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The New Role for the World Bank

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  • Michael A. Clemens
  • Michael Kremer

Abstract

The World Bank was founded to address what we would today call imperfections in international capital markets. Its founders thought that countries would borrow from the Bank temporarily until they grew enough to borrow commercially. Some critiques and analyses of the Bank are based on the assumption that this continues to be its role. For example, some argue that the growth of private capital flows to the developing world has rendered the Bank irrelevant. However, we will argue that modern analyses should proceed from the premise that the World Bank's central goal is and should be to reduce extreme poverty, and that addressing failures in global capital markets is now of subsidiary importance. In this paper, we discuss what the Bank does: how it spends money, how it influences policy, and how it presents its mission. We argue that the role of the Bank is now best understood as facilitating international agreements to reduce poverty, and we examine implications of this perspective.

Suggested Citation

  • Michael A. Clemens & Michael Kremer, 2016. "The New Role for the World Bank," Journal of Economic Perspectives, American Economic Association, vol. 30(1), pages 53-76, Winter.
  • Handle: RePEc:aea:jecper:v:30:y:2016:i:1:p:53-76
    Note: DOI: 10.1257/jep.30.1.53
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    Cited by:

    1. Fuchs, Andreas & Dreher, Axel & Hodler, Roland & Parks, Bradley C. & Raschky, Paul, 2015. "Aid on Demand: African Leaders and the Geography of China s Foreign Assistance," Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 112838, Verein für Socialpolitik / German Economic Association.
    2. William Perraudin & Andrew Powell & Peng Yang, 2016. "Multilateral Development Bank Ratings and Preferred Creditor Status," IDB Publications (Working Papers) 94656, Inter-American Development Bank.
    3. repec:eee:wdevel:v:103:y:2018:i:c:p:133-148 is not listed on IDEAS
    4. William Perraudin & Andrew Powell & Peng Yang, 2016. "Multilateral Development Bank Ratings and Preferred Creditor Status," IDB Publications (Working Papers) 7686, Inter-American Development Bank.
    5. Selim Jahan, 2017. "Human Development Report 2016 - Human Development for Everyone," Working Papers id:12021, eSocialSciences.

    More about this item

    JEL classification:

    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations

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