WORLD BANK

-SAVIOUR OF POOR
COUNTRIES?
MACROECONOMICS
SUBMITTED BY
SWATHESH SHETTY

14168

SWETHA THALIYIL

14169

TANEYA TALUDKAR

14170

VINJU C VIPIN

14177

VISHAL GUPTA

14178

VISHAL VASWANI

14179

By Group number 10
Section C

INTRODUCTI
Created at the 1944 Bretton Woods Conference
ON

Based in Washington, D.C.

First country to receive a World Bank loan was France. (US$250 million)
Until 1968, its loans were earmarked for construction of income-producing
infrastructure
From 1968 to 1980, the bank concentrated on meeting the basic needs of people in
the developing world(loan targets expanded from infrastructure into social services
and other sectors)
Beginning in 1989 the bank began including environmental groups and NGOs in
its loans
In 2000, the bank announced a "war on AIDS", and in 2011, the Bank joined the
Stop Tuberculosis Partnership.
On 23 March 2012, U.S. President Barack Obama announced that the United States
would nominate Jim Yong Kim as the next president of the Bank. Jim Yong Kim
was elected on 27 April 2012.

Objectives of World Bank

(i) To assist in the reconstruction and development of territories of members

(a) The restoration of economies destroyed or disrupted by war;

(b) The reconversion of productive facilities to peaceful needs; and
(c) The encouragement of the development of productive facilities and resources in
less developing countries;
(ii) To promote private investment
(iii) To supplement private investment by providing on suitable conditions finance for
productive purpose out of its own capital funds
(iv) To promote the long-range balanced growth of international trade and the
maintenance of equilibrium in balances of payments
(v) To arrange the loans made or guaranteed by it in relation to international loans
through other channels
(vi) To assist in bringing about a smooth transition from a wartime to peacetime
economy by the conduct of its operations with due regard to the effect of

FUNCTIONS
1. World Bank provides various technical services to the member
countries
2. Bank can grant loans to a member country up to 20% of its share
in the paid-up capital.
3. The quantities of loans, interest rate and terms and conditions are
determined by the Bank itself.
4. Generally, Bank grants loans for a particular project duly
submitted to the Bank by the member country.
5. The debtor nation has to repay either in reserve currencies or in the
currency in which the loan was sanctioned.
6. Bank also provides loan to private investors belonging to member
countries on its own guarantee

BRICS Countries
Russia
GDP: $3.491
tn

China
GDP:
$16.149 tn

Brazil
GDP: $3.012
tn

India
GDP: $7.277
tn
South Africa
GDP: $662
bn

TREND ANALYSIS

Distribution of Loan
Year

All Nations
Total
Average/year(
Disbursed($)
$

Poor Nation
Total
Average/year(
Disbursed($)
$

Percent

1947-1951

1190,680303.99

238136060.80

419851749.36

83,970349.87 35.26%

1952-1961

4786396485.37

478639648.5

3014038484.76

301403848.5 62.97%

1962-1971

10119224078.41

1011922408

7041569805.07

704156980.5 69.59%

1972-1981

47384390441.49

4738439044

40456850037.27

4045685004 85.38%

1982-1991

113172353567.29

11317235357

102114128023.35

10211412802 90.23%

1992-2001

130941947799.13

13094194780

108067393632.94

10806739363 82.53%

2002-2011

152,235403460.28

15223540346

139941787727.23

13,994178773 91.92%

2012-2013

1579608047.62

789804023.8

1563415915.15

781707957.6 98.97%

Share of Loan availed by poor countries

120.00%

100.00%

80.00%

60.00%

% of total loan
40.00%

20.00%

0.00%

Year

BRICS Nation
Loan availed

India
Russian Federation

Brazil
South Africa

China

Loans disbursed and

GDP
Year
1991-1992
1992-1993
1993-1994
1994-1995
1995-1996
1996-1997
1997-1998
1998-1999
1999-2000
2000-2001
2001-2002
2002-2003
2003-2004
2004-2005
2005-2006
2006-2007
2007-2008
2008-2009
2009-2010
2010-2011

Loans
-17.78%
-6.67%
3.02%
33.18%
-31.72%
-8.12%
75.56%
-13.77%
-41.40%
56.10%
-33.63%
13.44%
-10.59%
23.90%
11.59%
-17.57%
99.33%
54.42%
-13.06%
-52.14%

GDP
6.43%
9.97%
10.41%
12.81%
9.74%
6.49%
-1.05%
-1.09%
8.43%
0.32%
1.68%
12.14%
18.30%
18.05%
17.82%
23.24%
18.90%
-0.20%
21.20%
16.07%

25000000000000.00
20000000000000.00
15000000000000.00
GDP

f(x) = 573.73x + 1324128225528.68

10000000000000.00
5000000000000.00
0.00
5000000000.00

10000000000.00 15000000000.00 20000000000.00 25000000000.00 30000000000.00

Loan

Scatter Plot
R= 0.5495 (Coefficient of
Correlation)
R2 = 0.3020 (Coefficient of
Determination)
25000000000000.00

20000000000000.00

15000000000000.00

f(x) = 573.73x + 1324128225528.68

GDP
10000000000000.00

5000000000000.00

0.00
5000000000.00 10000000000.00 15000000000.00 20000000000.00 25000000000.00 30000000000.00

Loan

Benefits from World Bank in India

Benefits from World Bank in China

Benefits from World bank in Brazil

Benefits from World bank in Russia

Benefits from World bank in South Africa

Growth Strategies
The World Bank supports developing countries to
prepare their poverty reduction strategies. The strategies
focuses on issues such as:
Universal primary education
Basic health
Rural infrastructure and other public services
Illiteracy and lack of access to basic health care.
The World Banks financial assistance is very productive
and accelerates growth and poverty reduction.

Contd.
Difficult to provide any useful large-scale financial
assistance to distorted and corrupt Institutions. Hence,
World Bank now channels its assistance to relatively
good governments in the developing world.
Countries such as China, India, Mexico, and Brazil
use the Bank effectively to promote their own
development agendas.
None of these countries would borrow from the Bank
or take advice from it unless they found these services
to be useful to them.

Alternative to World Bank

National Development Bank or the BRICS bank enable
founding members to hold 55% of the minimum
voting power at all times, unlike the World Bank, and
future members can hold a maximum of up to 45%.
The bank aims to provide money for infrastructure
and development projects to its member countries.
Every nation would have equal say irrespective of the
size of its GDP, unlike World Bank.

Reasons
No country dominates the bank and all founding members are on equal
footing despite differences in GDP size.
It shows that the BRICS are viable and dynamic emerging economies despite
the recent gap in growth rates.
It shows that the BRICS countries are developing and working towards
achieving a common goalimproving the living standards and infrastructure
needs of their people.
The bank directly challenges the financial order set up by the U.S and
Europe.
China and India have failed to increase their influence in the World Bank
and the IMF, and this new bank would help with reforms benefiting these
nations.

THANK YOU