international business Environmemnt

7/30/2019 international business Environmemnt

1/17

A PROJECT ON

INTERNATIONAL DEVELOPMENT

ASSOCIATION AND INTERNATIONAL FINANCE

CORPORATIONSubmitted towards partial fulfillment of

POST GRADUATE DIPLOMA IN

BUSINESS MANAGEMENT

(Approved by AICTE, Govt. of India)

(Equivalent to MBA)

ACADEMIC SESSION

2008 2010

Subject IBE


2/17

INSTITUTE OF MANAGEMENT STUDIES

LALQUAN GHAZIABAD

CANDIDATES DECLARATION

We hereby certify that the work, which is being presented in the

report entitled

IDA AND IFC in partial fulfilment of the requirements for the award

of the Post Graduate Diploma In Business Management and

submitted in the IBE of the Institute of Management Studies,

Ghaziabad is an authentic record of our own work carried out under

the supervision of Dr. M.C.HARBOLA , Faculty of Institute of

Management Studies, Ghaziabad.

The matter presented in this report has not been submitted by us for the award of any

other degree of this or any other Institute.


3/17

Introduction

The INTERNATIONAL DEVELOPMENT ASSOCIATION (IDA) , is the part of the world

bank that helps the worlds poorest countries. it complements the world bank's other

lending arm the international bank for reconstruction and development (IBRD) which serves middle-income countries with capital investment and advisory services.

IDA was created onSeptember 24, 1960 and is responsible for providing long-term,

interest-free loans to the world's 80 poorest countries, 39 of which are in africa. ida

provides grants and credits with repayment periods of 35 to 40 years. since its

inception, ida credits and grants have totaled $161 billion, averaging $7$9 billion a

year in recent years and directing the largest share, about 50%, to Africa. while the

ibrd raises most of its funds on the world's financial markets, ida is funded largely by

contributions from the governments of the richer member countries. Additional funds

come from IBRD income and repayment of IDA credits.

IDA loans address primary education, basic health services, clean water supply and

sanitation, environmental safeguards, business-climate improvements, infrastructure

and institutional reforms.These projects are intended to pave the way toward

economic growth, job creation, higher incomes and better living conditions.

IDA critics allege the improper use of financial resources, and object to a voting

structure based on financial contributions (the largest being from the US until 2007,

when it was overtaken by the united kingdom).Others criticize the IDA for its

promotion offree trade, which some see as a means of oppression by the world bank

group.
http://en.wikipedia.org/wiki/World_Bankhttp://en.wikipedia.org/wiki/World_Bankhttp://en.wikipedia.org/wiki/International_Bank_for_Reconstruction_and_Developmenthttp://en.wikipedia.org/wiki/September_24http://en.wikipedia.org/wiki/September_24http://en.wikipedia.org/wiki/1960http://en.wikipedia.org/wiki/Loanshttp://en.wikipedia.org/wiki/Free_tradehttp://en.wikipedia.org/wiki/International_Bank_for_Reconstruction_and_Developmenthttp://en.wikipedia.org/wiki/September_24http://en.wikipedia.org/wiki/1960http://en.wikipedia.org/wiki/Loanshttp://en.wikipedia.org/wiki/Free_tradehttp://en.wikipedia.org/wiki/World_Bankhttp://en.wikipedia.org/wiki/World_Bank


4/17

India: Using IDA Effectively in a Large Country

With a population of just over 1 billion, of which about 300 million live below the

poverty line, India is the largest democracy in the world and one of the most

important countries in terms of meeting global development goals. Indias annualGDP growth has been strong and steady at more than 6 percent over the past decade

and accelerating to over 8 percent in recent years following wide-ranging structural

reforms begun in 1991. Poverty rates have fallen from about 36 percent to 28 percent

between 1993 and 2004. Life expectancy has improved significantly to 64 years,

closing the gap with China to about seven years (compared to 14 years in the early

1980s).

Sources: Central Statistical Organization; Reserve Bank of India; Planning Commission,

WDI, UNICEF; WHO.Notes: a. Peak; b. estimated; c. Bhat et al.; d. Another set of estimates, also provided by IndiasPlanning Commission, suggests that poverty rates have declined to 22 percent of the population in


5/17

2004/05 from 26 percent in 1999/2000. These estimates are based on a different methodology whichcannot be compared to earlier estimates.

Since 1995, the International Development Association (IDA), the part of the World

Bank that gives interest-free credits and grants to the worlds poorest countries, has

provided US$11 billion to India. The Bank has also extended US$12 billion in loans

from the International Bank for Reconstruction and Development (IBRD)whichserves

credit-worthy countries. A key feature of IDAs work in India has been its support for

policy reforms essential for accelerating growth and reducing poverty. The reform

process (at both the central and state government levels) has been underpinned by

research, analysis and technical assistance financed by IDA. IDA has also supported

complementary sectoral investments in areas like rural development and livelihoods,

health and education and has supported reforming states with credits. Measured

by IDAs Performance-based Resource Allocation system, India is placed 8th among

the 76 IDA recipient countries whose performances are ranked.

With economic liberalization, India began to focus as never before on private-invest

ment led growth, engendering an open and competitive economy, and on a massive

surge of new services and manufacturing to drive global competitiveness and growth.

Software exports, telecommunications, information technology andoutsourcing of

business pro- cesses, fi nancial sector, housing and retail services, have all helped fuel

the rise of the services sector, which has grown by over 9 percent a year and

contributed nearly 60 percent of overall growth in recent years.

Despite three major changes in national governments, reforms haveenjoyed a remarkable staying power.

The reform process was gradual, there was no big bang and as a result it has

become relatively endogenous with much better accountability for results. Also

noteworthy is the increasing role of states with greater accountability, competition

to perform and learning from one state to the next. In a deregulated and open

economy, states have benefitted when their governments have delivered better

governance and public services and attracted greater and more mobile private

investment. Conversely, they have been punished by a flight of capital and peoplewhen their political leaders have not. Improving the prospects of the poorest and


6/17

reserves have climbed to US$170 billion.

Foreign Direct Investment is growing rapidly, with India recently rated as one of

the most attractive investment locations in the world. In recent years, export

growth has accelerated to over 20 percent per year. Fiscal deficits have remained

high, but are on a declining track under fiscal responsibility acts, both at the

center and at the state lev-els. Poverty has fallen to about 28 percent, although

the momentum of decline may have slowed for reasons examined below. Growth

has helped considerably in progressing towards the Millennium Development Goals

(MDGs) but delivery of public services to Indias 300 million poor pose major

challenges. Increasingly sharp too is the picture of two Indias. One India is on a

rapid development trajectory. The other is caught in a low-level development trap,

progressing much more slowly. There, levels of illiteracy are 40 percent and

significant gender, ethnic and regional differences in human development and

poverty reduction persist. In response to this concern, the central and sub-national

governments have stepped up their attention to programs that help the poor and

disadvantaged. At the state level, there are growing initiatives to support spending

on water, old age and disability pensions, and lagging states has now become a

challenge. on water, old age and disability pensions, and rural livelihoods and credit.

Reaping the benefits of gradual but sustained reforms, annual growth hasclimbed to over 8 percent in the last four years.

Investment rates, backed by growing savings, and led by private investment, have

now risen to more than 30 percent of GDP, compared to about 23 percent a decade

ago.

IDA CONTRIBUTIONS


7/17

IDA has committed US$10 billion to India over the past decade through 62 projects.

Yearly IDA commitments have averaged nearly US$950 million per year, or about 3

percent of total public investment and 0.2 percent of Indias GDP (200005).

Consistent with IDAs poverty focus, three quarters of the lending has gone to rural

development (28 percent), health and nutri-tion (26 percent), and education (20

percent). IDA support has also leveraged IBRD lending. For example, a US$525

million IDA policy loan to support the reform of sub-national state governments,

was blended with US$571 million in IBRD lending.The knowledge economy,

employment, the financial sector, state economies, and fiduciary matters, among

many other relevant subjects.

IDAs analysis and advisory program in India represents 32 percent of the overall

opera-tional budget, an intellectual investment that is justified by the scale and

complexity of a country like India.

This comprehensive support was initially aimed at the fi scally stressed but

reforming states of the South (Andhra Pradesh, Karnataka and Tamil Nadu). Its

success led the government of India to ask the Bank to extend the same mix of


8/17

lending and analysis to the poorer states of the North and East.

Supporting human development.

IDA assistance for education and health at the national level as well as in key states

such as Andhra Pradesh, Rajasthan, and Tamil Nadu, has helped India increase

enrollment rates, reduce gender gaps, and arrest debilitating

diseases that drive people into poverty. In education, IDA supported a national

program which seeks to achieve universal elementary school enrollment and comple-

tion for 6 to 14 year-old children by 2010.

The total cost of this Sarva Shiksha Abhiyan (SSA) program was US$3.5 billion of

which IDA contributed US$500 million. Primary enrollment has increased and the

number of out-of-school children has fallen from 25 million in 2003 to about 10

million in 2006. Enrollment at the upper primary school level has increased by 10

percent annually since 2003. Several states have reached a gender-parity index (GPI)

above 90.

The social gap has also narrowed with an increase in primary level enrollment among

scheduled castes and scheduled tribes. In addition to lending, IDAs support for

education has included training, capacity building, technical, support, monitoring and

evaluation, financial management, dissemination, and media campaigns. In the health

sector, IDA has helped India combat maternal and child mortality and communicable

and debilitating diseases. As in the case of education, IDAs support has also included

institution building to improve service delivery.

Some highlights include:

Thanks to support provided by an IDA- fi nanced tuberculosis control project, 703

million Indian citizens live in areas covered by a program capable of delivering the

WHO-approved DOTS protocol. During program expansion, it was found that the

provision of DOTS reduced TB death rates seven-fold compared to the what they had

been before DOTS was introducedwith an estimated of 100,000 lives saved each

year.


9/17

A project to control cataract blindness were examined and over 1.2 million people

with disease were treated during the life of a leprosy control project. This project

helped India transform the national leprosy program into an effective and sustainable

program through a decentralized approach which increased community access to

multi-drug therapy.

Supporting rural development.

IDA has contributed to rural development through agricultural and irrigation develop-

ment projects and through rural livelihoods projects.

Agricultural sector

Projects in states as diverse as Uttar Pradesh (UP) and Assam have emphasized

marketing alongside productivity and replicated through multi-state projects.

These projects have not only led to new investments but also helped the government

promote marketing reforms through liberalization of the Agricultural Produce and

Market Act. In UP, a model sodic lands project has pioneered technological

innovation to restore water-logged agricultural lands to their productive potential

technique which is increasingly in demand in other states.


10/17

Lessons of IDAs contributions.

Currently 90 percent of IDA-supported projects in India are rated as satisfactory.

This reflects lessons learned during years of engagement and project implementation.

Relevant and infl uential research and diagnoses.

The Banks high-quality knowledge products, intensive policy dialogue, and lending

operations (including adjustment loans) were relevant and contributed effectively and

in a timely way to key policy debates and building constituencies for reforms.

Greater emphasis on systemic reforms, in fiscal and financial management, public

sector reform, agricultural policy and rural development, and gender equity were

recognized as key ingredients for achieving sustained development impact.

A successful shift to state-level support.

A 10-year assessment of the Banks involvement in India published by the Banks

Independent Evaluation Group in 2001 noted that in the second half of the 1990s, and

most notably after 1997, the relevance of Bank assistance to poverty reduction started

to improve. This was when the Bank began to focus assistance on reforming states,

with notable success.

Achieving inclusive growth.

Compared to its high economic growth rate, Indias success in reducing poverty has

been relatively modest, with poverty declining at less than 1 percent- age point

annually in the previous decade and strong divisions remaining between states,

urban and rural areas, genders and social groups. Such divisions are muting the

impact of growth on poverty and raising the importance of development strategies that

seek to achieve inclusive growth. In a majority-ruled electoral democracy where the


11/17

voices of the poorest and most socially excluded groups may not always be heard,

IDA can help direct financial and technical resources towards the neediest. April

2007.

http://www.worldbank.org/ida

International Finance Corporation

The International Finance Corporation (IFC) promotes sustainable private sector

investment in developing countries as a way to reduce poverty and improve people's

lives.

IFC is a member of the World BankGroup and is headquartered in Washington, DC.

It shares the primary objective of all World Bank Group institutions: to improve the

quality of the lives of people in its developing member countries.

Established in 1956, IFC is the largest multilateral source of loan and equity financing

for private sector projects in the developing world. It promotes sustainable private

sector development primarily by:

1. Financing private sector projects and companies located in the developing world.

2. Helping private companies in the developing world mobilize financing in

international financial markets.

Providing advice and technical assistance to businesses and governments.
http://en.wikipedia.org/wiki/World_Bankhttp://en.wikipedia.org/wiki/Washington,_DChttp://en.wikipedia.org/wiki/World_Bankhttp://en.wikipedia.org/wiki/Washington,_DC


12/17

Ownership and management

IFC has 181 member countries , which collectively determine its policies and approve

investments. To join IFC, a country must first be a member of the International Bank

for Reconstruction and Development (IBRD). IFC's corporate powers are vested in its

Board of Governors, to which member countries appoint representatives. IFC's share

capital, which is paid in, is provided by its member countries, and voting is in

proportion to the number of shares held. IFC's authorized capital (the sums

contributed by its members over the years) is $2.45 billion; IFC's net worth (which

includes authorized capital and retained earnings) was $9.8 billion as of June 2005.

[2]

The Board of Governors delegates many of its powers to the Board of Directors,

which is composed of the Executive Directors of the IBRD, and which represents

IFC's member countries. The Board of Directors reviews all projects.

The President of the World Bank Group, Robert Zoellick, also serves as IFC's

president. IFC'sCEO and Executive Vice President, Lars H. Thunell, is responsible

for the overall management of day-to-day operations. He was appointed on January

15, 2006.

Although IFC coordinates its activities in many areas with the other institutions in theWorld Bank Group, IFC generally operates independently as it is legally andfinancially autonomous with its own Articles of Agreement, share capital,management and staff.

Funding

The IFC's equity and quasi-equity investments are funded out of its paid-in capital andretained earnings (which comprise its net worth). Strong shareholder support, triple-Aratings, and a substantial capital base allow the IFC to raise funds on favorable termsin international capital markets. As of June 30, 2006, retained earnings representedalmost three-quarters of the IFC's $9.8 billion net worth.
http://en.wikipedia.org/wiki/International_Bank_for_Reconstruction_and_Developmenthttp://en.wikipedia.org/wiki/International_Bank_for_Reconstruction_and_Developmenthttp://en.wikipedia.org/wiki/International_Finance_Corporation#cite_note-1http://en.wikipedia.org/wiki/Robert_Zoellickhttp://en.wikipedia.org/wiki/Robert_Zoellickhttp://en.wikipedia.org/wiki/CEOhttp://en.wikipedia.org/wiki/CEOhttp://en.wikipedia.org/wiki/Lars_H._Thunellhttp://en.wikipedia.org/wiki/January_15http://en.wikipedia.org/wiki/January_15http://en.wikipedia.org/wiki/2006http://en.wikipedia.org/wiki/International_Bank_for_Reconstruction_and_Developmenthttp://en.wikipedia.org/wiki/International_Bank_for_Reconstruction_and_Developmenthttp://en.wikipedia.org/wiki/International_Finance_Corporation#cite_note-1http://en.wikipedia.org/wiki/Robert_Zoellickhttp://en.wikipedia.org/wiki/CEOhttp://en.wikipedia.org/wiki/Lars_H._Thunellhttp://en.wikipedia.org/wiki/January_15http://en.wikipedia.org/wiki/January_15http://en.wikipedia.org/wiki/2006


13/17

Activities

Within the World Bank Group, the World Bank finances projects with sovereign

guarantees, while the IFC finances projects without sovereign guarantees. This means

that the IFC is primarily active in private sector projects, although some projects in

the public sector (at the municipal or sub-national level) have recently been funded.

Private sectorfinancing is IFC's main activity, and in this respect is a profit-oriented

financial institution (and has never had an annual loss in its 50-year history). Like a

bank, IFC lends or invests its own funds and borrowed funds to its customers and

expects to make a sufficient risk-adjusted return on its global portfolio of projects.

IFC's activities, however, must meet a second test of contributing to a reduction in

poverty in line with its mandate. In practice, this is broadly interpreted, but

considerable time and effort is devoted to both (i) selecting projects with positive

developmental outcomes, and (ii) improving the developmental outcome of projects

by various means.

IFC provides both investment and advisory services. IFC also carries out technical

cooperation projects in many countries to improve the investment climate. These

activities may be linked to a specific investment project, or, increasingly, to broader

goals such as improving the legislative environment for a specific industry. IFC's

technical cooperation projects are generally funded by donor countries or from IFC'sown budget.

IFC's Advisory Services focus on five core areas: Access to Finance, Business

Enabling Environment, Environmental & Social Sustainability, Infrastructure

Advisory, and Corporate Advice. Advisory services to expand access to finance

(A2F) often accompanies IFC's financial investments, and includes assistance to

banks and specialized financial institutions in improving their ability to provide

financial services to micro, small, and medium enterprises.

Critics have questioned the sustainability of some IFC-funded projects. The IFC
http://en.wikipedia.org/wiki/Private_sectorhttp://www.ifc.org/ifcext/gfm.nsf/Content/Advisory+Serviceshttp://en.wikipedia.org/wiki/Private_sectorhttp://www.ifc.org/ifcext/gfm.nsf/Content/Advisory+Services


14/17

recently invested $9 million in the upgrading of a slaughterhouse facility in the

Amazon regionowned by Brazil's biggest beef producer, despite opposition from

local NGOs and the Sierra Club.[3] On the other hand, after successful pilots in

several countries, theWorldHotel-Linkproject was successfully spun off from the

IFC on 31 March 2006 and is now a private company with global reach helping

locally-owned small scale travel service providers in developing-world destinations

overcome market access barriers.

CommDev (The Oil, Gas and Mining Sustainable Community Development Fund) is

a funding mechanism for practical capacity building, training, technical assistance,

implementation support, awareness-raising, and tool development.

Operating flexibly and efficiently, CommDev serves as an integral component of an

extractive industry project, enhancing, accelerating, and extending the value-added

support given to communities beyond the compliance requirements of IFC investment

projects and World Bank loans.
http://en.wikipedia.org/wiki/Amazon_regionhttp://en.wikipedia.org/wiki/Amazon_regionhttp://en.wikipedia.org/wiki/Sierra_Clubhttp://en.wikipedia.org/wiki/International_Finance_Corporation#cite_note-2http://en.wikipedia.org/wiki/WorldHotel-Linkhttp://en.wikipedia.org/wiki/WorldHotel-Linkhttp://en.wikipedia.org/wiki/Amazon_regionhttp://en.wikipedia.org/wiki/Sierra_Clubhttp://en.wikipedia.org/wiki/International_Finance_Corporation#cite_note-2http://en.wikipedia.org/wiki/WorldHotel-Link


15/17

IFC's Vision, Values, & Purpose

IFC vision is that people should have the opportunity to escape poverty and improvetheir lives.

IFC values are excellence, commitment, integrity, and teamwork.

IFCs Purpose is to create opportunity for people to escape poverty and improve theirlives by

3. 1) Promoting open and competitive markets in developing countries4. 2) Supporting companies and other private sector partners where there is a gap

3) Helping to generate productive jobs and deliver essential services to theunderserved.

WHERE IFC WORKS?

IFC invests in enterprises majority-owned by the private sector throughout mostdeveloping countries in the world. Developing regions include:

5. Sub-Saharan Africa6. East Asia & the Pacific7. South Asia8. Europe & Central Asia9. Latin America & the Caribbean

Middle East & North Africa
http://www.ifc.org/ifcext/about.nsf/Content/Valueshttp://www.ifc.org/ifcext/about.nsf/Content/Regionshttp://www.ifc.org/ifcext/about.nsf/Content/Valueshttp://www.ifc.org/ifcext/about.nsf/Content/Regions


16/17

IFC STRATEGIC PRIORITIES-

IFC emphasizes five strategic priorities for maximizing its sustainable developmentimpact:

10. 1) Strengthening its focus on frontier markets, particularly the SME sector;11. 2) Building long-term partnerships with emerging global players in developing

countries;

12. 3) Addressing climate change, and environment and social sustainability activities;13. 4) Addressing constraints to private sector investment in infrastructure, health, andeducation; and

14. 5) Developing domestic financial markets through institution building and the useof innovative financial products.

For all new investments, IFC articulates the expected impact on sustainabledevelopment, and, as the projects mature, IFC assesses the quality of the development

benefits realized.


17/17

REFERENCES-:

http://www.worldbank.org/ida

www.wikipidea.org
http://www.wikipidea.org/http://www.wikipidea.org/

Date post:	14-Apr-2018
Category:	Documents
Upload:	shipraasrivastav
View:	212 times
Download:	0 times

international business Environmemnt

Documents