About three-quarters of the world's population lives..........these loans could only do good things for a country.

The World Bank consists of ......

About three-quarters of the world's population lives in developing countries. Until recently, a developing country was generally understood to be one that was not yet highly industrialized. It was usually located in Africa, Asia or Latin America. Lately, however, with the fall of communism in Eastern Europe and the break-up of the Soviet bloc nations, semi-industrialized countries that are struggling to survive as they build new economic systems have also been placed in the developing nation category. What all developing countries have in common is that the people of these countries do not have enough money to invest in schools, utilities, factories and highways. One way in which these countries can get money is by borrowing from an organization called the World Bank. The World Bank is actually the umbrella term, the general term, for three separate organizations with three slightly different purposes. First, there is the International Bank of Reconstruction and Development. This is the organization most people have in mind when they think of the World Bank. In order to borrow money from this branch of the World Bank, a country must be a member. It is like joining a club, but instead of paving an initiation fee to join the club, the club lends you money (although the money is supposed to be paid back with interest, as with any bank loan). The International Bank of Reconstruction and Development loans money to countries for projects that will aid economic development. It also provides technical assistance. For example, Cameroon applied for a loan for a new irrigation system along the Logone River. They hope that with this new irrigation system the cash income of that region would be five times greater than before. But the bank did not approve the project right away. Technological advances can sometimes cause environmental problems, hence, before approving the project, the Bank assigned environmental consultants to prepare an environmental impact report. The consultants found that the new irrigation system would result in a serious health problem due to the snails that live in the area. These snails carry a tropical disease called bilharzia, and the new irrigation might spread the snails and the disease to a larger area. The Bank then helped to find a solution to the problem by paying for the studies of the river. Scientists and engineers worked together to stop the breeding of the snails so that the irrigation system could be used. However this bank can only offer loans for the purchase of imported goods. And to make sure that this rule is followed, the bank pays the seller directly. This is good for the countries that want to sell goods to developing countries but it discourages local production of goods. In the long run this will do more harm than good to the developing country's economy. People are also questioning the value of a dam being built in India with the money from the World Bank. That dam will displace more people than it will eventually serve with electric power. It will also destroy scarce forestlands as well as endangered animals and plants. The second organization under the World Bank umbrella is the International Development Association, or IDA. The IDA has approximately 160 members and makes loans that are interest free. This is good for needy countries. It allows even the poorest country to begin projects immediately, without having to worry about interest payments. On the other hand the IDA is very dependent on contributions from member nations to support various projects. This is where contributing nations could attach some strings to the loans. This is also how the superpowers can begin to dictate what sort of government policies must be in place before the loans will be given. The third organization in the World Bank group is the International Finance Corporation, or IFC. The IFC is different from the International Bank of Reconstruction and Development or the IDA because the IFC can invest in private business or industry, while the other two organizations can only invest in government projects. This is good for the country because the government does not have to guarantee the loan and it encourages the growth of private business or industry. IFC also has no control over how the company spends its money. There seems to be no strings attached to this loan. However, the member nations get voting rights based on the amount of money they contribute to the Bank. Therefore the wealthier nations still have the greatest influence on how and to whom the money will be given. As of June 1993, the World Bank held $140 billion in loans to poor nations. In theory, this huge sum of money should be helping the world's poor. Since the establishment of the World Bank, most people Have assumed that these loans could only do good things for a country.

Summary: The World Bank consists of three organizations whose main function is to help poor countries develop their economy. The first and most well-known is the International Bank of Reconstruction and Development. It provides loan and technical assistance to needy member countries as in the case of the new irrigation system in Cameroon. However, these loans can only be used to purchase imported goods and they have to be paid back with interest. the second organization under the World Bank is the International Development Association. This organization provides interest free loans which can help even the poorest country to start their projects without having to worry about the interest. Unlike the International Bank of Reconstruction and development and the International Development Association which only fund government projects, the International Corporation Finance can invest in private business and industry. However it has no control over how the money is used. harmful.