The World Bank and The IMF: Twins or Rivals? Essay -- Economy Economic

The World Bank and The IMF: Twins or Rivals? Both institutions, the World Bank and the International Monetary Fund, were established more than fifty years ago; and the foundations of both were expected to play roles in stabilizing the frustrated global economy and aiding post-war European countries as well as other developing countries for economic progress. In the first three decades, both institutions had their own respective functions and extensively engaged in different economic and financial activities. In general, the World Bank primarily concentrated on making long term loans to finance infrastructural projects in developing countries, as the IMF mainly provided economic consultation as well as short-term loans to both developed and developing countries (Driscoll). However, the distinctive differences started disappearing since the beginning of 1970s, as both began to involve in more and more similar economic activities. As such, these overlapping activities blurred the functions between the two institutions, in which ca se a restructuring reform might be required to avoid potential conflicts. Although both organizations were not identical twins as they were born in the first place, the relationship between them was very close. According to the World Bank’s article of agreement, â€Å"in order for a country to be able to become a member of the Bank, it must be a member of the Fund† (Polak 1). There are two reasons behind this rule: First, it can prevent free ridership that could possibly enables members of one organization to misuse their rights in the world monetary market. Second, it is widely believed that a good lending of the World Bank heavily depended on a country’s stable monetary market, which can be secured by... ...hirty years. Today, although they are facing certain critiques for some of their inconsistent policies that are not accepted by some economists, both are striving for a common goal to achieve the establishment of the stability in the world economy as well as the entire global economic wealth. Works Cited Driscoll, David. D. â€Å"The IMF and The World Bank: How Do They Differ?† Aug. 1996. 23 Nov. 2002. Moffitt, Michael. The World’s Money. New York: Simon and Schuster, 1995. Naim, Moises. â€Å"Fad and Fashions in Economic Reforms: Washington Consensus or Washington Confusion?† 26 Oct. 1999. 20 Nov. 2002. Polak, Jacques J. The World Bank and The IMF: A Changing Relationship. Washington D.C.: The Brookings Institution, 1994.