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11339 Downloads1 I Published: 10 Oct ,2017
Almost every business requires certain amount of financial funds to manage its activities and allow smooth functioning of all those. This makes the companies to contact with certain authorities for finance that may include loans, capital investments etc. Large number of banks and investment firms fund various business and countries, one such bank is World Bank. It is understood that bank plays a significant role in the overall world economy. The rise and fall in the economic policies of this bank affects business all over the world especially the developing countries (Lowrey, 2014). There are various functions that banks fulfil for businesses like issue of money, settlement of payments that involves collection and paying money to agents, credit facilities and also creating money in the economy. There are number of countries that fall under the category of developing countries and are slowing proceeding towards becoming developed countries. The developing countries are classified by the world bank that lie under low and middle income groups namely, Singapore, Hong Kong, China, Brazil, India, Qatar, South Korea etc (Collins, 2011). There are many reasons that these countries are listed under this category concerning the income levels, low speed of development, lower living standards, low value adding services etc. Therefore this essay is based on studying these above factors for the developing countries. This study will also concentrate upon the various impacts that World Bank has on these economies. The essay will also outline the possibilities of development and opportunities that World Bank can bring out for the developing nations and thereby strengthening the overall world economy (Skowron and Kristensen, 2012).
Firstly introducing World Bank involves understanding it as a bank that finances companies and businesses. But the key factor that differentiates it with all other authorities and institutions is that it is an international financial institution of United Nations that is basically involved in providing loans to developing countries. World Bank was established in 1944 and also includes International Monetary Fund (IMF) as a major element working together. It had been known to finance number of countries towards their development, witnessing France to be the first company that was provided loan with this bank. It is a member of the United Nations Development Group and is also a great contributor in development of all the developing countries. The bank has been working under the World Bank group and United Nations towards certain goals, where its key goal is to contribute in reduction of poverty (Goldman, 2005). The World Bank group consists of five interrelated institutions, IBRD (International bank for Reconstruction and Development), IDA, International Finance Corporation (IFC), Multilateral, Investment Guarantee Agency (MIGA) and International Centre for Settlement of Investment Disputes (ICSID). All these members of World Bank group are further contributors in development of world in various fields. The major negotiations are said to be set by two major contributors US and UK. The overall objectives and aims of this bank is related with promotion of international investments and fostering better opportunities of foreign trade that will further bring more opportunities of global investments (Bier, 2003).
In understanding the key roles of World Bank, it has been identified that it greatly contributes towards reduction of poverty in whole world and bringing better economic and social development. There are several ways or sector that World Bank provides assistance, in, through projects that further brings development in rural sector along with better transportation, education, agricultural facilities, social development, energy sector, health and nutrition etc. that are all drivers of overall development of nation. It has also been responsible in providing technical support to countries by funding them for special training and developments and organizing various development programs (Bourguignon and Pleskovic, 2005). After understanding the key aims, it has also been identified that this bank is involved in financing the developing countries that have their Gross national product less than $865 yearly and are thus also supported by International Development Association (IDA). As identified earlier, there are different roles that World Bank plays towards the development of world economy in terms of building capacity, uplifting better infrastructure, dealing with certain global issues like poverty, corruption, health and environment problems an also involving in research, training and development of the nations (Askary, 2006).
Understanding type of loans that are provided by the World Bank, these are investment loans and development policy loans, where the former is related with economic and social development of projects, latter is for arranging finance that would support development of a country. The World Bank along with global development also provides support in numerous activities by getting involved in partnerships with various institutions like Consultative Group for International Agricultural Research (CGIAR) that is helpful in expanding the access of poor economies to global opportunities as it has 28 public and private development agencies linked with it. It has also been connected with Global Environment Facility (GEF) that involves funding developing countries towards sustainability of Global environment conditions. The Global Water Partnerships (GWP) is also a part of its activities that are focussed over management of water globally (Hartungi, 2006). Thus the key focus of the World Bank as discussed earlier lies among eradication of poverty, social and economic development, providing better training and learning programs, encouraging better education and health awareness.
After understanding history, purpose and key roles of World Bank that have been contributing towards global economic development, it is important to understand various developing countries and their link with this bank. This study is concerned with key argument in discussing the impacts and implications of World Bank and its activities for the developing countries. For any country that is not or very less developed there can be certain terms used for its, one among them is developing countries. The other terms used for these countries are less developed country (LDC) or less economically developed country (LEDC). There are certain criteria that some countries are ranked under these groups involving people of the country with less education money and lesser hope of life (Avnimelech, Zelekha and Sharabi, 2014). According to the former secretary of United Nations, developed countries were defined as those where the people living within feel free to live and work and enjoy health and environment in their nations. Further these definitions are given according to the statistical assumptions of World Bank along with IMF that also describes that a country’s developed or developing status is judged by indexes like per capita income, gross national and domestic product, life expectancy ratios, literacy rates, health and environment conditions etc (Aksoy and Beghin, 2004). All these components of judging the development of a country are marked under a single name of Human Development Index (HDI) which is given by the United Nations. In terms of properly defining the developing countries, those that have not yet covered or reached a significant level of industrialization in it, that is required to meet the requirements of the current population lie under this category. This includes all aspects like literacy, poverty etc and is a cause of lower standards of living for its people and has been facing lowering of income and higher increase in population (Wang, Lai and Spivakovsky, 2012).
There are various issues that developing countries like Brazil, China, India and many more have been facing that have hold them under the list of developing countries till now. Some of these problems may include improper food and health requirements that describes that the government of these countries are unable to fulfil the food and shelter needs of population. Also the inability to eradicate the poverty and health issues in the country along with impacts of natural disasters have been strong reasons for such countries hampering their growth towards becoming developed nations. It is also important for these countries to focus on better education, health and environment safety that will ultimately help in developing living standard of its country (Rooksby, 2004). These issues have been the reason that all the finance of these countries spend on these issues and disasters and further they also require loans from developed countries, and again get involved in paying interest from their funds that could have been utilized for their development activities. There are certain areas where these developing countries must focus upon towards their development and thus can also utilize loan and financial support from institutions like World Bank in investing it in health, education, infrastructural development and promoting more opportunities for manufacturing.
As stated in above sections, World Bank has come up with an initiative of funding World’s poorest nations. Further it got involved in bringing economic and social improvements in the developing countries that is further aimed at boosting the productivity and standard of living of the overall population (Mahmood, 2000). It has been evident from sources that World Bank contributed $46.9 billion for more than 300 projects worldwide for the key developing countries. The bank along with funds also provides better financial and technical assistance to these countries thereby contributing towards its key goal of reducing poverty. There are various concerns that the bank has been taking towards betterment of these developing countries most importantly involving, better health and education along with economic development through improving the productivity levels. World Bank is popularly known for its lower interest loans, credits with no interests that it provides to the developing countries. There is key focus or themes that are considered by the bank in serving the global economy and all developing countries (Helmy, 2013). These involve the countries that are most poor especially those in Africa, the states with special challenges may be due to conflicts, countries with low or middle income levels, addressing of various issues across the globe and in spreading awareness about better education and learning all over the world.
The key goal of World Bank towards the progress of developing countries involves certain key initiatives like Eradication of poverty and hunger. It has been evident from various figures of World Bank that in around 2010, 21% of people in the developing countries have been living at less than $1.25 per day that made them to focus towards eradication of poverty and hunger all over the world (Easterly, 2000). Many developing countries in the world are facing the problems like malnutrition and deaths due to hunger and poverty among people that had led World Bank to take serious initiatives to fund such countries mostly that of Africa that will support them overcoming such issues. The overall World Bank group is working with many international communities that have been framed in providing support for poverty and hunger (Yu and You, 2013). Further the community in partnerships to World Bank are also committed towards encouraging better agriculture and financing the farmers to bring out more productions within these countries and eradicate the issues with poverty and hunger (Buckley, Lo, and Boulle, 2008). The World Bank has also been supporting the countries with programmes for promoting better nutrition and creation of more jobs and food opportunities that will help people to earn their living and help reducing poverty to some extent.
Achieving primary education is another initiative taken up by the World Bank and authorities working in its partnerships to invest significant amounts for the developing countries and promote better educational faculties in them. This will be helpful for these countries so as to bring better standard of living and more civilised population that can contribute towards the progress of their nations (Bruns, Mingat and Rakotomalala, 2003). The necessity of schools for children in these developing countries is related with promotion of basic skills and knowledge that is required work and life. Further better education can lead to uplifting of the society and bringing self dependence and awareness that will indirectly help in reduction of poverty too. World bank has been known as one of the largest financier in the world that have been investing amounts in spreading opportunities for education in the developing countries. There have been sources describing that World Bank has been contributing around $2.8 billion a year for poor developed or developing countries to support education. The firms like International Development Association (IDA) have been taking initiatives of promoting better education in these countries as an aim of making the children educated and sources of better productivity for future (Clover, 2007).
World Bank also has taken initiatives for the developing countries in promoting equality among gender. Its partnership association with Millennium Development Goals have taken it as a necessity to promote gender equality in developing countries. This is also aimed at providing better opportunities of empowerment of women and girls too that will ultimately be a better initiative in reduction of poverty as well as illiteracy in such countries. This can be understood by the fact that more education facilities to girls involving them in secondary education to will create more employment and increment in wages for future (Anderson and Winters, 2008). The Bank has also been supporting the betterment of women by encouraging better law and order against discrimination of women that is significant contributor in the development of society. IDA and World Bank have given serious support and cooperation along with funds to improve the conditions of women especially pregnant women and making gender equality as their priority.
Child mortality has been another significant issue in the world that involved death of children at earlier ages (Khandker, Koolwal and Samad, 2010). This has been due to the sincere efforts of World Bank and its partnership associations that have largely contributed their funds towards improvement in health and environment conditions, along with their efforts to remove poverty and bringing better health, nutrition and improvement in standard of living. MDG’s one of the goals is to reduce the death rate of children less than 5 years of age in almost all developing countries (Wiseman and Collins, 2012). This is due to the improved efforts of World Bank and their investments in better health care, infrastructure facilities and awareness that have been a reason towards dropping down of death rates of children. The World Bank along with IDA have been providing funds and facilities to many developing countries and supporting them with immunization among children that has contributed in the reduction of child mortality.
Improvement of mental health is also taken care of by the World Bank and its partners. The whole responsibility of managing mental health among population of the developing countries is with the World Health organization (WHO) that has been putting its efforts in improving the health conditions of the world and the developing countries (Marquez, 2014). World Bank has just been providing assistance by providing financial support to these organizations. The mental health issues are all related with the disabilities and deformities that are key focus of these organizations towards their reduction by better awareness and medicinal support.
Fighting with HIV/AIDS and other diseases is very much important for all the developed as well as developing countries. The developed countries are able to eradicate these diseases due to better health facilities further the developing countries could deal with them with the help and support of World Bank. It has been seen that such deadly and non preventive diseases like HIV/AIDS have been threat to the economic conditions of the country and may affect the productivity of population by targeting some of the experts, professionals, political leaders that may affect the economic growth and development of the complete economy (Alexandraki and Lankes, 2004). It has further also been a cause for further enhanced problems and social issues like exploitation of children losing their parents due to such diseases and more and more infections caused further. The World Bank has taken progressive steps in terms of providing better support to developing countries in combating with this disease through antiretroviral therapies provided to millions of adults in these countries and also distributing safety nets to malaria patients in improving their conditions and thus helping the countries fight with such deadly diseases.
Ensuring environment sustainability is a key to the progress of a country. For a developing country, it is important to manage its focus on all key areas of improvement like sustainable development that involves making the nation to prosper with better opportunities and investing in sustainable sources of energy like wind and solar projects etc. this also requires developing countries like Indi, china, brazil etc to focus on cleanliness and growth along with providing better access to its people investments in sustainable projects that could yield progress for long future concern. The World Bank in this context also has managed to bring out larger investments in management of environment and natural resources further leading to development of biodiversity and wild life n countries like Africa that can also be utilized by the nations as a source of income and contribution towards the economic development (Munevar and Toussaint, 2013).
Global partnerships for development is also a key goal of World Bank in providing better opportunities for the developing countries in working along with certain trade agreements and across boundaries with partnerships to promote better facilities among nations. These cross border trade and business opportunities will help in the development of these countries economy, leading to reduction of poverty and unemployment and bringing advancements in the overall economy through technological changes and innovations (Israel, World Bank ink tech training deal, 2014). International Development Association (IDA) has been working with the World Bank in funding the developing countries to reduce their burdens of debt. The bank has also significantly contributed in these countries by handling their debts during the severe financial crisis during 2008 and has been still involved in providing them support in situations of uncertain economy and lending due to trade. They have also plans to improve the accessibility of these companies to global market to help improve their economic and financial status.
The latest news and sources describe that the World Bank has taken initiatives in making its potential lending to the developing countries double by adding around $100 billion in the next decade. This decision of the bank has been focussed in fostering better support to fast growing developing countries in eradicating its poverty at a better speed and supporting its economy in fostering prosperity and development (Cisse and et.al., 2013). All these initiatives have been proving World Bank as the most supportive and significant institution that has been contributing towards development of overall world economy and bringing out better advancements in the developing countries.
With the improvements in the various policies and conditions of the world and rise of some developing countries in progressing faster towards growth has led World Bank and several partners associated with it to develop better strategies for countries like China, India and Brazil in making them grow at a faster pace. The several strategies like improvement of educational facilities, health conditions, eradicating poverty and reduction in death rates by funding the government has been significant steps adopted by the bank towards development of various economies. It has been due to these reasons that countries have been seeking support and funds from World Bank and IMF in bringing out more financial support for the developing countries all over the world (Cull and Effron, 2005).
World Bank plans are mostly concerned with Poverty reduction strategies that have involved certain associated partners to analyse the financial and economic conditions of the developing countries, estimating their poverty indexes and understanding their requirements of funding so that bank can lend them. The IDA along with World Bank is also associated with bringing out programs that will support better scope of innovation and advancement through competitive programs inviting business projects through these developing countries and funding best products. Food security is also one among the focus of World Bank that has made it to bring out better programs influencing food security all over the globe and analysing the overall crisis of food among the developing countries. This has led the World Bank in launching food security programs that are aimed at providing self developed opportunities for countries in production of food through agriculture, research and better trade (Nabli, 2011).The organization has also been involved in arranging programs concerning the importance of nutrition for the developing countries. The World Bank has also been playing specific and significant role in bringing Global Development Learning Network that is based on managing communication among various developing countries to talk upon certain issues of development and work together with coordination to bring better results in improvement of their economic and social conditions. Bank has also taken initiatives and ideas of investing good amounts in human capital, their education, health and overall development that will ultimately contribute towards economic development of the country.
Apart from innumerable benefits that developing countries see with funding support of World Bank, there are certain issues too that have led criticism and arguments against the functioning of the World Bank (Weisbrot, 2013). One of the strongest argument against the bank arises in terms of the ways it functions that describes that it has been leaded by some of the most powerful countries of the World and these economies further dominate the operations, leadership positions and decisions of the World Bank. Further other criticisms also have been raised due to issues like focus on funding and not development, dominance of Americans on leadership positions, improper structural adjustments that have impacted the poor countries with changes in economic policies etc. It has also been engaged in critics concerning unreasonable policies and conditions over the loans in terms of interests etc. that may not be very beneficial for developing countries (Bekhechi and Mercier, 2002).
The world bank is therefore understood as a global body that works for and provides better funds to the developing countries and help them progress in the international economy. The undertaken essay is all about understanding the World Bank, its facilities and impacts over the developing countries all over the world. In understanding this concept, it could be found that the World Bank has been sincerely involved towards the progress of the developing countries that further has helped in bringing significant improvements in countries like India, China, Brazil and other fast developing economies. There are various initiatives that are taken by World Bank as an initiative towards betterment of the developing countries. This involves eradication of poverty by bringing better opportunities of employment within these nations and thus also helps in removing hunger (Pleskovic, 2010). There are some countries that can foster their economy by focusing on productivity through agricultural support that can be beneficial for them. Further The World Bank has certain partnership associations that support it in planning and funding the developing countries in advancement of the society. This Essay also provides examples where the bank has been contributing its efforts towards the development of some economies by promoting better health care and infrastructural facilities through proper immunisation and funding to the countries. The betterment of women in the society has also been a goal of IMF and World Bank that further can be fostered through more educational facilities for women and thus contribute in social and economic progress of the developing countries.
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