<a target="" rel="" title="Link: null">INTRODUCTION </a>

Prior to World War 2,
the world had been colonized by European countries. Europe at time was
controlling almost 85% of the worlds land surface. After World War 2, their
economies and infrastructure were decimated and so they withdrew from nearly
all of their colonies and granted them independence in what was called 'decolonization'.
The only problem was that these former colonies did not have any of the means
to support their own development because during their years under colonial rule,
they were exploited for their natural resources and had not developed their own
industries. This means that these countries just kept getting poorer and
poorer. They reached to such worse conditions that there were countries where
people were not even earning a single dollar a day. To support and reconstruct
those countries, World Bank was established in 1944 with its parent company INTERNATIONAL
BANK FOR RECONSTRUCTION AND DEVELOPMENT (IBRD) and its sister company INTERNATIONAL
MONETARY FUND (IMF).
Basically its initially dual role was reconstruction and development. It’s
primarily function was to reconstruct Europe after World War ll. The bank
raised funds through financial markets and donations on the regular basis from
the world’s wealthiest countries. With these funds, the bank provided interest
bearing and interest-free loans to the countries for their reconstruction and
development issues, as these developing countries could not afford loan from
international market. 

<h1><a target="" rel="">CHANGING ROLE OF WORLD BANK</a></h1>

&nbsp;

In 1947, when McCloy
took charge at the World Bank as president, he shifted the strategy from
reconstruction to economic development. First loan of $250 million was given to
France for the postwar reconstruction. Then $40 million to Denmark, $195 million
to Netherland and $12million to Luxembourg was given to respective countries
for reconstruction. These loans were given to these countries under the Marshall
Plan or European Recovery Program (ERP) named after Secretary of State
George C. Marshall who announced it on 5th of June 1947 at Harvard University. The
plan was unique, offering U.S assistance for recovery efforts designed and
implemented by the still war-ravaged nations of Europe. The main arguments were
that the plan was 

1)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Humanitarian in seeking to restructure
postwar economic sufferings.

2)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Anti-communist in that it sought to
rebuild the economies.

3)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Designed to help U.S economy as the
borrowing nations had to spend those dollars in U.S for the purchase of goods
and services.

This was an easier way for
the bank to finance and help. But at that time public investment loans were
totally shunned like education, health and other social sectors. Other reason
for that was that they espouse the idea of increasing the financial stability
to be the important factor of development. That theory or that idea remained
for 2 decades. Another reason was related to the bank’s culture as a “financial
institution” because by the early 1950s the bank’s operations and development
had been set into a banker’s mold.&nbsp; &nbsp;

Marshall Plan lasted
from 1948 to 1952. In these four years, European countries developed up to 30%
since the World War ll. Marshall Plan assisted seventeen countries, including
Great Britain, France, Italy and Western Germany. 

<h1><a target="" rel="">CURRIE MISSION</a></h1>

&nbsp;

After this Marshall
Plan, the World Bank shifted its focus on the development of Non-European
countries. There were many reasons for this shift. Many events occurred during
1950s. One of core reasons was Currie Mission. Emilio Toro, who was
one of the first Bank’s Executive Directors and Albert Hirschman, went Colombia
on a survey and they knew the conditions over there. So these people shifted the
bank’s focus towards development. Colombia was also a member of World Bank and
it was a very backward country. 

<h1><a target="" rel="">DEVELOPMENT TO INDUSTRILIZATION</a></h1>

<h1>&nbsp;</h1>

In 1950s and 1960s, the
focus of the bank was shifted to industrialization and urbanization. Almost 87%
of loan to developing countries was made for power and transportation. The
remaining commitment was made for other economic stability like telecommunication;
industry etc. while 4% was invested in irrigation and agriculture. $13.5
million on April, 1949 was given to Chile’s Corporacion de Fomento de la
Produccion for 4 electric power projects and incidental irrigation. Then the
second development loan of $2.5 million on the same day was loaned for
machinery for Chilean agriculture. From January 1947 through April 1961, the
bank provided $5.1 billion to 56 countries for 280 different loans for
development. While during these development lending, World Bank shunned public
investments in sanitation, health and education. Although after the Survey
Mission by E. Harrison Clerk in 1952, he strongly recommended to invest in
health, sanitation and education. Despite these recommendations none of the 11
loans Nicaragua received from World Bank from 1951 to 1960 covered sanitation,
public health and education. In 1961, Robert Cavanaugh stated that “if we got into the social field... then the
bond market would definitely feel that we were not actually prudently from a
financial standpoint… if you start financing schools and hospital and water
works, and so forth, these things don’t normally and directly increase the
ability of a country to repay a borrowing.” For strong reputation in the
financial market, the bank was quite influenced by such statements. Even some
of the bank staff considered health and education to be an important factor for
development but the academic and financial influence forced the bank to put
aside such welfare for the first 25 years. 

<h1><a target="" rel="">TRICKLE DOWN APPRAOCH</a></h1>

&nbsp;

This post-colonial push
to development did result in higher rates of growth. GNP, GDP and PER CAPITA
INCOME increased magnificently. But most of this increased were concentrated in
government and industrial sector only. This push to industrialization and
development in government sector increased migrations of people from rural
areas to cities which led to increased poverty in rural areas. Some
policymakers thought that this gap would be covered by the increased GDP and
GNP. This was called the “trickle down” approach. But that
just did not happen. Their “trickle down” approach failed that considered that
this economic growth would cover the poverty.

<h1><a target="" rel="">ROLE OF MCNAMARA</a></h1>

&nbsp;

&nbsp;In 1968, Robert S. McNamara became President
of the World Bank. When he joined World Bank, the views about economic growth
were changed as in 1950s studies found that the orthodox views about
development showed that physical capital played a smaller-than-expected role in
economic growth. During this, the investment in human capital and human
development gained acceptance. &nbsp;McNamara
worked in U.S Air Force and Ford Motors as a financial analyst. He had long
history. He was main person emphasized on improving the ability to counter
communist. He played a vital role in defusing Cuba Missile. He also opposed an anti-ballistic
missile (ABM). So these show that he always had a positive
approach towards political and economical issues. In his long tenure, he
transformed the bank by moving from poverty reduction to centre stage. He
redefined the bank as developing agency rather than just financial institution.
In his time, he planned lots of programs to eliminate poverty from the society.
Considering poverty as a core issue, McNamara emphasized on population control
and many other U.S agencies and Ford Foundation was working on this issue at
that time. So in 1970, McNamara established a Population Project Department.
The establishment of this department was not a big achievement as at the end of
the fiscal year 1973, the total lending for such population control project was
just $22 million which was even less than 10% of the $320 million for electric
power and transportation. It was even lower than the fraction given for
agriculture $938 million. 

<h2><a target="" rel="">Population Control Program</a></h2>

Although the bank
financed lots of programs regarding poverty reduction and population control
but they just failed. Again failure of such population control program was just
because of the lack of interest of bank investors and shareholders and the
results of the bank were based on the number of loans approved and not on the
outcomes. Then in 1971, biochemist James Lee became the scientific advisor of
World Bank. 

<h2><a target="" rel="">FROM ECONOMIC GROWTH TO NUTRITION</a></h2>

After that McNamara
shifted his attention towards nutrition. This happened after the INTERNATION
CONFERENCE ON NUTRITION, NATIONAL DEVELOPMENT AND PLANNING conference
in 1971 and INTERNATIONAL PLANNING PROGRAM in 1972. By 1972, the World Bank
report Possible Bank Actions on Malnutrition Problems let the establishment of a bank
nutrition unit. Moreover, events like Nutrition Policy Paper and Alan
Berg’s book The Nutrition Factor in 1973 supported lending in this sector. 

After that Health
Policy Paper was requested from the bank staff by McNamara and by that Onchocerciasis
Control Program (OCP) was created to eliminate river blindness. In the
board of governors meeting in 1976, McNamara talked about unmet basic human
needs in the developing countries. Further he called for research within the
bank before endorsing a full-scale. 

While at the same time,
In 1970s, oil shocks were proved to be the most serious threat to the fight
against poverty. In this case, project lending was totally failed. Poverty rate
was increased and the economic conditions of many countries collapsed. McNamara
assessed the conditions and worked on the solutions. He estimated that the poor
countries required two to four billions more in order to reestablish
themselves. In response to this, McNamara urged the developing countries to
adjust their economic policies. 

For that, McNamara
started Structural Adjustment Program. Structural adjustment lending
entailed providing financial support to the governments that agree to
macroeconomic forms. Reforms that were intended to transform their country’s
basic economic structures in a fundamental way. Examples of structural
adjustment measures included increases in energy prices, action to raise state
revenues and tariff reform. For that, he also urged the industrial countries
and the oil producing countries to provide this support. OPEC agreed to
increase their commitments by increasing $2 billion by 1974 and by 1975 OPEC
members were contributing 3 per cent of their GNP. &nbsp;After all these efforts, the structural
adjustment program failed to stabilize the developing countries economy.

<h1><a target="" rel="">DEBT CRISIS</a></h1>

&nbsp;

As time passes, the
world faces a new crisis in the late 1970s and that was the debt crisis. This
debt crisis was a result of the heavy supply of loans for industrialization
made by U.S in 1960s to the developing countries. As the interest rate rose,
commercial banks and world bank lent out money very quickly without any study
that whether those countries would be able to repay it or not. Many of these loans
were used by dictators and oppressive regimes for political reasons rather than
for development. And these lending did not profit the poor. Gradually as the
third world countries felt that they were not getting the prices of their
exports as many countries had started producing such products and by that
prices fell down. At the same time, oil prices also rose up. And these
developing countries could not earn enough export money to repay their loans.
For that, they lent more money. Mexico was one of the examples. They couldn’t
repay their loans on the scheduled date. Same case happened with other
countries as well Sub-Sahara Africa and Asia. And these countries asked help
from IMF and World Bank in 1982.&nbsp; These
loans made the conditions worse. So the government imposed structural
adjustment program which affected the poor. This is called the “snowball
effect”. 

<h2><a target="" rel="">SNOWBALL EFFECT</a></h2>

&nbsp;

The “snowball
effect” is the automatic increase of debt caused by the combine effect
of high interest rates and new loans needed to repay the previous loans. From
this on, the IMF, supported by the World Bank had imposed structural adjustment
policies. These policies were imposed on the developing debt countries in order
to reduce the burden of debt. And for that those debt countries needed to
change their structural policies. Indebted countries that refuse to implement
structural adjustment would be under the threat of refusal of more loans by IMF
and the Northern Government. So in this time period, World Bank concentrated on
the reestablishment of the macroeconomic mechanism.

<h1><a target="" rel="">A.W CLAUSEN</a></h1>

&nbsp;

Major changed happened
in the policies of the World Bank was due to the change in President, A.W Clausen,
and the replacement of Chief Economist Hollis B. Chenery by Anne Krueger in
1982. In the late 1980s, the structural program policies of the World Bank were
responsible for the health reduction, nutritional and educational levels of tens
of millions of children in Asia, Latin America and Africa.

<h1><a target="" rel="">LEWIS T. PRESTON</a></h1>

&nbsp;

<h3><a target="" rel="">Growth and human Development</a></h3>

In 1991, Lewis T.
Preston became the president of the World Bank. In his view, the bank should
work on the short-term problems rather than on the long-term issues. The bank
was not in a condition to finance as well as the countries were not in a
condition to take more loans. So the trend of lending changed in the form of
aids. The World Development Report (1990) responded to the adjustment with the
human face through focusing on two major factors, the intensive growth and the
human development. In their view, the increasing human capital investment leads
to the increasing in economic productivity. But their main goal of achieving
poverty reduction was not changed. They focused on the new poverty agenda to
promote pro-poor growth through three ways.

1)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Labor-intensive strategies to generate
income-earning opportunities for the poor by using their asset, their labor.

2)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Social investment in basic health and education
to improve the productivity of labor.

3)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Provision of social nets, to protect
vulnerable groups and the very poor.

In 1990s, poverty rate had grown due to the failure
of Washington Consensus. For that, World Bank concentrated on those two factors
described above. Lending of loans was converted into lending of aids from
industrial countries as these developing countries were already crashed by the
debt crisis. Human capital development programs worked in the 1990s while
poverty reduction worked slowly. In 1993, the World Bank had increased its
support of country-specific research and analysis of HNP issues. For that
purpose, the World Bank had also started issuing loans, credits to enable to research
different economies. Then in 1995, Lewis T. Preston resign from the presidency
due to his illness and in 1995, James Wolfensohn became the new president of
the World Bank.

<h2><a target="" rel="">JAMES D. WOLFSENSOHN</a></h2>

&nbsp;

<h3><a target="" rel="">Millennium Development Goals</a></h3>

During James D. Wolfensohn presidency, again main
focus was on the poverty reduction. He also highlighted some major issues in
order to achieve its mission like corruption, debt relief, disabilities, the
environment and the gender. In September 2000, the international community committed
to a specific agenda for reducing poverty. This agenda listed eight Millennium
Development Goals which is not only identified the gains needed but quantified
them and established yardsticks for measuring improvements in people’s lives.
These are as follows:-&nbsp; 

1)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Eradicate
extreme poverty and hunger

2)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Achieve
universal primary education

3)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Promote
gender equality and empower women

4)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Reduce
child mortality

5)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Improve
maternal health

6)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Combat
HIV/AIDS, malaria and other diseases

7)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Ensure
environmental sustainability

8)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Develop
a global partnership for development

&nbsp;

This
MDG agenda continued and is implemented in order to resolve problems and the
main focus is still to reduce poverty. During 2000 to , the world has faced
unlimited crisis like oil shock, financial crisis, food crisis, inflation at
peak, etc. for all these issues, the international committee is using MGS as a
base line to solve such problems.

&nbsp;

<h1><a target="" rel="">ROBERT B. ZOELLICK</a></h1>

Now
the new president of the World Bank is Robert B. Zoellick. The current focus of
the World Bank is on the achievement of the Millennium Development Goal (MDG).
There is a major change in the MDGs and that it is lending primarily to
“middle-income countries” at small mark-up while IDA provides little or no
interest rate loans to the low developing countries. These MDGs also includes
development in law and justice, rural development, trade, transport, industry,
gender, environment etc. the bank also works to help governments lead and
implement their own development strategies.

&nbsp;

<h1><a target="" rel="">CONCLUSION</a></h1>

&nbsp;

The
world bank of today’s world is quite different from the word bank of Bretton
Woods. It moved from reestablishment to development, then from development to
poverty reduction, after that main focused shifted to health and nutrition.
Then it played important role in food crisis, oil crisis, financial crisis,
etc, and World Bank is almost working every aspect of the daily life to improve
the condition of the developing countries and to cope up with the
industrialized world. As the World Bank is supporting different nations to
develop, in the next era, it will be the most essential part of the world for
development.

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