World Bank

BRICS Countries

By Group number 10Section C

SUBMITTED BY SWATHESH SHETTYSWETHA THALIYIL TANEYA TALUDKAR VINJU C VIPINVISHAL GUPTA VISHAL VASWANI 141681416914170141771417814179WORLD BANK -SAVIOUR OF POOR COUNTRIES?

MACROECONOMICS

Created at the 1944Bretton Woods ConferenceBased inWashington, D.C.First country to receive a World Bank loan was France. (US$250 million) Until 1968, its loans wereearmarkedfor construction of income-producing infrastructureFrom 1968 to 1980, the bank concentrated on meeting the basic needs of people in the developing world(loan targets expanded from infrastructure into social services and other sectors)Beginning in 1989 the bank began including environmental groups and NGOs in its loansIn 2000, the bank announced a "war on AIDS", and in 2011, the Bank joined the Stop Tuberculosis Partnership.On 23 March 2012, U.S. PresidentBarack Obamaannounced that the United States would nominateJim Yong Kimas the next president of the Bank. Jim Yong Kim was elected on 27 April 2012.

INTRODUCTION

Objectives of World Bank(i) To assist in the reconstruction and development of territories of members(a) The restoration of economies destroyed or disrupted by war;(b) The reconversion of productive facilities to peaceful needs; and(c) The encouragement of the development of productive facilities and resources in less developing countries;(ii) To promote private investment (iii) To supplement private investment by providing on suitable conditions finance for productive purpose out of its own capital funds (iv) To promote the long-range balanced growth of international trade and the maintenance of equilibrium in balances of payments (v) To arrange the loans made or guaranteed by it in relation to international loans through other channels(vi) To assist in bringing about a smooth transition from a wartime to peacetime economy by the conduct of its operations with due regard to the effect of international investment.

FUNCTIONSWorld Bank provides various technical services to the member countries2. Bank can grant loans to a member country up to 20% of its share in the paid-up capital.3. The quantities of loans, interest rate and terms and conditions are determined by the Bank itself.4. Generally, Bank grants loans for a particular project duly submitted to the Bank by the member country.5. The debtor nation has to repay either in reserve currencies or in the currency in which the loan was sanctioned.6. Bank also provides loan to private investors belonging to member countries on its own guarantee

BRICS Countries

BrazilGDP: $3.012 tnSouth AfricaGDP: $662 bnIndiaGDP: $7.277 tnChinaGDP: $16.149 tnRussiaGDP: $3.491 tn

TREND ANALYSIS

Distribution of LoanAll NationsPoor NationPercentYearTotal Disbursed($)Average/year($Total Disbursed($)Average/year($1947-19511190,680303.99238136060.80419851749.3683,970349.8735.26%1952-19614786396485.37478639648.53014038484.76301403848.562.97%1962-197110119224078.4110119224087041569805.07704156980.569.59%1972-198147384390441.49473843904440456850037.27404568500485.38%1982-1991113172353567.2911317235357102114128023.351021141280290.23%1992-2001130941947799.1313094194780108067393632.941080673936382.53%2002-2011152,235403460.2815223540346139941787727.2313,99417877391.92%2012-20131579608047.62789804023.81563415915.15781707957.698.97%

BRICS Nation

Loans disbursed and GDPYearLoansGDP1991-1992-17.78%6.43%1992-1993-6.67%9.97%1993-19943.02%10.41%1994-199533.18%12.81%1995-1996-31.72%9.74%1996-1997-8.12%6.49%1997-199875.56%-1.05%1998-1999-13.77%-1.09%1999-2000-41.40%8.43%2000-200156.10%0.32%2001-2002-33.63%1.68%2002-200313.44%12.14%2003-2004-10.59%18.30%2004-200523.90%18.05%2005-200611.59%17.82%2006-2007-17.57%23.24%2007-200899.33%18.90%2008-200954.42%-0.20%2009-2010-13.06%21.20%2010-2011-52.14%16.07%

Scatter PlotR= 0.5495 (Coefficient of Correlation)R2 = 0.3020 (Coefficient of Determination)

Benefits from World Bank in India

Benefits from World Bank in China

Benefits from World bank in Brazil

Benefits from World bank in RussiaBenefits from World bank in South Africa

Growth StrategiesThe World Bank supports developing countries to prepare their poverty reduction strategies. The strategies focuses on issues such as: Universal primary educationBasic healthRural infrastructure and other public servicesIlliteracy and lack of access to basic health care.The World Banks financial assistance is very productive and accelerates growth and poverty reduction.Contd.Difficult to provide any useful large-scale financial assistance to distorted and corrupt Institutions. Hence, World Bank now channels its assistance to relatively good governments in the developing world.Countries such as China, India, Mexico, and Brazil use the Bank effectively to promote their own development agendas. None of these countries would borrow from the Bank or take advice from it unless they found these services to be useful to them.

Alternative to World Bank

National Development Bank or the BRICS bank enable founding members to hold 55% of the minimum voting power at all times, unlike the World Bank, and future members can hold a maximum of up to 45%.

The bank aims to provide money for infrastructure and development projects to its member countries. Every nation would have equal say irrespective of the size of its GDP, unlike World Bank.

Reasons No country dominates the bank and all founding members are on equal footing despite differences in GDP size.It shows that the BRICS are viable and dynamic emerging economies despite the recent gap in growth rates. It shows that the BRICS countries are developing and working towards achieving a common goalimproving the living standards and infrastructure needs of their people.The bank directly challenges the financial order set up by the U.S and Europe. China and India have failed to increase their influence in the World Bank and the IMF, and this new bank would help withreforms benefiting these nations.THANK YOU