The New Role for the World Bank
AbstractThe World Bank was founded to address what we would today call imperfections in international capital markets. Its founders thought that countries would borrow from the Bank temporarily until they grew enough to borrow commercially. Some critiques and analyses of the Bank are based on the assumption that this continues to be its role. For example, some argue that the growth of private capital flows to the developing world has rendered the Bank irrelevant. However, we will argue that modern analyses should proceed from the premise that the World Bank's central goal is and should be to reduce extreme poverty, and that addressing failures in global capital markets is now of subsidiary importance. In this paper, we discuss what the Bank does: how it spends money, how it influences policy, and how it presents its mission. We argue that the role of the Bank is now best understood as facilitating international agreements to reduce poverty, and we examine implications of this perspective.
CitationClemens, Michael A., and Michael Kremer. 2016. "The New Role for the World Bank." Journal of Economic Perspectives, 30 (1): 53-76. DOI: 10.1257/jep.30.1.53
- F33 International Monetary Arrangements and Institutions
- F34 International Lending and Debt Problems
- I38 Welfare, Well-Being, and Poverty: Government Programs; Provision and Effects of Welfare Programs
- O19 International Linkages to Development; Role of International Organizations