The governance of the World Bank: Lessons from the corporate sector
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The World Bank Group (WBG) is a multilateral organization as well as a large financial conglomerate. The debate on its governance, however, has mainly focused on how to ensure more inclusive decision-making by strengthening the voice and representation of its entire membership. The WBG’s governance as a set of arrangements that enable the principal (shareholders) to oversee the agent (management) has so far been overlooked, even though the adequacy of such arrangements is relevant in all institutions wherein shareholders delegate to management the achievement of organizational objectives. In reviewing the institutional, historical, and current underpinnings of the WBG’s decision-making, we elaborate on the extent to which the Group follows best-practice corporate governance standards that have been designed with the aim of improving shareholders’ oversight. Drawing from a methodology developed by the IFC, an entity of the WBG, we analyze the Group’s internal governance, highlighting which aspects are furthest from (or closest to) current financial-sector best practices. In so doing, we provide a framework for prioritizing the most critical areas in which the WBG’s governance falls short of private-sector standards, and we identify the nature of possible remedies.