Capital: Capital can take many forms but for the purpose of this section we will refer to capital as money.
Core Areas: These are economically important and attract investment, capital and people. For the purpose of this section we will consider MEDCs like the US, Canada, Western Europe and Japan to be the core areas.
Periphery Areas: These areas are poorer and may experience exploitation, economic leakage and out migration. For the purpose of this section we will consider LEDCs in Africa, Central Asia and parts of Latin America to be the periphery.
For further details on why areas become core or periphery and a list of some of their characteristics visit: Global core and periphery
Loans: Money that is borrowed from someone.
Debt Repayment: The paying back of money that you have borrowed.
Aid: To provide support or help. Aid can take many different forms ranging from giving money and loans to providing technology and expertise to providing food and rescue teams.
Remittances: Money sent home to friends and family by migrants living in a different location (often abroad).
Foreign Direct Investment (FDI): Investment made by overseas governments, businesses or individuals in foreign enterprises.
Repatriation of Profits: TNCs operating in foreign countries will normally send any profits made back to the TNC headquarters. This repatriation of profits is sometimes known as economic leakage.
By their very nature core areas attract capital, investment, resources and people through things like FDI, debt repayment and repatriation of profits. However, flows of capital can also go from core ares to peripheral areas in the forms of FDI, loans, aid and remittances. Below are a few examples of flows in both ways.
Loans and Debt Repayment
Individuals, companies and countries often have to borrow money in order to finance their operations. For example most individuals will take a bank loan (mortgage) at some point in order to buy a house. Companies may take loans in order to buy new equipment, build a new factory or buy supplies. Countries may have to borrow money to fund infrastructure projects, pay welfare benefits or even to fund a war. Individuals and companies will normally take loans with private banks e.g. HSBC or Citigroup. Countries may also borrow money from private banks or other financial institutions like the IMF or issue bonds to be sold to private investors (individuals and countries).
Bonds: These are a type debt security (similar to loans) that countries issue when they want to raise capital (money). Creditors will buy the bonds and will then receive repayment plus interest off the debtor over an agreed period. Countries with bad credit ratings e.g. Greece have to pay higher rates of interest in order to sell bonds to investors.
Even though debt is often associated with LEDCs, the highest levels of debt are actually held by MEDCs. Countries like the US, UK, France and Germany has debt that runs into trillions of dollars. However, because these countries also have large GDP's they are normally able to service their debt fairly comfortably. In the recent economic crisis though a number of more developed countries like Greece, Ireland and Portugal have had problems servicing their debt and have had to have bailouts from the EU and the IMF. They have also been enforced to impose strict austerity measures in order to reduce spending and debt.
Debt Service: The money needed to cover debt repayments. Debt service is often calculated as a ratio or proportion of income/GDP.
Bailout: Money given to a company or a country that is at risk of failing (going bankrupt) or defaulting on its debt.
Austerity: This is a policy of deficit cutting through reduced government spending.
Many LEDCs have high levels of debt. The high levels of debt often came about from money borrowed after their independence (borrowed from private MEDC banks, IMF and World Bank). There have been recent attempts to help countries with high debt. Two schemes aimed at reducing debt are:
HIPC: The highly indebted poor countries scheme was initiated by the IMF and World Bank in 1996. Countries with unsustainable debt burden were give low interest loans or debt cancellations as long as they followed reforms like reducing corruption and promoting democracy.
Jubilee 2000: This was an international coalition that hoped to reduce or cancel third world debt by 2000. Its aim was to cancel $90 billion of world debt.
Official Development Assistance (ODA): This is the term that the Development Assistance Committee (DAC) of the OECD has given to official aid.
By looking at the top graph on the right it is obvious that the US is the world's biggest giver of aid. However, as a percentage of GNI it is not even in the top 20 donors. The UN has made it a target of all MEDCs to give 0.7% of their GNI as aid. Unfortunately there are currently only five countries that do this; Sweden, Luxembourg, Norway, Denmark and the Netherlands.
According to the OECD the current top recipient of ODA is Afghanistan followed by Indonesia. Some might find it surprising that the world's second largest economy, China is still number 4 on the list of recipients. Japan is currently China's biggest donor followed by the UK, France and Germany. The reason China gets so much aid is that millions still live in poverty and they need assistance to help with disasters and to develop clean water and energy supplies. However, many countries in the current economic crisis area asking if China need this much money and are reducing the amount of aid that they give, especially at a time that China is giving aid itself to so many countries in Africa and Latin America.
For further information on the different types of aid and a list of some of the advantages and disadvantages of aid visit: Reducing disparities.
Remittances
Remittances is money sent home to friends and family by migrants living elsewhere (often in a foreign country). Remittances can be a very important source of income for LEDCs. In 2007 the World Bank estimated that remittances sent around the world totaled over $250 billion, with most flows going from MEDCs to LEDCs. To the right you can see that El Salvador receives 16% of its GDP from remittances (mostly from friends and family living in the US) and that Tajikistan in Central Asia receives 35% of its GDP from remittances. Remittances can be beneficial because money goes directly to people that need it rather than through governments. It also means that money is spent how people want it to be spent. However, reliance on remittances can create dependency, they are vulnerable to changes in exchange rates and they can fall significantly during economic downturns.
For further information on remittances and a list of some of the advantages and disadvantages of remittances visit: Reducing disparities.
Most countries want to attract FDI because it helps their economy grow and creates jobs. LEDCs can present themselves as attractive locations for FDI because of the potential profits. Enterprises that have been invested in, in LEDCs may present high levels of profit because of:
Cheap labour
New markets
Low taxation
Cheap land and resources
Relaxed planning and environmental regulations
However, despite attractions, it is still MEDCs that receive the most FDI. LEDCs can miss out on FDI because of:
Unstable or corrupt government
Poor transport and communication links
Poverty reducing potential market
Complicated regulations in foreign languages
Unstable currencies or economies
Some growth economies and emerging markets like China, India and Brazil are seeing increases in FDI, but until LEDCs are able to improve their economies and infrastructure they will continue to lose out to MEDCs. It must also be remembered that FDI can cause problems and is not always advantageous. Problems may include increased pollution, inflation, exploitation of resources, economic leakage and closure of local industries.
Transnational corporations are companies that operate in more than one country. Normally they will have their headquarters in their country of origin and will repatriate most of their profits back to this location. They will then often have research and development (R&D) facilities in MEDCs where there is skilled labour and high levels of technology. Manufacturing plants will often be built in countries where production costs are lowest or markets strongest. Retail outlets will be placed in any country that has a potential market.
The World's biggest TNCs have traditionally been from MEDCs like the US, Japan, the UK and Germany. However, some of the World's biggest TNCs are now from emerging markets like China and Brazil. In the future there are likely to be a lot more from these countries as well as countries like Russia, India and Indonesia. These countries are going to see a growth in their TNCs because they have huge domestic markets and their products will improve in quality and recognition.
Traditionally, oil, banking and car companies have been the biggest TNCs in the World. However, with changing technology and improving living standards, other TNCs like pharmaceuticals, electronics and retail are appearing.
Countries are able to attract TNCs into their countries in a number of ways, including:
Offering reduced business taxes
Offering cheap and skilled labour and assisting with recruitment
Helping with acquisition of land and relaxing planning controls.
Improving transport and communication links
Offering access to domestic market
Relaxed environmental regulations
Allowing economic migrants (foreign workers) into their country
A lot of these incentives maybe offered in Enterprise zones established by countries. To learn about the enterprise zone in Incheon, Korea, go to: Reducing disparities.
ADVANTAGES OF TNCs
DISADVANTAGES OF TNCs
Creates jobs for local people
Locals with jobs then spend money in their local economy at local businesses and therefore there is a positive multiplier effect as extra money gets added to the local economy.
TNCs will pay local and government taxes and therefore increase the government budget.
Jobs at a TNC will be in the formal economy, so hopefully better regulated in terms of safety, pay, etc.
Improves workers skill and education level
They introduce new technology into the country
Infrastructure like roads and ports are often upgraded and benefit the whole economy
Diversifies the economy, might move away from the reliance on one industry like farming or tourism
The country receives prestige for attracting TNCs and investment into the country.
Many of the best paid managerial jobs go to foreigners
Local workers often do manual jobs which are poorly paid and often workers suffer exploitation (long shifts, no breaks, etc.)
There will be some economic leakage as profits from TNCs go back to their home country
Increasingly manufacturing processes are becoming more mechanised so less workers are needed in factories.
One of the attractions of LEDCs is cheap labour, but as a country develops labour costs increase and TNCs may move to cheaper locations.
Products produced by TNCs maybe too expensive for locals to buy. TNCs may also use local raw materials.
The increased demand created by TNCs may cause local inflation.
If the government is building new roads or a port for a TNC it probably means that they can't spend as much money on education or healthcare.
TNC decision makers are often foreign so policies of TNCs may not always benefit local people.
Trade: The exchange of goods and services.
Imports: Good and services being purchased from overseas and brought into a country.
Exports: Goods and services leaving a country to be sold overseas.
Balance of Trade: The difference in the monetary value of exports and imports over a specified period (normally a year or a quarter).
Balance of Payments: This accounts for the balance of all monetary transactions between countries. This includes goods like the balance of trade but also services and transfers of financial capital.
Trade deficit (in the red): When the value of your imports is greater than the value of your exports.
Trade Surplus (in the black): When the value of your exports is greater than the value of your imports.
Protectionism: Methods used to protect domestic industries from foreign competition. This might be done with tariffs, quotas or subsidies.
Currency Devaluation: This means reducing the value of their currency in relation to other currencies. This might be done by keeping interest rates low so people don't want to invest in it or flooding the market with the currency (increasing supply)
The WTO started its life as GATT (General Agreement on Tariffs and Trade). GATT was established in 1948. GATT involved member countries meeting (rounds) to discuss and agree tariffs over trade. The final round in Uruguay (1986-94) agreed to establish its successor the WTO. The WTO officially began life on the 1st January 1995. The WTO Is based in Geneva and now has 153 members who between them represent 97% of total world trade. Although GATT only looked at the trade of goods, the WTO also looks at the trade of services and intellectual property rights. The aim of the WTO is to:
Liberalise (free) world trade (reduce protectionism)
Create a forum for governments to negotiate global trade agreements
Be a place to settle trade disputes
Be a place to set and clarify trade rules.
The WTO's most recent negotiations were in Doha, Qatar. The aim of the negotiations was to involve LEDCs more in global trade. One of the major sticking points in the talk was Europe's and the US's refusal to cut farm subsidies.
Despite its work, the WTO has had some critics. It is criticised for favouring MEDCs especially over its agricultural subsidies, allowing counterfeiting and breaking of copyright/patents to continue in member countries and having no power to punish countries who break trade rules.
The aim of all national governments is either to try and balance their budget or to get a budget surplus (unfortunately most countries run a deficit). As well as balancing spending and taxation governments also need to look at the their levels of imports and exports. Governments can increase or decrease imports and exports in some of the following ways
National governments can try and increase flows of global trade in a number of ways including:
Joining a trading bloc or trading organisation
Promoting free trade and ending protectionism
Opening enterprise zones and attracting TNCs
Devaluing their currency
They can also try and reduce flows of global trade in some of the following ways:
Using protectionist measures (tariffs and quotas)
Imposing sanctions or embargoes with other countries
Switching to more planned economies
Increasing regulations and environmental controls (more red tape)
Imposing ownership regulations on foreign companies
International Monetary Fund (IMF)
The IMF like the World Bank was created at Bretton Woods in 1944. It started with only 46 members but has now grown to include 186. Member countries all contribute to a pool of money which member countries can then borrow on a temporary basis to overcome budget deficits/imbalances. The IMF was extremely important after WWII to help stabilise the global economy.
The IMF has taken a leading role during the current global economic crisis. It has sold gold reserves to increase it pool of money and the G20 leaders have pledged a further $500 billion to allocate to other members suffering from budgetary problems. Even though the IMF is currently taking a leading role in the economic crisis, it has been heavily criticised. Criticisms include:
The IMF have supported some undemocratic governments that have been favourable to European and US TNCs.
SAPs imposed on borrowing countries were often damaging, forcing countries to sell state assets and to cut funding to education and health.
The IMF has forced countries to impose strict austerity measures in order to receive money (increased taxes and reduced spending). Greece has had to follow very strict austerity measures to get help from the IMF and EU.
The main funding nations (MEDCs) have too much influence over decisions.
The head of the IMF always comes from Europe
That it often has reactionary policies rather than preventative ones.
The World Bank was established in Bretton Woods in 1944 and has its headquarters in Washington DC. The World Bank is not a traditional high street bank, but a global one owned by its member countries (187 countries). It has two main institutions, the International Bank for Reconstruction and Development and the International Development Association. The bank has over 10,000 employees and over 100 offices around the world. In its early days the bank did not lend much money, but then in the late 1960's and 1970's it started lending more money to developing countries in order to fund schools, hospitals, infrastructure projects, etc. In the 1980's the World Bank along with the IMF imposed SAP (structural Adjustment programmes) on many of its borrowers.
From the 1990's onwards the World Bank is now more interested in helping countries achieve the UN's Millennium Development Goals. This includes reducing poverty, improving health and education and ensuring sustainable growth.
The World Bank has had a number of criticisms including:
Its imposition of policies on developing countries (particularly the damaging SAPs)
Its assumption that LEDCs cannot develop without outside help and knowledge
The largest contributors (MEDCs) have too much power over policies
That the head of the World Bank always comes from the US
That it focuses too much on GDP growth rather than improvement in living standards.
Some development projects were environmentally damaging e.g. dams causing deforestation
Some projects involved expensive technology which countries could not fund themselves.
SAP (structural adjustment programme): These were sets of reforms/policies imposed by the IMF on countries in order for them to receive loans. The policies were very strict and may have involved:
Currency devaluation
Trade liberalisation
Privatisation of state industries
Removal of price controls and subsidies
Reduced government spending
Acceptance of foreign ownership
Reducing corruption
Many of these programmes were later criticised for favoring MEDC TNCs, for governments selling off assets cheaply and underfunding vital institutions like healthcare and education. The diagram below shows some of the major trade flows. Although figures are not clear it is obvious that the major flows are still between MEDCs and that most LEDCs are still unable to participate in the global economy on a major scale.
Financial flows
Capital: Capital can take many forms but for the purpose of this section we will refer to capital as money.
Core Areas: These are economically important and attract investment, capital and people. For the purpose of this section we will consider MEDCs like the US, Canada, Western Europe and Japan to be the core areas.
Periphery Areas: These areas are poorer and may experience exploitation, economic leakage and out migration. For the purpose of this section we will consider LEDCs in Africa, Central Asia and parts of Latin America to be the periphery.
For further details on why areas become core or periphery and a list of some of their characteristics visit: Global core and periphery
Loans: Money that is borrowed from someone.
Debt Repayment: The paying back of money that you have borrowed.
Aid: To provide support or help. Aid can take many different forms ranging from giving money and loans to providing technology and expertise to providing food and rescue teams.
Remittances: Money sent home to friends and family by migrants living in a different location (often abroad).
Foreign Direct Investment (FDI): Investment made by overseas governments, businesses or individuals in foreign enterprises.
Repatriation of Profits: TNCs operating in foreign countries will normally send any profits made back to the TNC headquarters. This repatriation of profits is sometimes known as economic leakage.
By their very nature core areas attract capital, investment, resources and people through things like FDI, debt repayment and repatriation of profits. However, flows of capital can also go from core ares to peripheral areas in the forms of FDI, loans, aid and remittances. Below are a few examples of flows in both ways.
Loans and Debt Repayment
Individuals, companies and countries often have to borrow money in order to finance their operations. For example most individuals will take a bank loan (mortgage) at some point in order to buy a house. Companies may take loans in order to buy new equipment, build a new factory or buy supplies. Countries may have to borrow money to fund infrastructure projects, pay welfare benefits or even to fund a war. Individuals and companies will normally take loans with private banks e.g. HSBC or Citigroup. Countries may also borrow money from private banks or other financial institutions like the IMF or issue bonds to be sold to private investors (individuals and countries).
Bonds: These are a type debt security (similar to loans) that countries issue when they want to raise capital (money). Creditors will buy the bonds and will then receive repayment plus interest off the debtor over an agreed period. Countries with bad credit ratings e.g. Greece have to pay higher rates of interest in order to sell bonds to investors.
Even though debt is often associated with LEDCs, the highest levels of debt are actually held by MEDCs. Countries like the US, UK, France and Germany has debt that runs into trillions of dollars. However, because these countries also have large GDP's they are normally able to service their debt fairly comfortably. In the recent economic crisis though a number of more developed countries like Greece, Ireland and Portugal have had problems servicing their debt and have had to have bailouts from the EU and the IMF. They have also been enforced to impose strict austerity measures in order to reduce spending and debt.
Greek Bonds Rated Junk by Standard & Poors - BBC article
Greece insists it will not default on huge debt - BBC article
The Greek Gamble: New bailout means new EU risk - BBC articles
Debt Service: The money needed to cover debt repayments. Debt service is often calculated as a ratio or proportion of income/GDP.
Bailout: Money given to a company or a country that is at risk of failing (going bankrupt) or defaulting on its debt.
Austerity: This is a policy of deficit cutting through reduced government spending.
Many LEDCs have high levels of debt. The high levels of debt often came about from money borrowed after their independence (borrowed from private MEDC banks, IMF and World Bank). There have been recent attempts to help countries with high debt. Two schemes aimed at reducing debt are:
HIPC: The highly indebted poor countries scheme was initiated by the IMF and World Bank in 1996. Countries with unsustainable debt burden were give low interest loans or debt cancellations as long as they followed reforms like reducing corruption and promoting democracy.
Jubilee 2000: This was an international coalition that hoped to reduce or cancel third world debt by 2000. Its aim was to cancel $90 billion of world debt.
For more information on origins of debt, problems caused by debt and HIPC visit: Origin of disparities and Reducing disparities
Aid
Official Development Assistance (ODA): This is the term that the Development Assistance Committee (DAC) of the OECD has given to official aid.
By looking at the top graph on the right it is obvious that the US is the world's biggest giver of aid. However, as a percentage of GNI it is not even in the top 20 donors. The UN has made it a target of all MEDCs to give 0.7% of their GNI as aid. Unfortunately there are currently only five countries that do this; Sweden, Luxembourg, Norway, Denmark and the Netherlands.
According to the OECD the current top recipient of ODA is Afghanistan followed by Indonesia. Some might find it surprising that the world's second largest economy, China is still number 4 on the list of recipients. Japan is currently China's biggest donor followed by the UK, France and Germany. The reason China gets so much aid is that millions still live in poverty and they need assistance to help with disasters and to develop clean water and energy supplies. However, many countries in the current economic crisis area asking if China need this much money and are reducing the amount of aid that they give, especially at a time that China is giving aid itself to so many countries in Africa and Latin America.
David Cameron: Why we're right to ringface aid budget - Guardian Article
Pakistan: US suspends $800 million of military aid - BBC article
Egypt PM dismisses US aid threat over activists trial - BBC article
US foreign aid benefits recipients - and donor - Guardian article
The $2.5 billion question: Why does China get so much aid - NCT article
UK to end direct aid to 16 countries - BBC article
UK seeks China aid partnership in Africa - BBC article
For further information on the different types of aid and a list of some of the advantages and disadvantages of aid visit: Reducing disparities.
Remittances
Remittances is money sent home to friends and family by migrants living elsewhere (often in a foreign country). Remittances can be a very important source of income for LEDCs. In 2007 the World Bank estimated that remittances sent around the world totaled over $250 billion, with most flows going from MEDCs to LEDCs. To the right you can see that El Salvador receives 16% of its GDP from remittances (mostly from friends and family living in the US) and that Tajikistan in Central Asia receives 35% of its GDP from remittances. Remittances can be beneficial because money goes directly to people that need it rather than through governments. It also means that money is spent how people want it to be spent. However, reliance on remittances can create dependency, they are vulnerable to changes in exchange rates and they can fall significantly during economic downturns.
Reducing disparities.
Migrants Feel Recession Aftermath - BBC article
Money sent home more than aid - BBC article
Foreign Direct Investment (FDI)
Most countries want to attract FDI because it helps their economy grow and creates jobs. LEDCs can present themselves as attractive locations for FDI because of the potential profits. Enterprises that have been invested in, in LEDCs may present high levels of profit because of:
However, despite attractions, it is still MEDCs that receive the most FDI. LEDCs can miss out on FDI because of:
Some growth economies and emerging markets like China, India and Brazil are seeing increases in FDI, but until LEDCs are able to improve their economies and infrastructure they will continue to lose out to MEDCs. It must also be remembered that FDI can cause problems and is not always advantageous. Problems may include increased pollution, inflation, exploitation of resources, economic leakage and closure of local industries.
China in Africa - Friend or Foe - BBC article
China boosts foreign investment in Latin America - BBC article
Foreign investment in China slows on tightening policy - BBC article
Transnational Corporations (TNCs)
Transnational corporations are companies that operate in more than one country. Normally they will have their headquarters in their country of origin and will repatriate most of their profits back to this location. They will then often have research and development (R&D) facilities in MEDCs where there is skilled labour and high levels of technology. Manufacturing plants will often be built in countries where production costs are lowest or markets strongest. Retail outlets will be placed in any country that has a potential market.
The World's biggest TNCs have traditionally been from MEDCs like the US, Japan, the UK and Germany. However, some of the World's biggest TNCs are now from emerging markets like China and Brazil. In the future there are likely to be a lot more from these countries as well as countries like Russia, India and Indonesia. These countries are going to see a growth in their TNCs because they have huge domestic markets and their products will improve in quality and recognition.
Traditionally, oil, banking and car companies have been the biggest TNCs in the World. However, with changing technology and improving living standards, other TNCs like pharmaceuticals, electronics and retail are appearing.
Countries are able to attract TNCs into their countries in a number of ways, including:
A lot of these incentives maybe offered in Enterprise zones established by countries. To learn about the enterprise zone in Incheon, Korea, go to: Reducing disparities.
ADVANTAGES OF TNCs
DISADVANTAGES OF TNCs
Imports: Good and services being purchased from overseas and brought into a country.
Exports: Goods and services leaving a country to be sold overseas.
Balance of Trade: The difference in the monetary value of exports and imports over a specified period (normally a year or a quarter).
Balance of Payments: This accounts for the balance of all monetary transactions between countries. This includes goods like the balance of trade but also services and transfers of financial capital.
Trade deficit (in the red): When the value of your imports is greater than the value of your exports.
Trade Surplus (in the black): When the value of your exports is greater than the value of your imports.
Protectionism: Methods used to protect domestic industries from foreign competition. This might be done with tariffs, quotas or subsidies.
Currency Devaluation: This means reducing the value of their currency in relation to other currencies. This might be done by keeping interest rates low so people don't want to invest in it or flooding the market with the currency (increasing supply)
What is the currency war about - BBC article
World Trade Organisation (WTO)
The WTO started its life as GATT (General Agreement on Tariffs and Trade). GATT was established in 1948. GATT involved member countries meeting (rounds) to discuss and agree tariffs over trade. The final round in Uruguay (1986-94) agreed to establish its successor the WTO. The WTO officially began life on the 1st January 1995. The WTO Is based in Geneva and now has 153 members who between them represent 97% of total world trade. Although GATT only looked at the trade of goods, the WTO also looks at the trade of services and intellectual property rights. The aim of the WTO is to:
The WTO's most recent negotiations were in Doha, Qatar. The aim of the negotiations was to involve LEDCs more in global trade. One of the major sticking points in the talk was Europe's and the US's refusal to cut farm subsidies.
Despite its work, the WTO has had some critics. It is criticised for favouring MEDCs especially over its agricultural subsidies, allowing counterfeiting and breaking of copyright/patents to continue in member countries and having no power to punish countries who break trade rules.
http://www.wto.org/
National Governments
The aim of all national governments is either to try and balance their budget or to get a budget surplus (unfortunately most countries run a deficit). As well as balancing spending and taxation governments also need to look at the their levels of imports and exports. Governments can increase or decrease imports and exports in some of the following ways
National governments can try and increase flows of global trade in a number of ways including:
They can also try and reduce flows of global trade in some of the following ways:
International Monetary Fund (IMF)
The IMF like the World Bank was created at Bretton Woods in 1944. It started with only 46 members but has now grown to include 186. Member countries all contribute to a pool of money which member countries can then borrow on a temporary basis to overcome budget deficits/imbalances. The IMF was extremely important after WWII to help stabilise the global economy.
The IMF has taken a leading role during the current global economic crisis. It has sold gold reserves to increase it pool of money and the G20 leaders have pledged a further $500 billion to allocate to other members suffering from budgetary problems. Even though the IMF is currently taking a leading role in the economic crisis, it has been heavily criticised. Criticisms include:
http://www.imf.org/
World Bank
The World Bank was established in Bretton Woods in 1944 and has its headquarters in Washington DC. The World Bank is not a traditional high street bank, but a global one owned by its member countries (187 countries). It has two main institutions, the International Bank for Reconstruction and Development and the International Development Association. The bank has over 10,000 employees and over 100 offices around the world. In its early days the bank did not lend much money, but then in the late 1960's and 1970's it started lending more money to developing countries in order to fund schools, hospitals, infrastructure projects, etc. In the 1980's the World Bank along with the IMF imposed SAP (structural Adjustment programmes) on many of its borrowers.
From the 1990's onwards the World Bank is now more interested in helping countries achieve the UN's Millennium Development Goals. This includes reducing poverty, improving health and education and ensuring sustainable growth.
The World Bank has had a number of criticisms including:
http://www.worldbank.org/
Many of these programmes were later criticised for favoring MEDC TNCs, for governments selling off assets cheaply and underfunding vital institutions like healthcare and education.
The diagram below shows some of the major trade flows. Although figures are not clear it is obvious that the major flows are still between MEDCs and that most LEDCs are still unable to participate in the global economy on a major scale.
US Freezes Japan Gangster Funds - BBC article
World Trade To Recover Say WTO - BBC article
Global Trade Will Shrink by 9% - BBC article
G20 leaders seal $1tn global deal - BBC article