The Roles Of The World Bank Economics Essay

More than 2.5 billion of hapless work forces, adult females and kids around the universe are populating with less than 2 a twenty-four hours UN, 2012a. There are globally awareness and treatment about poorness. World Bank is one of the international development organisations whose ha clear mission to extinguish poorness of the universe. Base on research workers and a big figure of surveies found that the World Bank has contributed a batch to the universe development since the last 50 old ages with or without satisfactory consequence in different states. This essay is specifically described about the function of the World Bank in poorness riddance by concentrating on the instance of Cambodia.

Although there are a big figure of unfavorable judgment and issues between the World Bank in Cambodia with the Royal Government of Cambodia and some non-governmental establishments ( NGOs ) , this essay argues the World Bank has partially contribute to the poorness decrease Cambodia through assorted sectors such as authorities reform, good administration, anticorruption, instruction, route and land direction, and capacity edifice etc. The essay has been divided into four major subdivisions. The first subdivision will briefly describe literature reappraisal, with brief debut about the construct of poorness, the World Bank, and poorness in Cambodia. Then the 2nd subdivision will discourse about the function of the World Bank in poorness decrease in Cambodia through assorted sectors of the economic system by demoing particulars result base on available informations. The 3rd portion will discourse about the effectivity of plan supported by World Bank. The last portion of the essay will reason the success of the World Bank and challenges, and suggest some more advice to do more development of the state.


Before traveling deeper to analyze the function of World Bank in poorness riddance in Cambodia, the term poorness should be clearly defined. In 1995 the UN had used two definitions of poorness which include absolute poorness and overall poorness ( UN, 2012a ) . Absolute poorness was defined as “ a status characterised by terrible want of basic human demands, including nutrient, safe imbibing H2O, sanitation installations, wellness, shelter, instruction and information. It depends non merely on income but besides on entree to services ” . While overall poorness takes assorted signifiers, including deficiency of income and productive resources to guarantee sustainable supports ; hungriness and malnutrition ; sick wellness ; limited or deficiency of entree to instruction and other basic services ; increased morbidity and mortality from unwellness ; homelessness and unequal lodging ; insecure environments and societal favoritism and exclusion. It is besides characterised by deficiency of engagement in determination devising and in civil, societal and cultural life. In other word, Fight Poverty ( 2012 ) defined the poorness as being hungriness, deficiency of shelter, being ill and non being able to see a physician, non holding entree to school and non cognizing how to read, non holding a occupation, is fear for the hereafter, populating one twenty-four hours at a clip, impotence, deficiency of representation and freedom.

In general there are two type of poorness measuring. In state degree, poorness measured based on incomes or ingestion degrees, which means that a individual is considered hapless if his or her ingestion or income degree falls below some minimal degree necessary to run into basic demands. This minimal degree is normally known as the “ poverty line ” which difference depends on clip and society. In planetary degree, the World Bank uses mention lines by referred to those who live under $ 1 or $ 2 per twenty-four hours or in more exactly $ 1.08 and $ 2.15 ( Fight Poverty, 2012 ) .

The poorness usually is the consequence of economic recession, catastrophe or struggle, low-wage workers, and those who fall outside household support systems or societal establishments and safety cyberspaces ( UN, 2012b ) . In most society, the hapless are exposed to higher personal and environmental wellness hazards of unwellness and disablement because they have less good nourished, have less information, less wellness attention. The poorest of the hapless, around the universe, have the worst wellness ( WHO, 2012 ) . This is the ground why the hapless ever face a batch of trouble and unrecorded in adversity for longer coevalss.


Next, the essay briefly describes the background of the World Bank and its operation in Cambodia. The World Bank was established on July 1944, in Bretton Woods, together with the International Monetary Fund, and International Trade Organization ( the present WTO ) by a group of victor in of World War II, to supply necessary capital and proficient aid to reconstruct states destroyed by war in Europe ( Markwell, 2006 ) . After that, the World Bank has grown bigger into a word development establishment with a end to see the universe free of poorness. Base on World Bank ( 2007 ) , the beginning of the term “ universe bank ” was foremost used in an article Economist on July 1944 in a study on the Bretton Woods Conference, and in several meeting and newspaper and subsequently on it became functionaries name in 1975 ( p.11 ) . At the present that bank becomes the World Bank Group or Bank Group mentioning to the five establishments of the universe bank which include the International Bank The World Bank Group consists of five organisations which specialize in facet of development which include ( 1 ) International Bank for Reconstruction and Development ( IBRD ) focal point on loaning to authoritiess of middle-income and responsible low-income states ; ( 2 ) International Development Association ( IDA ) provides loans without involvement and grants to development plan of authoritiess in the poorest states ; ( 3 ) International Finance Corporation ( IFC ) provides loans, equity and proficient aid to project investing in developing states particularly private sector ; ( 4 ) Multilateral Investment Guarantee Agency ( MIGA ) provides warrants for any loss as a consequence of non-commercial hazards to local or international investors in developing states ; and ( 5 ) International Centre for Settlement of Investment Disputes ( ICSID ) provides conciliation and arbitration of investing differences internationally ( World Bank, 2007, p. 2 ) . This bank provides non merely loan but besides advice and proficient support to accomplish a end of poorness decrease and better criterion of life in developing states.

Harmonizing to the Treasury ( 2012 ) among the 188 member states, with US $ 205.4 billion, there are five major stockholders such United States held 16.52 per centum of entire ballots, Japan 9.72 per centum, Germany 4.84 per centum and UK and France each held 4.33 per centum. Since major determinations require an 85 per centum super-majority, the U.S. can barricade any reform in this organisation. Driscoll ( 1996 ) added that the World Bank get funding for its day-to-day operations chiefly from the sale of AAA-rated bonds of IBRD in the universe ‘s securities markets, but it does non do much net incomes. Another beginning of the Bank is from 40 giver states who contribute their financess every three old ages every bit good as from loan payment of the borrowed member states. The World Bank provides two nucleus types of loans which include investing loan and development loan. The IDA ‘s loan usually does non bear down involvement, but the low involvement loan for standard bank is between 0.5-1 per centum. When the borrowers proposed their undertaking, the World Bank evaluate for on their societal and environmental facet, societal, fiscal and economic state of affairs to do certain their money are distributed reasonably.

It should be informed that, besides fiscal support, the World Bank besides provide consultative and analytical services to its member states particularly toward the developing states in order to do certain that they can utilize the fund in the right demand and advance long-run economic growing. The World Bank has a Poverty Reduction Strategies for the poorest development counties. Generally pattern, each authorities identified the precedence sector for decrease of poorness of their states and so suggest to the World Bank for AIDSs or loan.

In 1993 Cambodia started borrowed from the World Bank after the intercession of United Nation in Cambodia and led to the first clip of all time election in the same twelvemonth after over 10 old ages of civil war and the race murder by Khmer Rouge government. During this last three old ages Cambodia has borrow from the World Bank $ 93 million for undertakings to better good administration, agricultural sector, educational restore etc. Cambodia had borrowed about $ 50-70 million yearly from the World Bank. However, it had stopped supplying loan since December 2010 due to the forced evictions from land of a development undertaking in Phnom Penh metropolis ( Reuters, 2011 ) .


This portion is the essay will briefly depict about the general overview of Cambodia. Cambodia is a little state located the Centre of Southeast Asia, surrounding Thailand, Laos, and Vietnam with estimated population of 14 1000000s 2012. Like that of many backward states, Kampuchean economic system is base on agribusiness which employed over 80 per centum of husbandmans. From 1975 to 1979, the Pol Pot government, there was no bank and money used, and private belongings was illegal. After a long clip recovered from the war, between 1998 and 2008, Cambodia ‘s Gross Domestic Product ( GDP ) growing really strong at around 10 per centum per twelvemonth. This high growing was obstructed in 2009, but keep strongly growing in the undermentioned twelvemonth. The rapid economic growing has created more occupations and the poorness rate was declined. Between 2007 and 2010, it is possible that the poorness rate in Cambodia increased by 1-4 per centum ( World Bank 2009 ; 2010a ) . The planetary fiscal crisis is a large challenge for the Millennium Development Goals ( MDGs ) which expected to make in 2015, particularly the caprine animal to take utmost poorness.

Poverty decrease is one of the highest precedences of the Royal Government of Cambodia, particularly in rural countries. Harmonizing to the first study of poorness head count in Cambodia was carried out in 1993-94 which was conducted merely in some portion of the state because of the deficiency of entree to some country due to security ground, found that the rate of poorness was 39 per centums. The lasted Cambodia Socio-Economic Survey conducted in 2007 shown the poorness has declined from 39 per centum in 1993-94 to 28.0 per centum in 2004 and to 24.7 per centum in 2007. However, in the rural countries of the state, the poorness head count has declined from 43.1 per centum in 1993-94 to 33.7 per centum in 2004 and to 30.6 per centum in 2007 ( Ministry of Planning, 2010, p.6 ) . A important diminution of 4.6 per centum from 2004 to 2007 represented a decrease of more than 1 per centum per twelvemonth. Similarly, at all sub-national degree, the consequences show that poorness head count has declined from 4.6 per centum in 2004 to 0.8 per centum in 2007 in Phnom Penh metropolis, from 25.8 per centum to 21.9 per centum in urban country, and from 39.1 per centum to 34.7 per centum in rural country ( Ministry of Planning, 2010, p.7 ) . The diminution in poorness reflects a important growing in existent per capita family ingestion particularly living criterions of the people. The consequence besides shown that among the poorest and following poorest quintiles ingestion increased in existent footings by 10.7 and 11.5 per centum severally.

The analysis of the information from the Cambodia Socio-Economic Surveys of 2004 and 2007 besides shows that there is betterment amongst the bottom two quintiles variables related to service bringing and human development results which had in agricultural production, wellness, instruction, and nutrition. The study besides shows further that physical entree to public services has improved in the signifier of nearer distances entree to wellness Centre or school as a consequence of bettering the building of route web, schools, and existent incomes of people. ( Ministry of Planning, 2010, p.7 )

The rate of poorness is estimated to worsen 1 per centum every twelvemonth but the fiscal crisis might alter that outlook. The poorness rate was 30.6 per centum in 2007 and it is expected to be at around 26 per centum in 2012. Base on Janlen, and Ravallion ( 2000 ) different policies have different impact on the degree of poorness in each states. For illustration the ability of the hapless to acquire more income by increasing economic chance or increase the degree of kid go toing school which is good for the long term development. Besides, the hapless can be better via the societal transportation, protection and support from the authorities or the related development spouses. Because lacking of informations, there are non many survey of poorness in Cambodia. However, in other states there are a batch of survey ( Baulch, and Hoddinott 2000 ; Kedir, and Mckay 2003 ; Haddad and Ahmed 2003 ) .


To demo the plants and the part of the World Bank in Cambodia, this essay traveling to discourse the affecting of the World Bank in assorted undertakings in Cambodia specifically through the good administration and anticorruption plan. Although Cambodia is one of the universe ‘s unfastened economic systems states with prolonging high degrees of growing in an environment of comparatively weak administration, but after emerging from a race murder and civil war the states has faced a batch of challenges such as hebdomad public service, public finance direction, and corruptness. Having seen such issue, the World Bank had worked hand in glove with the authorities of Cambodia from 2004 to 2010 to prosecute with good administration and anticorruption issue in Cambodia particularly through the nucleus populace sector direction, the allotment of natural resource, or public service bringing. Furthermore, the World Bank besides involved in other undertaking such as instruction, wellness, and set down direction and private sector development ( World Bank, 2011a ) .

The first cardinal country of the battle of the World Bank during this period is core public sector reform through public fiscal direction and civil service reform. In cooperate with other givers ; the World Bank had supported authorities to construct the 2005-2015 Public Financial Management Reform Program which is the bluish print for the authorities and the related ministry to use. Harmonizing to Girishankar et Al. ( 2011 ) in order to back up the public fiscal direction the World Bank had provide IDA ‘s $ 14.45 million Public Financial Management and Accountability investing loaning undertaking, four anterior actions in a $ 15 million development policy operation, and a $ 7 million Bank administered multi-donor trust fund. In 2008, the World Bank support the undertaking on demand for good administration by utilizing IDA approved an advanced $ 19.28 million investing loaning operation. It supported six implementing bureaus to beef up partnerships with citizens and civil society and actuate the demand side.

Another undertaking contributed by the World Bank is in instruction for authorities functionary toward the good administration and anticorruption plan. First, the Bank ‘s analytical work helped place the cross-cutting public sector direction obstruction from functioning good service bringing with lost systemic solutions. The undertaking participated by authorities functionaries from assorted establishments. Furthermore, instructors and some private sectors were besides invited to analyze that new cognition so that they can portion with their colleagues and besides pupils. Since so, nevertheless, advancement has been slow. In relation with that, the World Bank besides offered grants for school betterment to some schools in rural country.

Furthermore, the essay will concentrate on private sector development under the support of the World Bank. Base on the undertaking have done, private sector development docket of the World Bank in Cambodia is narrowly focused chiefly on trade facilitation issues, and constitutes a modest portion of its overall portfolio. Girishankar et Al. added that in 2005 the World Bank approved on the Trade Facilitation and Competitiveness Project funded $ 10 million, with chief aim to take a major beginning of rents by automatizing imposts maps and by deploying a individual electronic window ( one halt service ) to incorporate and ease trade bureaus. On top of that, an Export Market Access Fund to finance fiting grants to cover 50 per centum of the cost of accomplishing market criterions, capacity edifice to implement a grants jurisprudence and an amended investing jurisprudence so that the authorities can spread out the range for private engagement in substructure, and support to guarantee publication of relevant commercial Torahs with the Ministry of Commerce. Another plan named Trade Development Support, which was approved in 2008, besides got $ 12.25 million funded. This plan aims to finance a sector broad attack that supports trade policy preparation and execution, monitoring, and capacity edifice.

Sing the private sector, the International Finance Corporation ( IFC ) , a World Bank squad in Phnom Penh besides participated actively. For case, in the garment sector, the bank had helped the Better Factory Cambodia undertaking working on labour criterion which was originally supported by the International Labour Organization. With IFC support, the undertaking is now developing a scheme to spread out to a fee-for-service attack to monitoring, preparation, and good pattern sharing on work conditions ( World Bank 2009b ) .

In add-on, the IFC have besides back up the Government-Private Sector Forum and operates the regional Mekong Private Sector Development Facility, which intended to advance the duologue between concern groups and the authorities to decide differences and to determine the docket for investing clime reform in Cambodia. In cooperate with the Ministry of Economy and Finance and the IFC, the Prime Minister Hun Sen ever chairs a meeting two times per twelvemonth attended by private business people, the givers, and the related issued authorities bureaus ( World Bank, 2011a ) . Core work is undertaken during the twelvemonth by public-private working groups with a leader in each group and specialise in assorted countries runing from agro-processing to fiscal services, jurisprudence, revenue enhancement, administration, and touristry.

Besides the undertaking in cooperation with authorities, the World Bank besides supported the other undertaking run by non-governmental organisation, and private sector aiming the poorness decrease plan. Those undertakings have core value with the usage of an independent procurance bureau for all procurances to forestall allegations of fraud and corruptness, and the execution of good administration models for all undertaking of International Development Association. The World Bank set the good administration models for each undertaking supported by utilizing eight elements which procurance, revelation, fiscal direction, , civil society function, countenances, codification of ethical behavior, and project-specific elements.


After discoursing some development support plan by World Bank in Cambodia, the undermentioned portion of the essay will seek to measure how effectual of each plan. Harmonizing to the rating by Girishankar et al. there were merely limited impacts on state degree administration as the consequence of the World Bank ‘s attempts. This is a necessary corollary of Cambodia ‘s disputing administration environment, which have been practiced by those authorities functionaries for really long clip since the terminal of the race murder in 1979. It is a good start to present the good administration and anticorruption action with advancement in choice reform countries and sectors as a consequence.

Furthermore, during five old ages of the launched undertaking with support of the World Bank, the public finance direction of the state had besides improved. The betterment have shown in a batch of sector particularly a alteration in revenue enhancement outgo which 90 per centum have gone through the banking sectors which extremely cut down the degree of corruptness in the revenue enhancement aggregation procedure before ( Girishankar et al. , 2011 ) . However, the authorities gave feedback that the degree of betterment is still low and the public finance direction had really small advancement to the point that the state would utilize less support from givers. Additionally, there was some advancement in instruction sector.

Advancement has seen every bit good sing answerability issues. With attempt of authorities, World Bank and other givers the National Audit Authority and Anti-Corruption Unit are established bearing fruit. The impact of and effectivity of these establishments remains to be seen, but it is suppose to be a major stairss for the public and private sector to be held accountable. Besides, the impact of World Bank attempts in the roads and land direction sectors is besides under concern because it this undertaking was non really much cooperation from the authorities. For case, the World Bank had help the authorities and local governments to assist with land direction and disposal for 2,000 occupants in Boeung Kak Lake, but but that fell through in September 2009 when the authorization evicted those resident to other country ( Reuters, 2011 ) .

The last portion to measure the effectivity of the World Bank is in conductive undertakings run by other non-government organisations. There is some indicant that the international procumbent bureau has helped construct assurance and experience among bidders on World Bank undertakings, and raise outlooks that authorities stamps can be won without corruptness. However, there was no grounds of a positive impact on state procurance systems by and large. The chief advancement on procurance was the aid of the World Bank to make Sub-Decree 105 on procurement process ( Girishankar et al. , 2011 ) . This sub-degree has besides strengthened the clime for competitory command, but grounds is that most big contracts are still awarded utilizing less-competitive patterns.

Although the degree of effectivity is found low in most plan supported by the World Bank in Cambodia, but it had contribute significantly to back up the authorities ‘s action program on harmonisation, and on edifice capacity of authorities establishments. The consequence of those undertakings are helping development undertakings and bettering people ‘s support in rural countries. To better the effectivity of development aid of the World Bank and other givers, it requires strong and long permanent cooperation from both the authorities and international spouses.


This essay has clearly shown about the state of affairs of poorness in Cambodia and the engagement of the World Bank to contend against poorness. It has noted that, in the past old ages, Cambodia has experienced important transmutation from a adversity as a consequence of race murder and civil war for about two decennaries, non merely in political and security sphere but besides in economic and societal facets. Based on the latest Cambodia Socio-Economic Survey conducted in 2007 shown the poorness has declined from 39 per centum in 1993-94 to 28.0 per centum in 2004 and to 24.7 per centum in 2007 ( Ministry of Planning, 2010, p.6 ) . A important diminution of 4.6 per centum from 2004 to 2007 represented a decrease of more than 1 per centum per twelvemonth which makes Kampuchean people life in prosperity in the close hereafter.

The World Bank has besides participated a batch in the mission to extinguish poorness in the universe and in Cambodia through AIDSs, proficient aid, and the execution of undertakings target specific issue of the state. Among those, the good administration and anticorruption undertakings was really critical which lead to the improvement of public service provided by authorities functionaries and the right usage of public finance direction. The World Bank cooperated with other spouses and the authorities set up the National Accounting Authority, and Anti Corruption Unit to cover with improper issues. However, the effectivity of the World Bank is still well limited. It is of import to hold strong and long permanent cooperation from the authorities and spouses like the World Bank and others to better the effectivity of development aid in Cambodia.

Personally, I do believe that the peace, political stableness, security, and safety as of today are the requirements for Cambodia to capitalise on its socio-economic potencies. In add-on, the Royal Government of Cambodia formulated the National Programme for Rehabilitation and Development of Cambodia and the first five-year Socio-Economic Development Plan, and other development schemes with vision for rehabilitation and development concentrating on macroeconomic stableness, societal development, and poorness decrease. The execution of these scheme is to foster the attempts to prolong the accomplishments that the Royal Government has hitherto to gain the “ Millennium Development Goals ” in 2015 with the purpose of bettering and heightening public institutional capacity, advancing good administration, and overhauling economic substructure in order to further economic growing, make occupations for all citizens, guarantee societal equity, and increase public sector efficiency every bit good as protect natural and cultural resources, which is critical for sustainable development and poorness decrease for all people in Cambodia.

( Word Count: 4291 )