DSST Business Ethics Study Guide sm 2

The loan was for 987 million half the amount

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applications from Poland and Chile were rejected. The loan was for $987 million, half the amount requested and came with strict conditions. Staff from the World Bank monitored the use of the funds, ensuring that the French government would present a balanced budget and give priority of debt repayment to the World Bank over other governments. The United States State Department told the French government that communist elements within the Cabinet needed to be removed. The French Government complied with this diktat and removed theCommunist coalition government. Within hours the loan to France was approved. [6] The Marshall Plan of 1947 caused lending by the bank to change as many European countries received aid that competed with World Bank loans. Emphasis was shifted to non-European countries and until 1968, loans were earmarked for projects that would enable a borrower country to repay loans (such projects as ports, highway systems, and power plants). [ edit ] 1968–1980 From 1968 to 1980 the bank concentrated on meeting the basic needs of people in the developing world. [ citation needed ] The size and number of loans to borrowers was greatly increased as loan targets expanded from infrastructure into social services and other sectors. [ citation needed ] These changes can be attributed to Robert McNamara who was appointed to the presidency in 1968 by Lyndon B. Johnson. [7] McNamara imported a technocratic managerial style to the Bank that he had used as United States Secretary of Defense and President of the Ford Motor Company. [8] McNamara shifted bank policy toward measures such as building schools and hospitals, improving literacy and agricultural reform. McNamara created a new system of gathering information from potential borrower nations that enabled the bank to process loan
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applications much faster. To finance more loans, McNamara told bank treasurer Eugene Rotberg to seek out new sources of capital outside of the northern banks that had been the primary sources of bank funding. Rotberg used the global bond market to increase the capital available to the bank. [9] One consequence of the period of poverty alleviation lending was the rapid rise of third world debt. From 1976 to 1980 developing world debt rose at an average annual rate of 20%. [10][11] [ edit ] 1980–1989 In 1980 A.W. Clausen replaced McNamara after being nominated by US President Jimmy Carter. Clausen replaced a large number of bank staffers from the McNamara era and instituted a new ideological focus in the bank. The replacement of Chief Economist Hollis B. Chenery by Anne Krueger in 1982 marked a notable policy shift at the bank. Krueger was known for her criticism of development funding as well as third world governments as rent-seeking states. Lending to service third world debt marked the period of 1980–1989. Structural adjustment policies aimed at streamlining the economies of developing nations (at the expense of health and social services) were also a large part of World Bank policy during this period. UNICEF reported in the late 1980s that the structural adjustment programs of the World
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