Caribbean Integration
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WORLD BANK HISTORY CONT’D.
Overtime the bank has been joined by other agencies resulting in greater flexibility and influence at various levels.1956 saw the creation of the Economic Development Institute which offers courses in development for senior officials of member countries. This agency was financed considerably by the Ford and Rockefeller foundations and a large number of persons have passed through the institution. The EDI also promotes international cooperation with other agencies such as the FAO.
In 1960, as a result of heavy pressure from developing countries for a lending agency that was more accessible, the international Development Association was formed. This agency basically provides loans to the poorer countries for long periods. Usually they are given 30 -40 year repayment periods with a 10 year grace period, no interest and a mere service charge. Its purpose is “to market human vision, experience, capital and energy to build the wealth of nations. Since its inception the IDA has spent billions to promote development in some 90 countries, with most of it going to Africa.
Another arm of the WB is that of the International Financial Corporation (IFC) which like the EDI was set up in 1956.however this arm is responsible only for private sector lending whereas the IDA deals with Governments.
Later in 1988, the Multilateral Investment Guarantee Agency was set up. Its main aim is to “encourage dialogue between government and business. This organization works to combat protectionist and other related policies, to promote the flow o f private capital and to offer guarantees against commercial risk on capital.
ECONOMIC AND POLITICAL HISTORY
In the beginning, only 20 % of capital invested would be actually paid in, the remainder being callable if and when needed. Today this system remains, however as the bank has been able to generate capital growth on its own, the actual percentage being paid in now is significantly lower.
The bank also borrows and invests on the world market in its own right. In relation to lending the banks are only allowed to take economic considerations into account when making decisions. Political affairs and other non economic factors play no role in the decision process.
ECONOMIC FOUNDATIONS
The economic theories on which the World Bank was founded promoted free trade, a free market economy modified by government actions such as buying and selling on the world market to ensure a steady national interest rate, effective demand and full employment.
However, over the years, the bank has shifted to a amore neo liberal system. Much similar to that proposed by Milton Friedman which champions free trade. Today its view is that maximum profits can be derived from the expansion of the private sector and the eradication of protectionist measures. they advocate the free movement of goods internationally without tariff barriers or restrictions between all countries. They also encourage nations to develop their own industries and agricultural products to increase exports and gain wealth from the same.
It also follows the Neoliberalist perspective that governments should reduce fiscal spending and that large civil service and local government sectors should be cut down to promote efficiency. They also advocate the free movement of capital around the world and the ability to