonesia have overwhelmingly failed due to immature state of governance and World Bank’s failure to understand dynamic nature of poverty in those regions.

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Conclusively, the role played by the World Bank is notable across the world through its active programs aimed at reducing starvation and deaths resulting from poor living standards especially in developing countries. The bank since its formation has undergone transformation designed to meeting the set goals and objectives during its formation. More importantly, the bank provides financial and advisory services to member states in boosting economic growth and developments in line with its Millennium Development Goals.


Gilbert, C. L., & Vines, D. (2000). The World Bank: Structure and policies. Cambridge: Cambridge University Press. Web.

Nallari, R., & Griffith, B. (2011). Understanding Growth and Poverty: Theory, Policy, and Empirics. Washington: World Bank Publications. Web.

World Bank. (2006). Hazards of nature, risks to development: An IEG evaluation of World Bank assistance for natural disasters. Washington, D.C: World Bank. Web.

World Bank., & International Monetary Fund. (2002). Civil service reform: Strengthening World Bank and IMF collaboration. Washington, D.C: World Bank. Web.

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