Founded at Bretton Woods, New Hampshire, in July 1944 by representatives of 44 governments, the International Bank for Reconstruction and Development (IBRD), commonly known as the World Bank, was conceived as a mechanism through which financial resources could be funneled to Europe to aid in the rebuilding effort in the aftermath of World War II.
Initially based solely in Washington, D.C. (where its world headquarters remains), and from its founding to the present day dominated by the United States, the World Bank played a key role in the cold war between the United States and the Soviet Union: at first in western Europe, and then through its loans to nation-states in Asia, Africa, and Latin America (the so-called Third World), considered by the United States key sites in the struggle against international communism.
From the 1950s the World Bank broadened its mandate to encompass economic development and poverty issues in Third World countries through its International Finance Corporation (IFC), its International Development Association (ADA), its International Centre for Settlement of Investment Disputes (ICSID), and its Multilateral Investment Guarantee Agency (MIGA), which together with the IBRD compose the World Bank Group. In 2007 the World Bank Group had 185 member states, with close coordination between the activities of its five entities and some 40 percent of its staff based outside the United States. Its governing structure consists of a board of governors, with a representative from each member state; a board of executive directors; and a president.
In the decades following its foundation, the World Bank underwent a number of broad shifts, from funding postwar reconstruction to large development projects in Third World countries to its current focus on the alleviation of poverty and sustainable development. Scholarly interpretations of the World Bank’s role in world affairs vary widely. Neoclassical and neoliberal economists and social scientists tend to interpret the World Bank in positive terms, as a force for progressive social change. In contrast, many left leaning social scientists tend to view it as serving the interests of multinational corporations and facilitating the foreign policy goals of the world’s advanced industrial countries, particularly the United States.
The bank itself acknowledges many of its past mistakes, particularly its support for massive “white elephant” projects in Africa and Latin America that lined the pockets of corrupt politicians and business owners while doing little to alleviate poverty or advance genuine economic development. Such projects included the Kariba Dam in Zambia and Zimbabwe (Southern Rhodesia) in the 1950s, which displaced and impoverished thousands of Tonga people; the Singrauli thermal coal mining projects in India (financed from the mid-1970s to the early 1990s and accused of causing massive environmental damage and human misery); and the Yacyreta Dam in Paraguay and Argentina (financed in the 1980s and early 1990s and denounced as an environmental catastrophe and a “monument to corruption”).
Despite divergent interpretations, all observers agree that the World Bank and the closely affiliated International Monetary Fund, also founded at Bretton Woods in 1944, have been among the most important international financial entities of the postwar era.