In yesterday's article, we had talked about how BRICS countries are coming up with their own institution to cater to the financing needs that global institutions like IMF and World Bank have failed to meet. While the emerging economies constitute a key share in the global economy, they are feeling marginalized by the organizations such as World Bank. While this development suggests rise of new organizations with global significance, it also raises a very important question. Are the existing ones losing their relevance?
A case in point here is the World Bank. Set almost 7 decades back, the World Bank came into force post Second World War with an aim to rebuild the societies that were its victims. As the time passed, its focus changed to development work. Here, the bank's role is getting sidelined by private sector that seems to be better at catering to the needs of rising middle class in emerging economies.
The World Bank seems to have failed to match the pace of global economic changes. As a global organization, one of its key tasks was to reduce systemic risk and make the global economy more resilient to any crisis. This certainly does not seem to be the case currently. The bank has also failed to take care of the poor and marginalized one of the key areas it intended to work on. Once the BRICS bank becomes a reality it relevance is likely to shrink further.
As an article in Livemint suggests, President Jim Yong Kong seems to be aware of these challenges that the World Bank faces. While he is trying overhaul the organizational set up, the biggest block to any reform may come from internal sources. Especially because his strategy includes trimming down the budget and staff as well. While it is not going to be an easy task, we hope Mr Jim Yong Kong will not give up on his mission so that the world can witness better contribution from one of the key and oldest global financial institutions.