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JULY 1944 BRETTON WOODS CONFERENCE
In July 1944 – one year before the end of World War II – delegates from 44 countries met for the United Nations Monetary and Financial Conference held at the Mount Washington Hotel in Bretton Woods, New Hampshire. The conference aimed to create the framework for post-war international economic cooperation and reconstruction. The intellectual leaders at the conference were John Maynard Keynes (Adviser to the Treasury in the United Kingdom), and Harry Dexter White (Assistant Secretary of the Treasury in the United States).
While the conference resulted in the formation of two institutions, the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (World Bank), the creation of the World Bank was not the primary focus. The majority of time and effort was spent on the IMF Commission under Harry Dexter White’s leadership. The work of the World Bank Commission, on the other hand, occurred only in the last few days of the conference. Its articles of agreement - primarily drafted by John Maynard Keynes – included rebuilding the economies of countries devastated by war and increasing the economic development of developing countries.
1946 - 1967 THE WORLD BANK AS BUILDER AND ENGINEER
The Bank’s first loan was to France and loans to other European countries followed. But when the 1947 Marshall Plan took over post-war reconstruction efforts in Europe, the Bank quickly shifted to funding infrastructure projects around the world in sectors such as power, irrigation, and transportation. The first loan to a non-European country was to Chile in 1948 for $13.5M USD for hydroelectric power generation. The Bank also initiated a technical assistance program and in 1955 established the Economic Development Institute to provide training to officials from member countries.
During the early years, the Bank evolved to meet the needs of its members. In 1956, the International Finance Corporation (IFC) was established to focus exclusively on the private sector, and in 1960 the International Development Association (IDA) was created to provide resources for less creditworthy members. The IFC’s first loan was to Brazil, in the amount of $2M USD, for the manufacture of electrical equipment. The Bank also mediated three international disputes that had an economic element: the nationalization of Iran’s oil industry; the development of the Indus River Water system; and the financing for the Aswan High Dam on the Nile.
1968 - 1981 THE WORLD BANK CONFRONTS POVERTY
By the 1970s, over 40% of people in developing countries lived in absolute poverty. In response, the World Bank’s projects aimed to help the poor directly. World Bank President Robert McNamara coined the term “absolute poverty” in his 1973 Annual Meeting speech, and was the first to communicate the World Bank’s twin goals: “…to accelerate economic growth and to reduce poverty.” (World Development Report, 1978). These concepts transformed the Bank into the institution focused on development that we know today.
Lending to member countries increased twelve-fold between 1968 and 1981, and expanded into new sectors: environment, rural development, water, sanitation, education, and others. The global effort to eradicate river blindness is one example of how the Bank worked to improve the lives of the poor, which was different from the large infrastructure projects that were done in the Bank’s first 20 years. The first loan for the environment was in 1971 for pollution control in Brazil, and the Bank subsequently built environmental safeguards into its process. During the 1970s economists were the primary advisers in the Bank, but staff with different skills in anthropology, sociology, environmental science and other sectors were hired to provide even more expertise to clients.
1982 - 1994 ECONOMIES IN TRANSITION AND STRUCTURAL ADJUSTMENT
The 1980s and 90s brought additional challenges related to oil shocks, debt crises and environmentalism, and the Bank reacted by bringing new skills and safeguards into its work, as well as structural adjustment. Structural adjustment loans came with policy conditions, such as fiscal discipline, tax reform and liberalization of foreign direct investment; but while they were intended to improve the policy and institutional environment in which the loans were made, their overall effectiveness was debated internally and in the client community.
In the 1990s, the Bank assisted former Soviet nations to redirect their economies after the dissolution of the Union of Soviet Socialist Republics, and many of these newly sovereign nations became World Bank members. In 1991, the Global Environment Facility (GEF) was established to further the focus on safeguarding the environment, and in 1996 the Heavily Indebted Poor Countries debt initiative was approved to enable poor countries to focus on sustainable development and reducing poverty. The World Bank added another institution to the group when the Multilateral Investment Guarantee Agency (MIGA) was formed in 1988 to provide political risk insurance and credit enhancement to investors and lenders.
1995 - NOW SUSTAINABLE DEVELOPMENT AND GLOBAL PARTNERSHIPS
During the late 1990s, the World Bank moved back into the areas of conflict prevention, post-conflict reconstruction, and assistance for countries to redirect their economies after major political change. This period also brought concern about the impact of government corruption on the effectiveness of lending operations, which led the World Bank to adopt an anti-corruption strategy under President James Wolfensohn. Wolfensohn gave a ground-breaking speech on the “cancer of corruption” at the 1996 annual meetings, and under his leadership the focus on country accountability and ownership of development work became central with the Comprehensive Development Framework.
The mid-2000s ushered in the idea of the World Bank as a knowledge institution, and by 2010, the Open Agenda guided the Bank to a more transparent approach to development. In collaboration with the United Nations’ Millennium Development Goals in 2000, and subsequently the Sustainable Development Goals in 2015, the World Bank moved into the new century emphasizing community-driven development and aid coordination, working to safeguard vulnerable groups, and mitigating the impact of climate change.
BRETTON WOODS CONFERENCE
In July 1944 – one year before the end of World War II – delegates from 44 countries met for the United Nations Monetary and Financial Conference held at the Mount Washington Hotel in Bretton Woods, New Hampshire. The conference aimed to create the framework for post-war international economic cooperation and reconstruction. The intellectual leaders at the conference were John Maynard Keynes (Adviser to the Treasury in the United Kingdom), and Harry Dexter White (Assistant Secretary of the Treasury in the United States).
While the conference resulted in the formation of two institutions, the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (World Bank), the creation of the World Bank was not the primary focus. The majority of time and effort was spent on the IMF Commission under Harry Dexter White’s leadership. The work of the World Bank Commission, on the other hand, occurred only in the last few days of the conference. Its articles of agreement - primarily drafted by John Maynard Keynes – included rebuilding the economies of countries devastated by war and increasing the economic development of developing countries.
THE WORLD BANK AS BUILDER AND ENGINEER
The Bank’s first loan was to France and loans to other European countries followed. But when the 1947 Marshall Plan took over post-war reconstruction efforts in Europe, the Bank quickly shifted to funding infrastructure projects around the world in sectors such as power, irrigation, and transportation. The first loan to a non-European country was to Chile in 1948 for $13.5M USD for hydroelectric power generation. The Bank also initiated a technical assistance program and in 1955 established the Economic Development Institute to provide training to officials from member countries.
During the early years, the Bank evolved to meet the needs of its members. In 1956, the International Finance Corporation (IFC) was established to focus exclusively on the private sector, and in 1960 the International Development Association (IDA) was created to provide resources for less creditworthy members. The IFC’s first loan was to Brazil, in the amount of $2M USD, for the manufacture of electrical equipment. The Bank also mediated three international disputes that had an economic element: the nationalization of Iran’s oil industry; the development of the Indus River Water system; and the financing for the Aswan High Dam on the Nile.
THE WORLD BANK CONFRONTS POVERTY
By the 1970s, over 40% of people in developing countries lived in absolute poverty. In response, the World Bank’s projects aimed to help the poor directly. World Bank President Robert McNamara coined the term “absolute poverty” in his 1973 Annual Meeting speech, and was the first to communicate the World Bank’s twin goals: “…to accelerate economic growth and to reduce poverty.” (World Development Report, 1978). These concepts transformed the Bank into the institution focused on development that we know today.
Lending to member countries increased twelve-fold between 1968 and 1981, and expanded into new sectors: environment, rural development, water, sanitation, education, and others. The global effort to eradicate river blindness is one example of how the Bank worked to improve the lives of the poor, which was different from the large infrastructure projects that were done in the Bank’s first 20 years. The first loan for the environment was in 1971 for pollution control in Brazil, and the Bank subsequently built environmental safeguards into its process. During the 1970s economists were the primary advisers in the Bank, but staff with different skills in anthropology, sociology, environmental science and other sectors were hired to provide even more expertise to clients.
ECONOMIES IN TRANSITION AND STRUCTURAL ADJUSTMENT
The 1980s and 90s brought additional challenges related to oil shocks, debt crises and environmentalism, and the Bank reacted by bringing new skills and safeguards into its work, as well as structural adjustment. Structural adjustment loans came with policy conditions, such as fiscal discipline, tax reform and liberalization of foreign direct investment; but while they were intended to improve the policy and institutional environment in which the loans were made, their overall effectiveness was debated internally and in the client community.
In the 1990s, the Bank assisted former Soviet nations to redirect their economies after the dissolution of the Union of Soviet Socialist Republics, and many of these newly sovereign nations became World Bank members. In 1991, the Global Environment Facility (GEF) was established to further the focus on safeguarding the environment, and in 1996 the Heavily Indebted Poor Countries debt initiative was approved to enable poor countries to focus on sustainable development and reducing poverty. The World Bank added another institution to the group when the Multilateral Investment Guarantee Agency (MIGA) was formed in 1988 to provide political risk insurance and credit enhancement to investors and lenders.
SUSTAINABLE DEVELOPMENT AND GLOBAL PARTNERSHIPS
During the late 1990s, the World Bank moved back into the areas of conflict prevention, post-conflict reconstruction, and assistance for countries to redirect their economies after major political change. This period also brought concern about the impact of government corruption on the effectiveness of lending operations, which led the World Bank to adopt an anti-corruption strategy under President James Wolfensohn. Wolfensohn gave a ground-breaking speech on the “cancer of corruption” at the 1996 annual meetings, and under his leadership the focus on country accountability and ownership of development work became central with the Comprehensive Development Framework.
The mid-2000s ushered in the idea of the World Bank as a knowledge institution, and by 2010, the Open Agenda guided the Bank to a more transparent approach to development. In collaboration with the United Nations’ Millennium Development Goals in 2000, and subsequently the Sustainable Development Goals in 2015, the World Bank moved into the new century emphasizing community-driven development and aid coordination, working to safeguard vulnerable groups, and mitigating the impact of climate change.