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World Bank

The World Bank is an international financial institution that provides leveraged loans to
developing countries for capital programs. The World Bank has a stated goal of reducing

The World Bank differs from the World Bank Group, in that the World Bank comprises only two
institutions: International Bank for Reconstruction and Development (IBRD) and International
Development Association (IDA). Whereas the latter incorporates these two in addition to three
more: International Finance Corporation (IFC), Multilateral Investment Guarantee Agency
(MIGA), and International Centre for Settlement of Investment Disputes (ICSID).

Millennium Development Goals

The World Bank's current focus is on the achievement of the Millennium Development Goals
(MDGs), lending primarily to "middle-income countries" at interest rates which reflect a small
mark-up over its own (AAA-rated) borrowings from capital markets; while the IDA provides
low or no interest loans and grants to low income countries with little or no access to
international credit markets. The IBRD is a market-based nonprofit organization, using its high
credit rating to make up for the relatively low interest rate on its loans, while the IDA is funded
primarily by periodic "replenishments" (grants) voted to the institution by its more affluent
member countries. The Bank’s mission is to aid developing countries and their inhabitants to
achieve development and the reduction of poverty, including achievement of the MDGs, by
helping countries develop an environment for investment, jobs and sustainable growth, thus
promoting economic growth through investment and enabling the poor to share the fruits of
economic growth.

The World Bank sees the five key factors necessary for economic growth and the creation of an
enabling business environment as:

1. Build capacity: Strengthening governments and educating government officials.

2. Infrastructure creation: implementation of legal and judicial systems for the encouragement of
business, the protection of individual and property rights and the honoring of contracts.

3. Development of Financial Systems: the establishment of strong systems capable of supporting

endeavors from micro credit to the financing of larger corporate ventures.

4. Combating corruption: Support for countries' efforts at eradicating corruption.

5. Research, Consultancy and Training: the World Bank provides platform for research on
development issues, consultancy and conduct training programs (web based, on line, tele-/ video
conferencing and class room based) open for those who are interested from academia, students,
government and non-governmental organization (NGO) officers etc.

The Bank obtains funding for its operations primarily through the IBRD’s sale of AAA-rated
bonds in the world’s financial markets. The IBRD’s income is generated from its lending
activities, with its borrowings leveraging its own paid-in capital, plus the investment of its
"float". The IDA obtains the majority of its funds from forty donor countries who replenish the
bank’s funds every three years, and from loan repayments, which then become available for re-

The World Bank is active in the following areas:

- Agriculture and Rural Development

- Conflict and Development

- Development Operations and Activities

- Economic Policy

- Education

- Energy

- Environment

- Financial Sector

- Gender

- Governance

- Health, Nutrition and Population

- Industry

- Information and Communication Technologies

- Information, Computing and Telecommunications

- International Economics and Trade

- Labor and Social Protections

- Law and Justice

- Macroeconomic and Economic Growth

- Mining

- Poverty Reduction

- Poverty

- Private Sector

- Public Sector Governance

- Rural Development

- Social Development

- Social Protection

- Trade

- Transport

- Urban Development

- Water Resources

- Water Supply and Sanitation

Many achievements have brought the MDG targets for 2015 within reach in some cases. For the
goals to be realized, six criteria must be met: stronger and more inclusive growth in Africa and
fragile states, more effort in health and education, integration of the development and
environment agendas, more and better aid, movement on trade negotiations, and stronger and
more focused support from multilateral institutions like the World Bank.

1. Eradicate Extreme Poverty and Hunger From 1990 through 2004, the proportion of people
living in extreme poverty fell from almost a third to less than a fifth. Although results vary
widely within regions and countries, the trend indicates that the world as a whole can meet the
goal of halving the percentage of people living in poverty. Africa’s poverty, however, is
expected to rise, and most of the 36 countries where 90% of the world’s undernourished children
live are in Africa. Less than a quarter of countries are on track for achieving the goal of halving
under-nutrition. 2. Achieve Universal Primary Education The number of children in school in
developing countries increased from 80% in 1991 to 88 %in 2005. Still, about 72 million
children of primary school age, 57% of them girls, were not being educated as of 2005.
3. Promote Gender Equality and Empower Women The tide is turning slowly for women in the
labor market, yet far more women than men- worldwide more than 60% - are contributing but
unpaid family workers. The World Bank Group Gender Action Plan was created to advance
women’s economic empowerment and promote shared growth. 4. Reduce Child Mortality There
is some improvement in survival rates globally; accelerated improvements are needed most
urgently in South Asia and Sub-Saharan Africa. An estimated 10 million-plus children under five
died in 2005; most of their deaths were from preventable causes. 5. Improve Maternal Health
Almost all of the half million women who die during pregnancy or childbirth every year live in
Sub-Saharan Africa and Asia. There are numerous causes of maternal death that require a variety
of health care interventions to be made widely accessible. 6. Combat HIV/AIDS, Malaria, and
Other Diseases Annual numbers of new HIV infections and AIDS deaths have fallen, but the
number of people living with HIV continues to grow. In the eight worst-hit southern African
countries, prevalence is above 15 percent. Treatment has increased globally, but still meets only
30 percent of needs (with wide variations across countries). AIDS remains the leading cause of
death in Sub-Saharan Africa (1.6 million deaths in 2007). There are 300 to 500 million cases of
malaria each year, leading to more than 1 million deaths. Nearly all the cases and more than 95
percent of the deaths occur in Sub-Saharan Africa. 7. Ensure Environmental Sustainability
Deforestation remains a critical problem, particularly in regions of biological diversity, which
continues to decline. Greenhouse gas emissions are increasing faster than energy technology
advancement. 8. Develop a Global Partnership for Development Donor countries have renewed
their commitment. Donors have to ful. Ll their pledges to match the current rate of core program
development. Emphasis is being placed on the Bank Group’s collaboration with multilateral and
local partners to quicken progress toward the MDGs’ realization

The President of the Bank, currently Robert B. Zoellick, is responsible for chairing the meetings
of the Boards of Directors and for overall management of the Bank. Traditionally, the Bank
President has always been a US citizen nominated by the United States, the largest shareholder in
the bank. The nominee is subject to confirmation by the Board of Governors, to serve for a five-
year, renewable term.

The Executive Directors, representing the Bank's member countries, make up the Board of
Directors, usually meeting twice a week to oversee activities such as the approval of loans and
guarantees, new policies, the administrative budget, country assistance strategies and borrowing
and financing decisions.

The Vice Presidents of the Bank are its principal managers, in charge of regions, sectors,
networks and functions. There are 24 Vice-Presidents, three Senior Vice Presidents and two
Executive Vice Presidents.

The International Bank for Reconstruction and Development (IBRD) has 186 member countries,
while the International Development Association (IDA) has 168 members. Each member state of
IBRD should be also a member of the International Monetary Fund (IMF) and only members of
IBRD are allowed to join other institutions within the Bank (such as IDA)

Poverty reduction strategies

For the poorest developing countries in the world the bank’s assistance plans are based on
poverty reduction strategies; by combining a cross-section of local groups with an extensive
analysis of the country’s financial and economical situation the World Bank develops a strategy
pertaining uniquely to the country in question. The government then identifies the country’s
priorities and targets for the reduction of poverty, and the World Bank aligns its aid efforts

The bank supports certain kinds of poor people's organisations such as the Self-Employed
Women's Union and Shack/Slum Dwellers International.

Forty-five countries pledged US$25.1 billion in "aid for the world's poorest countries", aid that
goes to the World Bank International Development Association (IDA) which distributes the gifts
to eighty poorer countries. While wealthier nations sometimes fund their own aid projects,
including those for diseases, and although IDA is the recipient of criticism, Robert B. Zoellick,
the president of the World Bank, said when the gifts were announced on December 15, 2007,
that IDA money "is the core funding that the poorest developing countries rely on".

Clean Technology Fund management

The World Bank has been assigned temporary management responsibility of the Clean
Technology Fund (CTF), focused on making renewable energy cost-competitive with coal-fired
power as quickly as possible, but this may not continue after UN's Copenhagen climate change
conference in December, 2009, because of the Bank's continued investment in coal-fired power

Country assistance strategies

As a guideline to the World Bank's operations in any particular country, a Country Assistance
Strategy is produced, in cooperation with the local government and any interested stakeholders
and may rely on analytical work performed by the Bank or other parties.
WTO, World Trade Organisation
The Bretton Woods Conference had introduced the idea for an organization to regulate trade as
part of a larger plan for economic recovery after World War II. As governments negotiated the
ITO, 15 negotiating states began parallel negotiations for the GATT as a way to attain early tariff
reductions. Once the ITO failed in 1950, only the GATT agreement was left. The GATT's main
objective was the reduction of barriers to international trade. This was achieved through the
reduction of tariff barriers, quantitative restrictions and subsidies on trade through a series of
agreements. The GATT was a treaty, not an organization although a small secretariat occupied
what is today the Centre William Rappard in Geneva, Switzerland. The functions of the GATT
were taken over by the World Trade Organization which was established during the final round
of negotiations in early 1990s. Out of this round the WTO was born

The World Trade Organization (WTO) was founded in 1995 by the members of the General Agreement on
Tariffs and Trade (GATT). The WTO is the world’s only international organization that supervises 95% of
the world’s global trade. It assists trade related issues of its member nations that produce, export and
import goods and services in a smooth manner. Comprising 153 member nations, the agreements pertaining
to the WTO have been signed and confirmed by respective member nations.

The predecessor of WTO is General Agreement on Tariffs and Trade (GATT). WTO is an International body
dealing with the rules of trade among states and separate customs territories. The agreements in WTO
provide the legal ground-rules for international trade and commerce. They are mainly contracts, binding
governments to conduct their trade and trade policies according to principles and rules. Although negotiated
and signed by governments, the goal is to help producers of goods and services, exporters and importers
over the Globe and bringing them under one roof.

The International body has over 148 members as on October 13,2004 accounting for 90% of the world trade
and around 30 others are negotiating membership and are WTO observers.

Members of the WTO include:

 All of North America

 All of South America

 Most of Europe, Australia Southeast Asia, sub-Saharan Africa and the south Pacific regions

Why was WTO established?

The WTO was founded with the purpose of liberalizing international trade. Its aim was to help member
nations reach cordial solutions to their trade-related problems.

The main principles of WTO are:

• To promote fair competition

• To encourage economic and development reforms
• To increase predictability through transparency
• To lower trade barriers for freer trade
• To ensure fair treatment to locals and foreigners

Objectives of the WTO

With manifold objectives like helping trade flow smoothly, freely, fairly and predictably it has become
capable of organizing trade and commerce over the Globe through the mantra of liberalization, privatization
and globalization. It is stepping forward with objectives like:

1) Rejecting all forms of protectionism.

2) Removing trade barriers and eliminating discriminatory treatment in international trade through
successive multilateral trade negotiations.

3) Providing a fair, predictable and open rule-based trading system through overseeing the implementation
of multilateral trade rules and enforcing legally binding obligations.

4) Providing a mechanism for settling trade disputes.

5) Integrates developing and least developed economies into the world trading system.

How the WTO Works

All important decisions are made by the Ministerial Committee which meets every two years. Trade disputes
are resolved by the WTO through negotiations. In case any nation puts up trade barriers in the guise of
customs duty against another country or for a specific good, the WTO can issue trade related sanctions
against the violating country.

Two basic functions of the WTO are:

• To confirm whether the agreements that have been covered are implemented, administrated and
executed effectively.
• To settle negotiations and disputes by providing a forum check.

The activities of WTO are managed by a Ministerial Conference that is held once in two years.

Structure of the WTO

WTO is run by its member nations. Decisions are taken by consensus among entire member nations.

The WTO's top-level decision-making body is the ministerial conference, which meets at least once in every
two years.

Below this is the general council (normally represented by ambassadors and heads of delegation in Geneva,
but sometimes officials sent from members' capitals), which meets several times a year in Geneva. The
General Council also meets as the Trade Policy Review Body and the Dispute Settlement Body.

At the next level there are three Councils each handling a different broad area of trade - the Council for
Trade in Goods (Goods Council), the Council for Trade in Services (Services Council), and the Council for
Trade-Related Aspects of Intellectual Property Rights (TRIPS Council).

There are also specialized committees, working groups and working parties dealing with the individual
agreements and other areas such as the environment, development, membership applications and regional
trade agreements. They regularly report to the General Council, Goods Council and Services Council as

The WTO secretariat in Geneva has around 600 staffs and is headed by a director general. The WTO
Secretariat's main duties are to provide administrative support for the running of the system.

disputes and monitors country-specific trade policies while training and cooperating with developing nations
and other international organizations.

The WTO has a multi-tire organisational structure as shown hereunder:

The WTO consists of the following components

Ministerial Conference

A Ministerial Conference is the highest authority in the World Trade Organisation (WTO). Ministerial
Conference has to be held once in two years. Six Ministerial Conferences were held since its commencement
in 1995

• Singapore 1996
• Geneva 1998
• Seattle 1999
• Doha 2001
• Cancun 2003
• Hong Kong 2005
General Council

The General Council is the highest decision-making body of the WTO with its headquarters in Geneva. It has
representatives (usually ambassadors or equivalent) from all member governments. The General Council
acts on behalf of the Ministerial Conference on all WTO affairs including settling of disputes between
members and analyses trade policies.

Dispute Settlement Body

The Dispute Settlement Body consists of various panels to deal with different issues. The dispute settlement
procedure of the WTO is based on well-defined rules and regulations. There are specific time frames for
completing each case, which are handled by different panels.

The Trade Policy Review Body

The WTO General Council also has the Trade Policy Review Body to undertake trade policy reviews of

Councils and Committees

Apart from the above organs, there are various councils and committees to deal with various issues.

There are three councils under General Council

• Council for Trade in Goods

• Council for Trade-Related Aspects of Intellectual Property Rights
• Council for Trade in Services


Committees (General)

• Trade and Environment

• Trade and Development (Subcommittee on Least-Developed Countries)
• Regional Trade Agreements
• Balance of Payment Restrictions
• Budget, Finance, and Administration

Committes on Trade in Goods

• Market Access
• Agriculture
• Sanitary and Phytosanitary Measures
• Technical Barriers to Trade
• Subsidies and Countervailing Measures
• Anti-dumping Practices
• Customs Valuation
• Rules of Origin
• Import Licensing
• Trade-Related Investment Measures
• Safeguards
There are sub-committies for TRIPS and Trade in Services

Achievements of WTO
The WTO has several achievements as listed below:

• Enhanced the value and quantity of trade.

• Eradicated trade and non trade barriers.
• Broadened the trade governance scope to trade in investment, services and intellectual property.
• Emerged as a greater institution than GATT.
• Expanded the WTO agenda by including developmental policies.
• Eased settlement of disputes by enforcing improved rules.
• Improved monitoring by introducing the Trade Policy Review and the World Trade Report
• Increased transparency by removing green room negotiations
• Encouraged sustainable trade development

Challenges Ahead for WTO

The WTO faces considerable challenges as listed below:

• Decision-making within the organization.

• Streamline reforms related to its dispute settlement system.
• Implement development-oriented policies in an effective manner.
• Facilitate global trade liberalization in agriculture and textiles.
• Encourage Non Governmental Organizations or NGOs to become an important part of world trade
• Devise ways to increase staff and resources to ensure effective regulation.

In the years 2008 and 2009, the WTO witnessed increased economic uncertainty. Its main function is to
ensure the smooth and free flow of global trade. The WTO continues to administer agreements, handle trade



The Gains The Losses

Talks on foreign investment, competition, Talks on reduction or elimination of

policy, transparency in government barriers to environmental goods and
procurement and trade facilitation services.
pushed back by two years.
Flexibility in access to cheap drugs No commitment by rich to increase
without patents worry. textile imports.
Attempts to link labour standards to trade European Union fends off pressure to
defeated. lift farm subsidy, closing door on
possible exports from India.
Professionals in services will get more
opportunities to work in other countries.
Principles of geographical indications to
apply to basmati and alphonso mangoes.

IMF (International Monetary Fund)

IMF or International Monetary Fund is an international organization created in 1945 to supervise global economic
affairs, to give financial advice and aid to its member countries. Read on for more information about the history of

The early years of the 20th century witnessed the 'Great Depression' of the 1930s and the two World Wars.
This resulted in the collapse of the total global economic system, thereby affecting international trade. As
a result, all the countries were reeling with unemployment and plummeting living standards. Anglo-
American discussions during the period of World War II reflected the demand for an organization to take
care of the international monetary cooperation and promote the growth of international trade.

Bretton Woods Conference

A meeting of 730 delegates, from the 44 allied nations, was held at the Mount Washington Hotel, situated
in Bretton Woods, New Hampshire, United States. The meeting lasted for 22 days - July 1 to July 22, 1944,
and the main issue was regulation of the post-war international monetary and financial order. The main
debate was between the U.S. and U.K. delegations, regarding the nature of the impending organization.
The British delegation argued for a fund which could help the member nations economically, during the
times of crisis, whereas the U.S. delegation wanted a bank-like institution, from where the member
countries could borrow money, which would have to be repaid in time. Finally, the U.S. view was

Formation of IMF

During the Bretton Woods Conference, agreements were signed to establish the International Monetary
Fund (IMF), International Bank for Reconstruction and Development (IBRD or World Bank), and the
General Agreement on Tariffs and Trade (GATT).

The International Monetary Fund came into existence on December 27, 1945, when 29 countries signed
the treaty called Articles of Agreement. In 1946, the board of governors convened the first meeting of the
IMF in Savannah, Georgia, U.S., to elect its executive directors and decide the location of the
organization's permanent headquarters and to draft the bylaws. They decided to select Washington D.C. as
the permanent headquarters of the IMF. The financial operations of the IMF started on March 1, 1947.
The statutory goals of the IMF are to oversee exchange rates, giving financial and technical assistance to
the member countries and to address global economic problems.

IMF, which started with 29 countries as its members, now has a membership of 182. Countries seeking
membership of the IMF have to deposit a particular amount as subscription fee to the fund and has to
comply with the stipulated conditions. The other sources of income are loan repayments from debtor
countries, gold reserves and requested resources from its shareholders. This amount is used by the IMF
in providing financial assistance. In 1952, IMF had effected some changes to its drawing policies. The
concept of structural adjustment loans that helped the borrowing government to adjust the economic
structure, was introduced, and was modified in 1956. From 1956 till date, lending operations remain to be
one of the main functions of the IMF and various changes have been incorporated to its drawing policies.

Since its inception, the IMF has provided financial aid to various countries facing economic problems. The
organization still adheres to its objectives and tries to bring about a positive change in the global
economic scenario.

Objectives of IMF

•To promote co-operation among economies of world.

• To strengthen the economies of member countries by making fund's resources
available to them.
• To promote exchange stability and to facilitate the expansion and balanced
growth of International trade.
• To lesson the chances of disequilibrium in the international BOP of member
• To reduce the poverty in member countries and to promote high employment
by facilitating sustainable economic grow

How It Works/Example:
The IMF formally came into existence in December 1945 with 29 member countries after it was
conceived during negotiations of the Bretton Woods Agreement in 1944. It was originally tasked with
stabilizing exchange rates after World War II through regulation of rates among the member
countries. Between 1944 and 1971, most of the world operated under a fixed exchange-rate system,
which required each country to maintain a reserve balance of other currencies in order to weather
temporary supply and demand problems. Thus, the IMF required each member country to deposit
currency into an IMF reserve fund. The IMF then loaned these funds to nations with balance-of-
payment problems.

Today, the IMF promotes its objectives through surveillance and consultation with member countries
rather than regulation. It still provides short-term loans to member countries having balance-of-
payment problems, and countries seeking IMF assistance must meet or exceed certain thresholds
related to inflation rates, budget deficits, money supplies, and political stability.

Mechanics of the IMF

The IMF is run by a board of governors, which makes decisions on major policy issues but delegates
day-to-day decision making to the executive board. All member countries are represented on the
board of governors, which meets once per year. Each member country appoints a governor and an
alternate governor to represent it to the IMF. The governors are usually the ministers of finance or
governors of their central banks.

The IMF's 24-member executive board is chaired by a managing director. The managing director is
selected by the executive board every five years, and three deputy managing directors, each from a
different region of the world, report to the managing director. The executive board meets three times
a week, and the IMF's five largest shareholders (the United States, Japan, France, Germany, and the
United Kingdom) as well as China, Russia, and Saudi Arabia, each have a seat on the board. The other
sixteen directors are elected for two-year terms by groups of countries.

There are several committees within the IMF. The International Monetary and Financial Committee,
which is a committee of the board of governors, meets twice per year to evaluate policy issues
relating to the international monetary system. The IMF Development Committee, which is composed
of members of the boards of governors of both the IMF and the World Bank, advises and reports to
the IMF governors on matters concerning developing countries.

The IMF has a weighted voting system that gives more votes to countries with larger economies.
However, according to the IMF, most decisions are not made based on formal voting, but by

The IMF is funded by the subscriptions countries pay upon joining the IMF or when their subscriptions
are increased. Members pay 25% of their subscriptions in Special Drawing Rights (SDRs) or in major
currencies. The IMF can call on the remaining 75% as needed for lending. The IMF determines a
country's subscription amount based on its relative size in the world economy. The IMF may borrow
money to supplement the funds received from subscriptions. Generally, the IMF may borrow money
from several countries that participate in one of two standing lending agreements with the IMF.