The World Bank, headquartered in Washington, D.C., was established in 1944 and currently has more than 10,000 employees in more than 120 office around the world. They are a source of both technical and financial assistance to developing countries. Unlike what you would think of as a normal bank, the World Bank promotes partnership in order to support development and reduce poverty.
By 2030, the World Bank Group hopes to accomplish the following:
- An end to extreme poverty by decreasing the percentage of people living on less than $1.25 per day to no more than 3%;
- Promote prosperity by fostering the income growth of the bottom 40% for every country.
Offering services like low-interest loans, grants and interest-free credits to developing country, the World Bank plays a role in supporting everything from education and health to infrastructure and agriculture. In addition to financial assistance, they also offer up knowledge like policy advice and research. “To ensure that countries can access the best global expertise and help generate cutting-edge knowledge, the Bank is constantly seeking to improve the way it shares its knowledge and engages with clients and the public at large.” Here are where their priorities lie:
- Results: The World Bank strives to continue to deliver measurable results.
- Reform: The Bank works to improve all aspects of their work from how projects are designed to the access of information.
- Open development: The World Bank provides free and easy tools as well as research to help people face the world’s problems.
Since the end of World War II, the International Monetary Fund has played a large role in shaping the global economy. An astonishing 188 countries are members of the IMF. The IMF helps governments take advantage of opportunities that arise from globalization and economic development as well as manage the challenges. They do this by tracking global economic trends and performance and letting countries know when problems are coming their way.
Globalization has a large effect on countries’ policy choices regarding areas like labor, trade and tax policies; therefore, the IMF tries to help countries benefit from globalization while avoiding potential downsides. In addition, the IMF provides support through offering countries policy advice, research and statistics, loans and technical assistance.
When the IMF was founded more than 60 years ago, they focused on economic cooperation. Their main purpose, which was to provide the global public good of financial stability, is still the same today. They also continue to:
- Facilitate growth of international trade, which promotes job creation, economic growth and poverty reduction;
- Provide a forum for countries to cooperate on international monetary problems;
- Promote an open system of international payments and exchange rate stability;
- Lend countries foreign exchange.
IMF & World Bank leaders
(Image Source: Ryan Rayburn/World Bank)
The World Bank and the IMF are effective organizations on their own, but they have even come together to discuss some issues.
For example, in October 2013, leaders of the World Bank and the IMF came together for their first joint public appearance to discuss climate change. According to the article, both said they will offer their knowledge and financial support to help developing economies get on a green growth path. One of the challenges of meeting the eight MDGs in African countries is the risk of climate change. Africa is vulnerable to the effects of climate change and natural disasters. According to a report from the MDG Steering Group, “Threats posed by climate change and natural disasters further increase the need for regional cooperation and integration in areas of economic policy, infrastructure (e.g., power pools, transport and communications infra- structure), research, and the management of trans-boundary river basins.”
Looking at the World Bank and the IMF, one can see the many similarities. They are both institutions in the UN system that share the same goal: raising living standards in the member countries. However, more specifically, the IMF focuses on macroeconomic issues and the World Bank looks at poverty reduction and long-term economic development.
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