What is the World Bank?
Jean-Francois Rischard: The World Bank was created in 1944 before the World War II saga was over. It was created together with the monetary fund – the International Monetary Fund – and what was going to be later the WTO – the World Trade Organization. In the case of the Bank, its main purpose was to borrow money on the markets – in those days Europe more than the U.S. – and to lend this money for the reconstruction of Europe and of Japan and so forth. So it was a very bold design for the times, and it did that in the ‘50s. Mostly it was in the reconstruction business. It financed reconstruction, for instance, of Toyota in Japan. Or the financing for the reconstruction of the French railway system came from there. Then in the ‘60s that reconstruction job was over. It went into developing country business – lending for hospitals, for highways, for ports, for agriculture in the developing world starting mostly in Latin America and then going worldwide. And it really became the World Bank that is known today under McNamara when McNamara came from the U.S. government to become the very famous President of the World Bank in the ‘70s. He made it grow to a much bigger place than it was originally. And originally it had less than 1,000 people in Washington. And today it has 12,000 people roughly. And he got the World Bank into social areas, into education, into health, into nutrition, into what was called basic needs, integrate rural development and so forth. And so it became the largest and most sort of broadest development institution in the world. And that it is still today, even though it’s a very much changed world, there’s still a lot of that work to be done. It still operates by borrowing money in the markets by using bonds, using the money for very long term loans which all have to do with some developing purpose. And then when the loans get reimbursed by the clients, we repay the bond holders. That’s the way the World Bank works. For the very poor countries, it has a special kitty which is not based on borrowing money. It’s based on donated money. It’s called the International Development Association window, or IDA window, and that leads to very long term loans without interest rates. Or on grand terms for very poor countries, under roughly $1,000 per person. So it’s an institution that’s sort of a bank in a way, that has a sort of financing function; but it’s also full of people who have a lot of knowledge of what works and what doesn’t work in education, and road surfacing, in building latrines, in textbook publications for schools, and cataract operations. You name it. So it’s not just a money bank. It’s a knowledge bank at the same time. And lately it has become very active also in big global issues like global warming, the ozone depletion, the pollution of the seas and so forth. So it is still mainly in the poverty reduction business and the developing business, but it’s beginning to become a presence in the global issues business as well.
Recorded on: 7/2/07
A progressive institution that goes beyond World War II.
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