preview

What is the World Bank? Essay

Decent Essays
During, and in the years after the World War 2, there was a significant need of financial aid, especially in Europe. The structural US were almost untouched, and their economy was rising. Soon they became the new superpower. At a conference held in Bretton Woods, New Hampshire, in 1944, the World Bank (WB) was founded for purposes of reconstruction in Europe. The head office was placed in Washington, and the bank president was American. When the economic situation in Europe stabilized, the WB shifted its focus. The WB evolved from being a postwar lender in Europe, into one of the most influential financial institution today, because of its funding in the development world on different continents. This text will deal with the World Bank,…show more content…
So the output is proportional to machines, if you change the amount of machines, you get the same change in output. “Domar’s model was not intended as a growth model, made no sense as a growth model and was repudiated as a growth model, so it is ironic that Domar’s growth model became and continues to be today the most applied growth model in economic history.” (Easterly, Elusive Quest for Growth p.28) The result of the use of this economic model was short term. The growth stopped quickly, and even more money was invested. Easterly argues that the models used for growth, unfortunately was influenced by the great depression, with huge unemployment, and the industrialization of Soviet. What applies to one country and one situation does not necessarily go well in another. Many of the poor countries used import substituted industrializations, making their own goods instead of importing cheaper and better merchandise. By the start of the 80s, countries such as Mexico were in so deep debt, that they could not afford to pay the interest rate. (Easterly, Elusive Quest for Growth) The end of the 80’s and communism introduced the Washington Consensus. The Consensus was a long term structural adjustment, where the recipients of financial aid relied on some fundamental conditions. The loaner needed to apply free trade and private enterprise. This became a contributory factor for the introduction of capitalism
Get Access