World Bank
The World Bank Group is the world's largest development finance institution, comprising IBRD (lending to middle-income countries), IDA (grants/loans to poorest countries), IFC (private sector), MIGA (guarantees), and ICSID (disputes). It has raised $500+ billion in loans since 1946 while shareholders paid in only $14 billion - a 35:1 leverage ratio enabled by its AAA credit rating.
The Bank's 'preferred creditor status' means countries almost always repay it first, even during restructuring. This isn't legally mandated - it's a 'market custom' that allows lending at near risk-free rates. The arrangement works until it doesn't.
Average time from project conception to first dollar disbursed: 27 months. Category A environmental projects take 7.4 years average to close. Staff incentives reward 'moving money' (loan volume) rather than development outcomes. One researcher found staff believe 'career advances are primarily dependent on moving money.'
Key Facts
Power Dynamics
Voting based on capital subscriptions
US holds 16% voting share - only member above 15% veto threshold; all presidents have been American since 1947; borrowing countries hold only 38% of votes despite being majority
- US veto preserved through 1989 constitutional amendment
- Qualified majority at 85%
- American president tradition
- US Treasury control
- AIIB competition forcing infrastructure focus
- IMF coordination on crisis response
Revenue Structure
World Bank Revenue Sources
- IBRD lending spread (borrow cheap, lend higher) 70% →
- IDA donor contributions 20%
- Investment income 10% ↻
IBRD model depends on AAA rating and 'preferred creditor status' - both are conventions that could erode; IDA depends on donor replenishments
Could increase lending by $162 billion (71%) before credit downgrade trigger
Decision Dynamics at World Bank
Policy loans close in under 15 months; COVID emergency projects processed in weeks
Category A projects average 7.4 years from conception to close
Procurement delays, parliamentary approvals in borrowing countries, internal review processes
Failure Modes of World Bank
- Structural Adjustment Programs - 36 countries received 10+ loans, median per capita growth: ZERO
- By 1995, 0 of 88 countries stuck to Bank's timescales
- SAPs criticized as 'destructive to the poor' in Sub-Saharan Africa
- Volume-based incentives misalign staff behavior
- Borrower countries can never outvote lenders
- 27-month disbursement timeline unsuited for crises
If AIIB or bilateral Chinese lending becomes preferred alternative, Bank's leverage and influence could decline rapidly
Biological Parallel
Like a large herbivore with extensive digestive system - thorough but slow. The 27-month project cycle is the institution's 'gut transit time.' The system processes carefully but cannot respond to rapid environmental changes. Staff incentives (reward volume) don't match stated goals (development outcomes), like a metabolism optimized for different food than it's consuming.
Key Agencies
Loans to middle-income countries at market rates
Concessional loans and grants to poorest countries
Private sector investment arm