Role of world bank in the world and for countries

The World Bank plays a central role in global development by supporting countries—especially developing nations—through a combination of financing, policy advice, research, and technical assistance. Here’s a detailed overview of its functions and influence:

Global Role of the World Bank

Reducing Global Poverty: The World Bank’s main mission is to eradicate extreme poverty and boost shared prosperity on a livable planet.

Financing Development: It provides low-interest loans, zero-interest credits, and grants to fund infrastructure projects, health and education initiatives, agricultural improvements, and more in developing countries.

Promoting Sustainable Development: As a leading institution in the international development sector, the Bank funds projects that support growth while maintaining environmental and social safeguards.

Role for Countries

Capital and Project Support: The World Bank lends money to governments for large-scale projects—such as building schools, hospitals, roads, energy plants, or improving water supply—and encourages co-financing from other sources.

Technical and Policy Advice: Beyond finance, it offers policy guidance, technical expertise, and rigorous analysis to help countries tackle challenges such as poverty, health crises, and climate change.

Capacity Building: The Bank supports countries in strengthening their institutions and upgrading skills through training, data sharing, and knowledge transfer.

Investment Promotion: It guarantees certain loans, reducing investment risks and encouraging private and foreign investment in member countries.

Public Goods and Research: The World Bank serves as a hub for development research, data-sharing, and best practice dissemination, offering global public goods that benefit both its members and the wider development community.

World Bank Activities and Impact

- Operating in over 170 countries and governed by 189 member nations, the Bank partners with both public and private sectors to maximize the impact of every development dollar.

- Since its creation, the Bank has transformed donor contributions into trillions of dollars’ worth of development impact, supporting critical infrastructure, practical reforms, and sustainable economic transformation in low- and middle-income nations.

- The Bank adapts its agenda to address emerging global challenges, such as climate change, pandemics, and global conflicts, ensuring it remains a leading source of development funding and expertise.

Summary Table: Key Functions of the World Bank

In summary, the World Bank is a leading institution in international development, aiming to improve the lives of people worldwide by reducing poverty, promoting inclusive growth, and supporting sustainable outcomes through a combination of funding, knowledge, and policy support.

World Bank's influence on global poverty

The World Bank has had a profound influence on global poverty—both by shaping how the world measures extreme poverty and by driving action to reduce it:

Key Impacts

Reduction of Extreme Poverty: Since 1990, more than 1 billion people have been lifted out of extreme poverty worldwide. This dramatic decline has been largely attributed to economic growth in developing regions, supported by World Bank initiatives and investments.

Setting Global Poverty Lines: The World Bank sets and regularly updates the International Poverty Line (IPL), the official threshold used to measure extreme poverty. In June 2025, the IPL was raised from $2.15 to $3 per day to reflect higher living standards and national poverty benchmarks in low-income countries. This new line increased the estimated number of people living in extreme poverty but provides a more realistic assessment of needs.

Data and Monitoring: The Bank provides authoritative data, research, and policy recommendations to help countries understand their poverty challenges and craft targeted responses. It also drives global coordination towards Sustainable Development Goal 1: ending poverty everywhere.

Project Funding and Policy Guidance: Through billions of dollars in loans and grants, the World Bank funds projects in health, education, infrastructure, and social protection—directly supporting poverty reduction and resilience, especially in crisis-prone or fragile settings.

Country Success Stories: For instance, India lifted 171 million people out of extreme poverty between 2011–2023, with World Bank recognition of the government's welfare schemes and reforms supporting this progress. In China, rapid economic expansion backed by World Bank guidance helped lift 800 million people out of poverty in four decades.

Response to Global Setbacks: The World Bank adapts its strategies to help countries address setbacks such as the COVID-19 pandemic, debt crises, and climate shocks. These overlapping crises have slowed but not reversed decades of progress.

World Bank’s Methodology and Leadership

- The Bank’s poverty tracking methodology influences how aid is targeted, policies are designed, and progress is evaluated at both national and global levels.

- It emphasizes policies aimed at *broad-based growth*, investments in people, and social safety nets for the most vulnerable, believing that these are pivotal for poverty eradication.

- The Bank is a leader in international development, convening governments, donors, and the private sector around the shared mission of ending extreme poverty.

In summary, the World Bank’s influence on global poverty is seen through driving down poverty rates, providing the standards and tools for measuring poverty, funding and designing key interventions, and keeping poverty eradication at the top of the global agenda.

Reforms needed for World Bank effectiveness

Several important reforms have been identified to enhance the effectiveness of the World Bank in addressing today’s global development challenges:

Key Reform Areas for the World Bank

Governance and Representation:

  - The current voting structure and leadership succession are dominated by developed nations, primarily the U.S. This often results in developing countries having less influence on decision-making and priorities.

  - Suggested reforms include updating the governance and voting system, ensuring more equitable representation for developing and emerging economies, and making leadership appointments more inclusive and merit-based.

Revising the Bank’s Vision and Scorecard:

  - At the 2023 Marrakech Annual Meeting, a major reform process began to redefine the World Bank’s mission by putting increased focus on a “liveable planet,” which includes sustainable, inclusive growth, climate action, biodiversity, and social equality.

  - The Bank’s Corporate Scorecard—the tool for strategic measurement and accountability—is being fundamentally revised to align with these new priorities and should be finalized by the end of 2024.

Enhancing Flexibility, Selectivity, and Country Focus:

  - Critics argue that the Bank should tailor programs more effectively to the unique needs and political realities of each country, lend selectively to those with improving policies, and offer greater flexibility for countries in turnaround situations.

  - Reforms must ensure that programs respond to local contexts rather than applying uniform solutions.

Coordination and Partnerships:

  - There’s a need for better coherence within the World Bank and stronger collaboration with regional development banks and other partners for greater complementarity and to avoid duplication. This includes a “whole-of-development-bank” approach to maximize collective impact.

Tackling Global Public Goods:

  - The evolution roadmap pushes for a stronger focus on cross-border challenges—like climate change, pandemics, and biodiversity loss—by providing innovative finance, structured advice that accounts for global spillovers, and incentives for investments serving public goods, not just national interests.

Addressing Conditional Lending and Debt:

  - Criticism persists over the Bank’s conditional lending practices, which sometimes push countries into debt crises or force structural adjustments with negative social impacts.

  - Reforming lending practices to avoid exacerbating debt issues in low- and middle-income countries is seen as urgent, with calls for more transparency and attention to social protection alongside growth.

Monitoring, Evaluation, and Learning:

  - There is room for improvement in how the Bank monitors, evaluates, and learns from its lending programs—putting stronger emphasis on measurable results, sustainability, and knowledge sharing.

Ongoing Reform Highlights

- The Bank is already working on reforms from its “Evolution Roadmap,” focusing on sustainability, inclusiveness, crisis response, and mobilizing private capital without undue burden on recipient countries.

- Reforms are also aimed at unlocking additional resources (such as the $70 billion commitment for climate and biodiversity by 2035) and ensuring that financial incentives align with both national and global development goals.

These reforms are seen as essential to ensure that the World Bank remains impactful, responsive, and relevant in a rapidly evolving world, and is better equipped to address poverty, inequality, and planetary challenges in partnership with all its members.