Global Financing and Exchange Rate

Global Financing and Exchange Rate Mechanisms Paper

Roles of the World Bank

The aim is to provide information regarding the role of international financial institutions, specifically the role of the World Bank, on the highly global and technologically advanced economic process. The World Bank was originated during the final months of World War II at Bretton Woods, New Hampshire and had a mission of rebuilding the devastated post-war Europe. "Its first loan of $250 million was to France in 1947 for post-war reconstruction." (the International Bank for Reconstruction and Development/the World Bank, 2004) With those ambitious beginnings, the World Bank has remained as influential source of funding for the purposes of reconstruction after the likes of the world's natural disasters, humanitarian emergencies, and post-war rehabilitation.

The World Bank's role still has reconstruction of devastated scenarios as a main mission, however, today the world is in need of relief for the masses suffering from poverty and the inherent affects associated with poverty. "Today's Bank, however, has sharpened its focus on poverty reduction as the overarching goal of all its work. It once had a homogeneous staff of engineers and financial analysts, based solely in Washington, D.C. Today, it has a multidisciplinary and diverse staff including economists, public policy experts, sectoral experts, and social scientists. 40% of staff are now based in country offices." (the International Bank for Reconstruction and Development/the World Bank, 2004)

The objective of fighting poverty and improving the overall living standards of those individuals in the Third World and the newly emerging nations has become huge undertaking. One would think that the world would be getting richer based on the advances in technology and the many new economic opportunities in the global economy. "The global decline in living standards is not the result of a scarcity of productive resources as in preceding historical periods. The globalization of poverty has indeed occurred during a period of rapid technological and scientific advance. While the latter has contributed to a vast increase in the potential capacity of the economic system to produce necessary goods and services, expanded levels of productivity have not translated into a corresponding reduction in levels of global poverty." (Chossudovsky, 1998)

The ability of corporations to easily pick up and move into cheaper labor havens throughout the Third World has actually led to more downsizing, corporate restructurings and the relocations of whole companies which has led to higher levels of unemployment and lower earnings throughout the urban communities and the rural farm. Unemployment was at one time localized in small segments but it has now become an international problem. "We live in a world so rich that global income is more than $31 trillion a year. In this world, the average person in some countries earns more than $40,000 a year. But in this same world, 2.8 billion people -- more than half the people in developing countries -- live on less than $700 a year. Of these, 1.2 billion earn less than $1 a day." (Chossudovsky, 1998)