The Review of International Organizations

, Volume 3, Issue 3, pp 287–323 | Cite as

The governance of the World Bank: Lessons from the corporate sector

Article

Abstract

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.

Keywords

World Bank Governance Representation Accountability Evaluation 

JEL Classification

F330 F530 G300 

Notes

Acknowledgement

The author is grateful to Davit Karapetyan, Natalie Lichtenstein, Michele Lubrano, Giovanni Majnoni, Maria Fabiana Viola, James Vreeland, Ngaire Woods, and three anonymous referees for their helpful comments and suggestions. The author kindly acknowledges the feedback received by World Bank’s executive board members when presenting an earlier draft at a board seminar. Maria Lardner provided excellent research assistance. Any error or omission, however, is solely the responsibility of the author.

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Copyright information

© Springer Science + Business Media, LLC 2008

Authors and Affiliations

  1. 1.Oxford UniversityOxfordUK
  2. 2.Brookings InstitutionWashingtonUSA

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