The World Bank of the Unheard - Essay Example

Download file to see previous pages... Based in Washington D.C., it is comprised of developed and developing countries. All have a say, though an unequal one. Though first created to assist the Western European countries after the World War II, WB has become involved in a wide array of development projects. Despite the criticism and relatively powerless voices of the poor countries, WB will continue to service the poorest of this planet. WB architects envisioned a system that would benefit the poor. John Maynard Keynes, Harry Dexter White, and others at Bretton Woods in 1944 designed this institution to fully include the Western world into its functioning. They envisioned that the Western countries would be full members and partners in helping the developing countries. WB was not conceived as a development agency (Birdsall 51). However, WB became a global credit club, where developing countries rely on contributions from the wealthy (Birdsall 51). Later, another club for the rich was created: the International Development Association (IDA), where only rich countries can contribute and become members (Birdsall 51). WB was intended for the “war -ravaged countries of Europe—and the poorer countries of Latin America, and Africa” (Birdsall 51). ...
Still, they wanted to avoid a system in which there would be a one-to-one relationship between financial capacity and influence in WB. As a result, the architects introduced basic votes. They were distributed equally to all WB members. Each member has 250 votes irrespective of shares. Additional shares are won through the amount of shares owned in WB (Birdsall 53). Double majority voting is required to get anything changed in the Articles of Agreement (Birdsall 53). The country taking the largest risk, which was the US at the time of the WB inception, was given the right to “define the key boundaries within which the club would operate” (Birdsall 53). The US also had a duty to ensure all WB members had a say, regardless of their political and economic influence. In the beginning, there were only a few debtors. In the 1947–48 period, WB made loans to only six countries. These were France, the Netherlands, Denmark, Luxembourg, Chile, and India (Birdsall 54). Now, the International Bank for Reconstruction and Development (IBRD) and the IDA alone have around 150 countries as their debtors (Birdsall 54). However, WB benefits the rich. WB capital comes from its wealthy contributors. Largest contributors are the U.S. government, and the United States, Japan, and Germany (Birdsall 51). They are also its guarantors. They back all of the borrowing from WB, regardless of the outcome of the loan (Birdsall 51). WB has had a history of very low default rate, implying that with low levels of the deposits, it can “can borrow outside at good rates and lend at good rates to its less wealthy members” (Birdsall 51). The type of a global credit agency envisioned by its architects never happened. Instead, the developed countries ...Download file to see next pagesRead More