The objectives, functions and policy issues of the World Bank and IMF
Concept introduction:
World Bank − The multilateral institution was created in 1944 as the International Bank for Reconstruction and Development (IBRD) as the development bank to reconstruct the World War II damaged European Economies. It is presently headquartered at Washington along with its twin sister IMF headquarters. Presently, the World Bank consists of two organizations-
- The International Bank for Reconstruction and Development (IBRD)- To develop the middle-income and creditworthy low-income countries to bolster their
economic growth and development. - The International Development Association (IDA) - To provide credits and grants to the poorest countries. These credits/grants are interest free loans to provide financial aid to these countries.
World Bank Group- The Group consists of five complementary organizations to streamline and aid its function of reducing the poverty through developmental assistance to developing and emerging economies across the globe. Together they provide loans, guarantees and technical assistance for projects and programs in the member countries with focus on social development, governance and institution building in the developing countries and environmental protection across the globe. Apart from IBRD and IDA, the other organizations in the group are:
- International Finance Corporation (IFC) − It operates on the principle of development through the private sector. It finances investment in the private firms and businesses, facilitates capital flows across the financial markets of the world and provides advisory services to the private sector in the member countries justifying its role as the largest global development institution for the private sector.
- Multilateral Investment Guarantee Agency (MIGA) − The organization operating since 1988 works with the objective to promote FDI in the developing countries to promote economic growth and affect social development in these economies. It insulates the investors from risk by providing political risk insurance guarantee.
- The International Centre for Settlement of Investment Disputes (ICSID) − It provides facilities for the conciliation and arbitration of investment disputes.
International Monetary Fund (IMF) − It is the twin sister multilateral institution of the World Bank with its origin dating back to 1930s, while its structure and operational formalization was done in 1944 along with IBRD. To correct the international chaos triggered by the Second World War, it provides regulatory, financial and consultative functions. These include credit grants to correct the BoP deficits, surveillance over the monetary and exchange rate polices of the member countries for mutual gain and development. It works towards the establishment of the multilateral system of payments and alleviate the disequilibrium in the international balance of payments. Overall it aims at balanced growth across the member countries to increase employment, real income and optimal utilization of the productive resources across the globe.
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Economics Today: The Macro View (19th Edition) (Pearson Series in Economics)
- Answer in step by step with explanation. Don't use Ai.arrow_forwardUse the figure below to answer the following question. Let I represent Income when healthy, let I represent income when ill. Let E [I] represent expected income for a given probability (p) of falling ill. Utility у в ULI income Is есте IM The actuarially fair & partial contract is represented by Point X × OB A Yarrow_forwardSuppose that there is a 25% chance Riju is injured and earns $180,000, and a 75% chance she stays healthy and will earn $900,000. Suppose further that her utility function is the following: U = (Income) ³. Riju's utility if she earns $180,000 is _ and her utility if she earns $900,000 is. X 56.46; 169.38 56.46; 96.55 96.55; 56.46 40.00; 200.00 169.38; 56.46arrow_forward
- Use the figure below to answer the following question. Let là represent Income when healthy, let Is represent income when ill. Let E[I], represent expected income for a given probability (p) of falling ill. Utility & B естве IH S Point D represents ☑ actuarially fair & full contract actuarially fair & partial contract O actuarially unfair & full contract uninsurance incomearrow_forwardSuppose that there is a 25% chance Riju is injured and earns $180,000, and a 75% chance she stays healthy and will earn $900,000. Suppose further that her utility function is the following: U = (Income). Riju is risk. She will prefer (given the same expected income). averse; no insurance to actuarially fair and full insurance lover; actuarially fair and full insurance to no insurance averse; actuarially fair and full insurance to no insurance neutral; he will be indifferent between actuarially fair and full insurance to no insurance lover; no insurance to actuarially fair and full insurancearrow_forward19. (20 points in total) Suppose that the market demand curve is p = 80 - 8Qd, where p is the price per unit and Qd is the number of units demanded per week, and the market supply curve is p = 5+7Qs, where Q5 is the quantity supplied per week. a. b. C. d. e. Calculate the equilibrium price and quantity for a competitive market in which there is no market failure. Draw a diagram that includes the demand and supply curves, the values of the vertical- axis intercepts, and the competitive equilibrium quantity and price. Label the curves, axes and areas. Calculate both the marginal willingness to pay and the total willingness to pay for the equilibrium quantity. Calculate both the marginal cost of the equilibrium quantity and variable cost of producing the equilibrium quantity. Calculate the total surplus. How is the value of total surplus related to your calculations in parts c and d?arrow_forward
- Sam's profit is maximized when he produces shirts. When he does this, the marginal cost of the last shirt he produces is , which is than the price Sam receives for each shirt he sells. The marginal cost of producing an additional shirt (that is, one more shirt than would maximize his profit) is , which is than the price Sam receives for each shirt he sells. Therefore, Sam's profit-maximizing quantity corresponds to the intersection of the curves. Because Sam is a price taker, this last condition can also be written as .arrow_forwardWhy must total spending be equal to total income in an economy? Total income plus total spending equals total output. The value-added measurement of GDP shows this is true. Every dollar that someone spends is a dollar of income for someone else. all of the abovearrow_forwardLabor Market Data Price $5 $10 $15 $20 $25 3,000,000 6,000,000 9,000,000 12,000,000 15,000,000 Qd 15,000,000 12,000,000 9,000,000 6,000,000 3,000,000 Price $30 $25 $20 $15 $10 $5 + +- x- 3 6 Do + + F 9 12 15 Quantity (In millions) Area of a triangle = 1/2* base *height Market Efficiency & Total Surplus Worth Publishers SCENARIO: The state government is considering raising the minimum wage from $15 per hour to $20 per hour over the next 3 years. As an economic advisor to the governor, you have been asked to provide a recommendation on whether the minimum wage should be increased based on economic theory. Consider the labor market data provided. Prepare a brief report that: 1. Explains whether the labor market is currently efficient at the equilibrium wage of $15 per hour. How would you know? At equilibrium, what (dollar amount) is the Total Surplus this market provides? Show your rationale with numbers. 2. Analyzes the impact on total surplus in the market if the minimum wage is raised…arrow_forward
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