World Bank Document

Box 6.1
The growth and distribution of World Bank lending
The World Bank has increased its lending to developing For similar reasons social sector lending was also raised.
countries substantially, especially since 1970. By the end The sharp increase in oil prices in the 1970s led to a
of the World Bank's 1984 financial year cumulative IBRD growth in projects aimed at increasing oil and gas capaclending
totaled $94.2 billion and IDA credits reached ity. Since 1980 the financing requirements of the major
$33.6 billion. structural adjustments being made in developing coun-
There have been some distinct changes in the sectoral tries have been met in part by the introduction of strucdistribution
of World Bank lending over time (see Box tural adjustment lending (see Box 4.8 in Chapter 4).
figure 6.1A). During the 1950s and 1960s the main thrust The regional composition of lending has changed more
of World Bank lending was for the development of basic slowly than the sectoral composition. In the 1980s, howinfrastructure;
lending for power and transportation was ever, taking the IBRD and IDA together, there has been a
predominant. There was a reorientation of lending dur- shift toward greater lending to Asia-mainly related to
ing the 1970s toward agricultural projects in recognition the development financing needs of a new member,
of the potential high rates of return associated with such China. The acute developmental problems of subprojects.
Furthermore, given that a large proportion of Saharan Africa have also led to an increase in lending to
the poor were engaged in agriculture, this shift in that region.
emphasis also directly increased their standard of living.
Box figure 6.1A World Bank average annual lending, 1950-84
Billions of dollars
6
Lending by region
Lending by sector
1950-59 1960-69
Lending, 1950-84
Ai
4
2 -
Latin /Amrope, Mid1970-79 1980-84
0 East, and North Africa
1950-59 1960-69 1970-79 1980-84
E
Agriculture and rural development
Energy
Program lending and structural adjustment
*Industry
T ransportation and telecommunications
C] Social and other sectors
Source: World Bank data.
phase. Within the official sector concessional offi- oping countries.
cial flows (or official development assistance, As illustrated in Figure 6.2, these developments
ODA) expanded quickly, but the fastest growth led to a major increase in the flow of capital to
was in the activity of the World Bank (see Box 6.1) developing countries. Of particular significance
and other multilateral institutions. These institu- was the shift from equity financing (mainly direct
tions became increasingly active as borrowers in foreign investment) to debt-creating flows. That
the bond markets and lent the proceeds to devel- development increased the vulnerability of devel-
87