Reforming Paradoxes of Economic Development
Chapter 2: The ABCs of the World Bank
The World Bank Group is not a bank in any traditional sense. Legally, the World Bank is a specialized agency of the United Nations, with its own Articles of Agreement and autonomous governing structure. This structure oversees a collection of programs and funds. The two most important programs for our purposes are the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA). Together, these programs embody what is popularly referred to as the World Bank. The IBRD dates back to a set of international meetings held in Bretton Woods, New Hampshire, in 1944. The meetings were an attempt by the allied powers to plan for the post-war international economic and financial order. The premise was that financial stability was essential for peace and security, responding to the role that monetary crises and breakdowns in international trade played in contributing to World War II. The primary focus of the meeting was facilitating monetary stability and the meeting’s principal accomplishment was the creation of the IMF. The World Bank, a multilateral funding mechanism to facilitate post-war reconstruction, was also on the table, but this was only a secondary concern. The notion of “development,” with a focus on what is now referred to as the Third World (then many still colonial territories) was even further down the agenda. In the end, the parties reached agreement on both the IMF and the IBRD. These are “sister” institutions. To understand one, it is necessary to understand the other.
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