Overview of The World Bank Group

Working for a world free of poverty

World Bank InstituteProgram on Development and Governance

for MDI-George Mason UniversityApril 28, 2008

5/7/2008 2

OUTLINE

Development ContextBank OriginsOrganizational StructureEvolving ParadigmDevelopment Projects Online Resources

5/7/2008 3

Development Context

5/7/2008 4

Millennium Development Goals

Goal 1: Wipe out extreme poverty and hunger

Goal 2: Get all children a primary school education

Goal 3: Help women get equal rights and empower them.

Goal 4: Reduce death rate of young children

Goal 5: Improve the health of mothers

Goal 6: Combat HIV/AIDS, malaria, and other diseases

Goal 7: Help countries protect their environments.

Goal 8: Promote a global partnership for development

5/7/2008 5

The Challenge of Sustainable Development

Poorest fifth: 3% of world expendituresRichest fifth: 75% of world expenditures

Developed countries spend:

$1.2+ billion a year on defense (2006) (USA=46% of total)$360 billion a year in agricultural subsidies$103 billion in aid to developing countries (2006) (Source: OECD)$300 billion via remittances

Population growth over the next 25 years50 million in rich countries1.5 billion in poor countriesHalf of the population is under 25

5/7/2008 6

The world is generally on track globally to meet the Poverty Reduction Goal

Goal 1- Eradicate PovertyPopulation living on less than $1 a day

10

15

20

25

30

1990 1995 2000 2005 2010 2015

Actual path

Goal

%

The News: mixed bag

5/7/2008 7

Goal 1- Sub-Saharan AfricaPopulation living on less than $1 a day

20

30

40

50

60

1990 1995 2000 2005 2010 2015

History + Forecast

Goal

%

Sub-Saharan Africa is the only region not on track for achieving the MDGs

But …

Other “DevelopmentDeficits”

Over one billion people lack access to safe drinking water

Forty percent of the world’s population – 2.6 billion people – do not have access to basic sanitation

Over one-third of the developing world’s population – 1.6 billion people – do not have access to energy

Environmental hazards impose a heavy economic burden on developing nations’ economies:

GDP loss: 1.5 to 4 percent80 percent of diseases (malaria, diarrhea, and respiratory infections)Malaria kills one child every 30 seconds

Over 33 million people infected with HIV, the AIDS-causing virus2 million people die of AIDS every year

Growth of Official development assistance (ODA) of $104 billion has stalled; new push needed, even as donors like China and India are growing in size and importance

Source: GMR 2008 Press Release

New, and not-so-new shocks?

Food pricesWheat prices up 180% in 3 years; rice 75%, imperiling 100 million poor people“Seven lost years,” New Deal for Global Food Policy announced

Doubling of agricultural lending to $800 million for next yearExpanding school feeding, food for work programs, assistance to boost planting, and targeting vulnerable groups

Climate changeCore development issuePoorest countries, with least ability to adapt, will be hit hardestIncrease in number and intensity of extreme weather eventsAdaptation and mitigation are key

Avian Flu

Conflict

Other?

Source: GMR 2008 Press Release

World Bank Group Vision

“Contribute to an inclusive and sustainable globalization — to overcome poverty,

enhance growth with care for the environment, and create individual

opportunity and hope.”

Robert B. ZoellickPresident, The World Bank Group

October 2007

5/7/2008 11

Origins and Background

5/7/2008 12

The World Bank

International Bank for Reconstruction and Development established July 1944, BrettonWoods. Mission? To rebuild Europe and Japan after World War II.

5/7/2008 13

Early World Bank Borrowers

France first to borrow $250 million to finance post-war reconstruction in 1947.Many current donor nations such as Austria, Australia, Denmark, Japan, Italy, Korea and Greece were borrowers.

5/7/2008 14

ORGANIZATIONAL STRUCTURE

5/7/2008 15

The World Bank Group

International Bankfor Reconstructionand Development

InternationalDevelopmentAssociation

InternationalFinance

Corporation

MutilateralInvestment

Guarantee Agency

International Centerfor the Settlement ofInvestment Disputes

World Bank Group

1945 198819561960 1966

5/7/2008 16

International Bank for Reconstruction and Development

185 member countriesLends to middle income countriesFunds mainly from borrowing on capital marketsRepayment over 15–20 years/3 to 5-year grace periodSells bonds in international capital markets

www.worldbank.org/ibrd

5/7/2008 17

International Development Association (IDA)

165 member countriesLends to poorest countriesFunded largely from wealthier government contributions, with additional funds from IBRD profits and repayments of earlier IDA creditsCredits carry no interestRepayment over 35–40 years/10-year grace period

www.worldbank.org/ida

5/7/2008 18

178 member countriesPrivate sectorWorks to develop capital markets; lends and takes equity positions; provides advisory services for privatization, project development and structuringLoans carry market interest ratesCatalyst to other investors in the private sectorSells bonds in international capital markets

www.ifc.org

International FinanceCorporation (IFC)

5/7/2008 19

Multilateral Investment Guarantee Agency (MIGA)

172 member countriesPromotes foreign direct investment into emerging economies to support economic growth, reduce poverty, and improve people’s livesOffers political risk insurance (guarantees) to investors and lenders, covering risks including expropriation, breach of contract, currency transfer restriction, and war and civil disturbance Disseminates information on investment opportunities

www.miga.org

5/7/2008 20

International Center for Settlementof Investment Disputes (ICSID)

155 member countries

Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID)

Provide facilities for conciliation and arbitration of international investment disputes.

leading international arbitration institution devoted to investor-State dispute settlement.

www.icsid.org

5/7/2008 21

Voting Powers of Executive Directors for IBRDWorld Bank Shareholders

United States16%

Japan8%

Germany4%

Russian Federation

3%

Saudi Arabia3%

China3%

United Kingdom4%

Rest of the World55% France

4%

5/7/2008 22

How the World Bank Operates

185 Member Countries appoint their GovernorsGovernors delegate specific duties to 24Executive DirectorsPresident of the World Bank reports to the Board of Executive Directors

Office of the President

Executive Directors

Board of Governors

The World Bank Group Organogram

5/7/2008 24

World Bank Staff

Total Bank staff numbers about 10,000. 7,000 at HQ and 3,000 in the field.170 nationalitiesDeveloping country nationals represent 55% of total staff.

5/7/2008 25

Where Does the Bank Work?

5/7/2008 26

Where does the money come from?

IBRD has a AAA bond rating and raises funds on capital markets. (Rate lower than commercial Banks) ($190 billion)

IDA credits to the world’s poorest countries are funded largely from donor contributions, with additional funds from IBRD profits and credit repayments. (No interest rate /45 year repayment)- $1,065 GNI per capita/81 countries

5/7/2008 27

Established in 1960, IDA has 165 members countries of whom 82 recipients which are the world’s poorest countries.

Since inception in 1960, IDA credits and grants have totaled $161 billion.

IDA15 provides $41.5 billion over 3 years (FY2009-2011) including $16.5 billion from internal World Bank Group resources, and previous pledges from donors

Africa’s share of IDA 15 is 51%.

International Development Association (IDA)

IDA Commitments, 2007,by Theme

IDA @ work in 2007

World Bank Lending 2007, by Region

Lending by Thematic Area

5/7/2008 32

World Bank Networks

Human Development (HDN)Poverty Reduction and Economic Management (PREM)Sustainable Development (SDN)Financial and Private Sector Development (FPD)Operations Policy & Country Services (OPCS)

5/7/2008 33

EVOLVING DEVELOPMENT PARADIGM

5/7/2008 34

1950s (Europe Reconstruction) Physical

1960s (Rural) Natural

1970s (Human Development) Human

1980s (Economic Reform) Financial

1990s (Poverty Reduction) Social

2000s (Governance) Institutional

2007 Sustainable and Inclusive Globalization

Evolving Development Paradigm

5/7/2008 35

Six Strategic Themes1. Help Overcome Poverty and

Spur Sustainable GrowthEspecially in AfricaIDA: core financing instrument for the 81 poorest countries

2. Post-Conflict StatesDevelop a global understandingPromote improved country-level coordination

3. Develop and diversify menu of development solutions for Middle-income Countries

5/7/2008 36

4. Active role in regional and global public goods

Communicable diseases/public health, global environmental commons, financial architecture, tradeClose cooperation with other agencies: FAO, IFAD, WHO, UNEP, UNDP, Environmental Conventions (Biodiversity, Climate, Desertification, etc), WTO

5. Support those advancing development and opportunities in the Arab World

6. Foster a learning and knowledge agenda in the Bank

Capture and disseminate knowledgeBank as a “world class” knowledge institution

Six Strategic Themes (continued)

5/7/2008 37

Information Disclosure (Public Information Centers)

Debt Relief HIPC (26 countries / US$41 billion)MDRI (19 countries / US$40 billion)

Safeguards (Environmental, Social, Fiduciary)

Poverty Reduction Strategies (PRSP) and Country Government and Anticorruption Action Plans (CGACs)

WB / IMF joint commitment60 countries

Community Driven Development (10% portfolio)

Compliance Mechanisms (Inspection Panel)

Empowerment Agenda (social accountability, civic engagement)

New Approaches and Instruments

5/7/2008 38

Bank’s Main Products

Investment Loans/CreditsDevelopment Policy Lending Loans/CreditsGuarantees Other (Non-lending) Products

Sector StrategiesAnalytical and Advisory ServicesResearch

Top Ten Trust Fund Donors($ million)

Does the World Bank have competitors?

No … but the development assistance field is growingRegional Development Banks

AfDB, ADB, EBRD, IADB, Islamic Development Bank

Sources of development financing are broadening

China, India, Venezuela?Sovereign wealth funds, FDI?

Need to strengthen partnerships for maximizing development impact:

IMF, GEF, UN Family, business sector, and civil society organizations (CSOs)

5/7/2008 41

DEVELOPMENT PROJECTS

5/7/2008 42

World Bank Group in 2007

In fiscal 2007, $34.3 billion in loans, grants, equity investments and guarantees to over 100 developing countries640 operationsFocus: Poverty Reduction and GrowthAfrica is a top priority of the World Bank

5/7/2008 43

Largest IBRD/IDA Borrowers FY07Commitments

Borrower $ Millions % of TotalIndia 3,751 15.2Argentina 1,749 7.1China 1,641 6.6Indonesia 1,159 4.7Turkey 1,158 4.7Colombia 1,102 4.5Pakistan 985 4.0Nigeria 750 3.0Vietnam 712 2.9Africa Regional Projects

707 2.9

Total 13,714 55.5

5/7/2008 44

The Project Cycle

Bank/Bank/BorrowerBorrower

BankBank

BankBank

BorrowerBorrower

Bank Bank BoardBoard

BankBank

Bank/BorrowerBank/Borrower

BorrowerBorrower

Suggested Readings “The Bottom Billion: Why the poorest countries are failing and what can be done about it” by Paul Collier“The Trouble with Africa: Why foreign aid isn’t working” by Robert Calderisi“The End of Poverty: Economic possibilities for our time” by Jeffrey Sachs“The White Man’s Burden: Why the West's efforts to aid the rest have done so much Ill and so little good” by William Easterly “The Road to Huddersfield: A journey to five continents” by James Morris“The World Bank: From reconstruction to development to equity” by Katherine Marshall

5/7/2008 46

Online Resources

The World Bank Groupwww.worldbank.org

Youth portal:www.youthink.worldbank.org

5/7/2008 47

The World Bank Group

www.worldbank.org

Closing thoughts

“We no longer get change by whispering in the finance minister’s

ear. Rather, we get change by contributing to the public debate and

letting that debate influence the decision-maker.”

- Shantayanan Devarajan- Chief Economist, Africa Region- (formerly in South Asia Region)

Never doubt that a small group of

thoughtful, committed citizens can change

the world; indeed, it is the only thing that

ever has.

- Margaret Mead