PROJECT ON

INTERNATIONAL
BUSINESS

Under the guidance of

Prof. Pritish Kumar Sahoo

Submitted By:
Nisha Singh 21PGDM-BHU055

Priya Kumari 21PGDM-BHU063

Ritwik Subudhi 21PGDM-BHU079

Saurabh Kumar 21PGDM-BHU087

Shreya Jain 21PGDM-BHU097

 PREFACE

Management of Modern business requires an opportunity of

multidisciplinary concept and indepth knowledge of specific
analytical tools, geared to the solution to the real life problems. Not
every real situation is unique but a set of theoretical tools of
knowledge, itself based on empirical foundation can help in
developing the mechanism for handling such situation.

Project study report provides an opportunity to the student to

understand the industry with special emphasis on the development of
skills in analysing interpreting practical problems through application
of management.

The essential aim of management should be to assist management in

decision making and improving the efficiency of the organisation.
 CONTENTS
Index S No.
Introduction to World Bank 6-12
 Structure
 Functions
 Objectives
 IBRD & Indian Economy
 Benefits of World Bank to India
 Difference between IBRD & IMF
Conclusion 13
INTRODUCTION TO
“THE WORLD BANK”
 INTRODUCTION

The World Bank is an international financial institution that provides

loans to countries of the world for capital programs. It comprises two
institutions: the International Bank for Reconstruction and
Development (IBRD), and the International Development Association (IDA).
The World Bank is a component of the World Bank Group, which is part of
the United Nations system.
The World Bank's stated official goal is the reduction of poverty. However,
according to its Articles of Agreement, all its decisions must be guided by a
commitment to the promotion of foreign investment and international trade and
to the facilitation of capital investment.
The International Bank for Reconstruction and Development (IBRD) more
popularly known as the WORLD BANK was formed as a part of the
deliberations at Bretton Woods in 1945. The World Bank was floated in order
to give loans to members’ countries, initially for the reconstruction of their
(world) war-ravaged economies, and later for the development of the economies
of the poorer member countries.
The World Bank provides its member countries (188 in numbers) long term
investment loan on reasonable terms. By far the bulk of the World Bank loans
have been for financing specific projects. In recent years, it has also been
engaged in giving structural adjustment loans to the heavily indebted countries.
The World Bank is an inter-governmental institution, corporate in form, whose
capital stock is entirely owned by US member governments.

Voting power of THE WORLD BANK MEMBERS :

In 2010 voting powers at the World Bank were revised to increase the voice of
developing countries, notably China. The countries with most voting power are
now the United States (15.85%), Japan (6.84%), China (4.42%), Germany
(4.00%), the United Kingdom (3.75%), France (3.75%), India (2.91%), Russia
(2.77%), Saudi Arabia (2.77%) and Italy (2.64%). Under the changes, known as
'Voice Reform – Phase 2', countries other than China that saw significant gains
included South Korea, Turkey, Mexico, Singapore, Greece, Brazil, India, and
Spain. Most developed countries' voting power was reduced, along with a few
developing countries such as Nigeria. The voting powers of the United States,
Russia and Saudi Arabia were unchanged.

The changes were brought about with the goal of making voting more universal
in regards to standards, rule-based with objective indicators, and transparent
among other things. Now, developing countries have an increased voice in the
"Pool Model", backed especially by Europe. Additionally, voting power is
based on economic size in addition to International Development Association
contributions.

THE GOALS AND BENEFITS OF THE WORLD BANK

The World Bank has two stated goals that it aims to achieve by 2030. The first
is to end extreme poverty by decreasing the amount of people living on less than
$1.90 a day to below 3% of the world population. The second is to increase
overall prosperity by increasing the income growth in the bottom 40% of the
world's population.

Beyond its specific goals, the World Bank provides qualifying individuals and
governments with low-interest loans, zero-interest credits and grants. These
debt borrowings and cash infusions help with global education, health care,
public administration, infrastructure and private sector development. The World
Bank also shares information with world governments through policy advice,
research and analysis and technical assistance.

In conclusion, The World Bank is a provider of financial and technical

assistance to developing countries around the globe. The bank considers itself a
unique financial institution that provides partnerships to reduce poverty and
support economic development by giving loans and offering advice and training
to both the private and public sectors. The World Bank was established in 1944,
is headquartered in Washington D.C., and has more than 10,000 employees in
over 120 offices worldwide.
 STRUCTURE

The World Bank Group consists of, apart from the World Bank itself,
The International Development Association (IDA), The International Finance
Corporation (IFC), and the Multi-lateral Investment Guarantee Agency (MIGA)
and the International Centre for Settlement of Investment Disputes (ICSID).
The International Development Association (IDA) is the part of the World Bank
that helps the world’s poorest countries. Established in 1960, IDA aims to
reduce poverty by providing interest-free credits and grants for programs that
boost economic growth, reduce inequalities and improve people’s living
conditions. IDA is also called soft lending arm of the World Bank since it gives
interest free loans to the poor countries.
IFC provides investments and advisory services to build the private sector in
developing countries. IFC is a member of the World Bank Group, is the largest
global development institution focused on the private sector in developing
countries. IFC is a dynamic organization, constantly adjusting to the evolving
needs of the clients in emerging markets.

IFC’s three businesses – Investment Services, Advisory Services, and IFC Asset

Management – are mutually reinforcing, delivering global expertise to clients in
more than a 100 developing countries. IFC provide both immediate and long-
term financing, and combine it with advice that helps companies grow quickly
and sustainably – by innovating, raising standards, mitigating risk,
strengthening the investment climate, and sharing expertise across industries
and regions.

Created in 1988, MIGA helps encourage foreign investment in developing

countries by providing guarantees to foreign investors against loss caused by
noncommercial risks.
ICSID was founded in 1966. It is an autonomous body which facilitates the
settlements of disputes between foreign investors and their host countries.

FUNCTIONS

World Bank is playing main role of providing loans for development works to
member countries, especially to underdeveloped countries. The World Bank
provides long-term loans for various development projects of 5 to 20 years
duration.

The main functions can be explained with the help of the following points:

1. World Bank provides various technical services to the member countries. For
this purpose, the Bank has established “The Economic Development Institute”
and a Staff College in Washington.

2. 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, but for this loan private investors have to seek prior
permission from those counties where this amount will be collected.

OBJECTIVES

The following objectives are assigned by the World Bank:

 To provide long-run capital to member countries for economic

reconstruction and development.
 To induce long-run capital investment for assuring Balance of Payments
(BOP) equilibrium and balanced development of international trade.
 To provide guarantee for loans granted to small and large units and other
projects of member countries.
 To ensure the implementation of development projects so as to bring
about a smooth transference from a war-time to peace economy.
 To promote capital investment in member countries by the following
ways;

 To provide guarantee on private loans or capital investment.

  If private capital is not available even after providing guarantee,
then IBRD provides loans for productive activities on considerate
conditions.

WORLD BANK & INDIA’s

ECONOMIC DEVELOPMENT

In its 50-year partnership with India, the Bank concentrated on the growth
objective through subscribing to the trickle-down theory. Over the past five
years, it has posited its initiatives on a plain of poverty alleviation, to which
results are yet to be seen. This paper explores the effectiveness of the Bank’s
initiatives in terms of its contribution to India's growth, development and
poverty alleviation.
The author reviews the agricultural, forestry and power sectors as an illustration
of the broader impact of some of the Bank's policies, and argues that in this
regard, projects driven by 'poverty reduction' or 'growth' were poorly targeted,
were oft marred by implementation shortfalls and demonstrated the bank's
inability to network with smaller institutions. Gaps in the reform process of the
power sector are highlighted as:

 a lack of understanding of the enormity of the reform process and a piece-

meal, quick-fix and vacillating approach
 an overemphasis on privatization and under emphasis on competition
 setting up regulatory commissions before privatization and making them
toothless before the public sector licensees

Some of the main conclusions drawn from this paper are:

 Through increasing its support to environment both in terms of attention

and financing, but has failed to strike the ideal balance between
environment and development, and has not pushed the concept of trade-off
between these two objectives into the decision-making framework.
 during the late 1990s (1996-2000) the Bank cut down its lending to 65 per
cent of its late 80s (1986-90) levels, and reinforced its commitment to
health and education while cutting back on agriculture, power, oil and gas
and industry.

BENEFITS OF WORLD BANK TO INDIA

India is the founder member of the World Bank and it had a permanent position
in its Board of Executive Directors. The World Bank has helped India
in attaining economic development. It grants loans, offers expert
advice and imparts training to Indian personnel through its Economic
Development Institute.
In November 1951, a World Bank delegation visited India, reviewed
development and assessed further assistance from the Bank. In 1952, the
president of the World Bank visited India to explore the possibilities of
financing specific projects. In 1956, another delegation visited India to review
her development under the first five year plan. A resident representative was
appointed in New Delhi by the bank to assess the progress of development plans
and projects.

In February 1960, a three-member bank mission, comprising of Sir. Olive

Franks, Mr. Allen Prousal and Dr. Herman assessed the possibilities of
assistance required in the implementation of the third five year plan.
The Madhya Pradesh State Government sought the assistance of the bank for
Rs . 50 crores project to reclaim 2.25 lakh acres of land along the Chambal
river and its tributaries. In June 1970, the bank deputed a team to M.P, to study
the feasibility of the scheme. In August 1970, a seven member bank team
studied in depth a family planning programme in Uttar Pradesh. It assessed the
feasibility of launching a special project for intensive implementation of family
planning scheme.
The amount of financial assistance extended by the bank during the period from
August 1949 to June 1992 was the order of 20,599.2 million dollars through 147
loans. About 50% of this assistance was meant for the improvement of
transportation i.e., railways, ports, roads and airways. While 28 per cent of the
sum was earmarked for electric power development, agriculture received about
per cent of the assistance. India got an assistance of 5,472 million dollar during
third five year plan from All India Consortium, created with the help of the
World Bank. The World Bank played a significant role in the signing of Indus
water treaty in September 1960, this ended the 13-year old dispute between
India and Pakistan. By October 2001, the cumulative assistance extended by the
bank to India worked out to 56 billion US dollars. No single country ever
received such a huge sum from the World Bank.

Difference between IBRD and IMF

The International Monetary Fund and the World Bank at a Glance

International Monetary Fund World Bank

 Oversees the international monetary  Seeks to promote the economic

system. development of the world's poorer
countries.
 Promotes exchange stability and  Assists developing countries through
orderly exchange relations among its long-term financing of development
member countries. projects and programs.
 Assists all members--both industrial  Provides to the poorest developing
and developing countries--that find countries whose per capita GNP is
themselves in temporary balance of less than $865 a year special
payments difficulties by providing financial assistance through the
short- to medium-term credits. International Development
Association (IDA).
 Supplements the currency reserves of  Encourages private enterprises in
its members through the allocation of developing countries through its
SDRs (special drawing rights); to affiliate, the International Finance
date SDR 21.4 billion has been issued Corporation (IFC).
to member countries in proportion to
their quotas.
 Draws its financial resources  Acquires most of its financial
principally from the quota resources by borrowing on the
subscriptions of its member international bond market.
countries.
 Has an authorized capital of $184
 Has at its disposal fully paid-in billion, of which members pay in
quotas now totaling SDR 145 billion about 10 percent.
(about $215 billion).

 Has a staff of 2,300 drawn from 182  Has a staff of 7,000 drawn from 180
member countries. member countries.

CONCLUSION