Time to rethink how the World Bank operates
One for Year 13 economists. Larry Elliott looks here at the future of the World Bank in the aftermath and asks the pertinent question about whether an institution that emerged in the aftermath of World War Two is still fit for purpose in 2023.
In particular, the power of the United States in effectively being able to select the Bank's president, is a bone of contention. He argues that developing economies need their own advocate to push their agenda, rather than having to rely upon the 'generosity' of developed economies.
The World Bank is an international financial institution that provides loans, grants, and other assistance to developing countries with the aim of reducing poverty and promoting economic development. It was established in 1944 and is headquartered in Washington, D.C., United States. The World Bank has two main arms: the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA).
The IBRD provides loans and other financial assistance to middle-income and creditworthy low-income countries, while the IDA provides grants and low-interest loans to the world's poorest countries. In addition to providing financial assistance, the World Bank also conducts research, collects data, and provides analysis and advice to governments and other organizations on economic and social development issues.
The World Bank has 189 member countries, and its operations are financed by member country contributions, borrowing in the capital markets, and earnings from its investments.
Criticisms of the World Bank
The World Bank has faced criticism in recent years on various fronts. Some of the major criticisms include:
- Conditionality: The World Bank has been criticized for attaching conditions to its loans and assistance, which are often referred to as "policy conditionality." Critics argue that these conditions can be onerous and may not reflect the needs and priorities of the recipient countries. Additionally, some argue that these conditions can exacerbate existing social and economic inequalities in recipient countries.
- Environmental and Social Impacts: The World Bank has also faced criticism for its environmental and social impact policies. Critics argue that the Bank has funded projects that have had negative environmental and social impacts, including forced displacement of communities, destruction of ecosystems, and human rights violations.
- Lack of Transparency and Accountability: The World Bank has also been criticized for its lack of transparency and accountability. Critics argue that the Bank has not been transparent in its decision-making processes, and that it has not adequately engaged with civil society and other stakeholders in its operations.
- Influence of Major Shareholders: The World Bank has also faced criticism for the influence of major shareholders, particularly the United States. Critics argue that the Bank's decision-making processes are influenced by major shareholders, which can lead to policies that reflect the interests of those countries rather than the needs of recipient countries.
Overall, the World Bank has faced criticism for its role in promoting economic development and poverty reduction, and there are ongoing debates about the effectiveness of its policies and operations. The Bank has responded to some of these criticisms by revising its policies and procedures and engaging more with civil society and other stakeholders.