Honors Thesis Spotlight: Transparency and Accountability in the World Bank

The World Bank is a transparent institution that provides access to information about countries and their financial situation. This data is available on their website and also states which countries receive aid to reach economic equilibrium. Although the World Bank provides information about other countries, it seldom provides information about itself. In union with the United Nations, the World Bank adheres to two primary goals: reducing extreme poverty and promoting shared prosperity, both of which are normally executed through fiscal loans. These charitable and seemingly innocent donations are tarnished by the aid directed to genocidal regimes and the suspected corruption present in the World Bank. The lack of information about the World Bank sparks curiosity about its transparency as an agency and the efficiency of its branches.

The lack of transparency in the World Bank hinders the investigation of its operational efficiency. In 2006, the World Bank lost one hundred billion dollars due to suspected corruption within the organization. Assessing the amount of money that countries in need did not receive would take a thorough investigation of each branch and its employees. Unfortunately, the employee data of the World Bank is not publicly available. Still, the author takes a closer look into the International Development Association through publicly available financial statements transferred to spreadsheets. The International Development Association is the branch of the World Bank that works intimately with the world’s poorest countries providing financial aid. Then, this information is constructed into a ratio consisting of  “Administrative Costs ”as the numerator and the components of “total income” as the denominator. As an alternative metric, an expenditure ratio is used to further understand the expenditure of the IDA. Again, the numerator is the “Administrative costs ” but the denominator is the grant development expenditure for each year is substituted as the value for z.

These ratios, when applied to the IDA data, yield a ratio above one. This demonstrates that the IDA spent more on administrative expenses than it received in total income. The author suggests that this distribution deserves speculation, as such a large amount of money is spent on administrative costs and not other things. Present limitations prohibit data-supported results. The IDA is a branch of the World Bank that is ever-changing in its fiscal reporting method, so it is difficult to arrive at concrete calculations. Also, the lack of information from years before 1995 impedes definitive findings. The information for the IDA before 1995 was concurrent with the information of the International Bank for Reconstruction and Development, as they belonged to the same budget.

In conclusion, the IDA’s lack of fiscal transparency and clear distributions of aid points to a greater issue in the World Bank. The public is increasingly concerned about mass amounts of corruption that have been evident in recent years. If the World Bank was not a non-profit organization, the American people would likely demand publically available records. Ultimately, if the World Bank made its data sets public and proved consistent with its reporting, it would increase its credibility among, and beyond, the American people.

Caleb Stephens is a graduate from the College of Social Sciences at Florida State University. This post is a summary of Caleb’s honors thesis, written by COSSPP blog intern Camila Levy. You can learn more about Caleb here. You can learn more about this project here.

Source for featured image: https://www.pexels.com/photo/usa-and-israel-mini-flags-on-table-with-dollars-4386446/

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