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Home > ISDA > PIB > Vol. 1 > Iss. 8 (2012)

 

Publication Date

Winter 8-1-2012

Abstract

Tamir Agmon in his 1985 book states “International financial markets are shaped by politics and economics: The basic laws of economics push relentlessly toward market integration and worldwide global economy, while the political process practised by governments and other interest groups is expressed by constant jockeying for special economic privileges”.

The World Bank is an international financial institution that provides loans to developing countries for capital programs. The Bank was created in 1944, with its official goal being the reduction of poverty – to address the imbalance of wealth and support the laws of economics which Argon refers to. Although the first recipients of the loans were European countries (the very first loan recipient was France), the focus shifted in the 70s and 80s to concentrate the lending on meeting the basic needs of developing countries (infrastructure and social) rather than on the ability of the borrower country to repay the loans.