What is World Bank ? Discuss its various objectives and role of its affiliated agencies.

The First World War 1914 resulted in massive destruction of life and property all over the world. Due to scarcity of resources countries were not in a position to take up any reconstruction works. International Trade too got affected because of the disruption of world's currency system. There was no system of generally accepted exchange rate. It was at this point, 44 countries took initiate to hold discussions to solve this problem under the leadership of J. M. Keynes at Bretten Woods, New Hampshire. The meeting was concluded with the setting up of three international institutions, namely, the International Monetary Funds (IMF), International Bank for Reconstruction and Development (IBRD) and the International Trade Organisation (ITO).

World Bank : The International Bank for Reconstruction and Development (IBRD), commonly known as World Bank had been established with the important responsibility of reconstructing the war-effected economies of Europe and assist in the development of the under developed nations of the world. By late 1950’s World Bank was busy in accomplishing the restoring war torn nations in Europe.

After successfully accomplishing this objective, the World Bank turned its attention to the development of underdeveloped nations.

Functions of World Bank :

1. To help in acceleration the rate of economic growth of underdeveloped and developing countries.

2. To help in widening the scope of international trade.

3. It has decided to work for the development of the industrial and agricultural sector in under developed and developing nations.

4. Assistance is being given by world bank to different countries for raising cash crops so that their income rise and they may export the same for earning foreign exchange.

5. The bank is also providing resources for the betterment of education, sanitation, health care and small scale enterprises.

6. It has also extended its help the solve the problem of rural poverty through raising productivity, providing technical support and initiating research and cooperative ventures.

World Bank and its affiliates :

1. International Development Association IDA : It was formed in the year 1960. Its main objective has been to provide loans on concessional terms and conditions to those countries whose per capita incomes are below a critical level. The other objectives of IDA are :

1. The borrowing nation need not to pay any interest on the borrowed amount from IDA. Thus, it provides interest free long term loan to the poor nations.

2. To provide assistance for poverty alleviation in the poorest countries.

3. To extend macro economic management services such as those relating to health, education, nutrition, human resource development and population control.

II. International Finance Cooperation (IFC) : It was set up in July 1956 to provide finance to the private sector of developing countries.

III. The Multinational Investment Gurantee Agency (MIGA) : It was established in April 1988 to supplement the functions of World Bank and IFC.

Objectives of MIGA :

1. To encourage flow of direct foreign investment into the less developed member countries.

2. To provide insurance cover to investors against political risks.

3. To provide guranteee against noncommercial risks.

4. To insure new instruments, expansion of existing investments, privatisation and financial restructuring.

5. To provide promotional and advisory services.

6. To establish credibility.