Austerity is a political-economic term referring to policies that aim to reduce government budget deficits through spending cuts, tax increases, or a combination of both. Austerity measures are used by governments; the measures are meant to reduce the budget deficit by bringing government revenues closer to expenditures, assumed to make the payment of debt easier. Austerity measures demonstrate a government's fiscal discipline to creditors and credit rating agencies. In most macroeconomic models, austerity policies increase unemployment as government spending falls. Cutbacks in government spending reduce employment in the public and may do so in the private sector. Additionally, tax increases can reduce consumption by cutting household disposable income; some claim that reducing spending may result in a higher debt-to-GDP ratio because government expenditure itself is a component of GDP. In the aftermath of the Great Recession, for instance, austerity measures in many European countries were followed by rising unemployment and debt-to-GDP ratios despite reductions in budget deficits.
When an economy is operating at or near capacity, higher short-term deficit spending can cause interest rates to rise, resulting in a reduction in private investment, which in turn reduces economic growth. Where there is excess capacity, the stimulus can result in an increase in output. Austerity measures are pursued if there is a threat that a government cannot honour its debt obligations; this may occur when a government has borrowed in foreign currencies, or if it has been forbidden from issuing its own currency. In such a situation and investors may lose confidence in a government's ability or willingness to pay, either refuse to roll over existing debts, or demand high interest rates. International financial institutions such as the International Monetary Fund may demand austerity measures as part of Structural Adjustment Programmes when acting as lender of last resort. Austerity policies may appeal to the wealthier class of creditors, who prefer low inflation and the higher probability of payback on their government securities by less profligate governments.
More austerity has been pursued after governments became indebted by assuming private debts following banking crises. According to Mark Blyth, the concept of austerity emerged in the 20th century, when large states acquired sizable budgets. However, Blyth argues that the theories and sensibilities about the role of the state and capitalist markets that underline austerity emerged from the 17th century onwards. Austerity is grounded in liberal economics' view of the state and sovereign debt as problematic. Blyth traces the discourse of austerity back to John Locke's theory of private property and derivative theory of the state, David Hume's ideas about money and the virtue of merchants, Adam Smith's theories on economic growth and taxes. On the basis of classic liberal ideas, austerity emerged as a doctrine of neoliberalism in the 20th century. Economist David M. Kotz suggests that the implementation of austerity measures following the financial crisis of 2007–2008 was an attempt to preserve the neoliberal capitalist model.
In the 1930s during the Great Depression, anti-austerity arguments gained more prominence. John Maynard Keynes became a well known anti-austerity economist, arguing that "The boom, not the slump, is the right time for austerity at the Treasury." Contemporary Keynesian economists argue that budget deficits are appropriate when an economy is in recession, to reduce unemployment and help spur GDP growth. According to Paul Krugman, since a government is not like a household, reductions in government spending during economic downturns worsen the crisis. Across an economy, one person's spending is another person's income. In other words, if everyone is trying to reduce their spending, the economy can be trapped in what economists call the paradox of thrift, worsening the recession as GDP falls. In the past this has been offset by encouraging consumerism to rely on debt, but after the 2008 crisis, this is looking like a less and less viable option for sustainable economics. Krugman argues that, if the private sector is unable or unwilling to consume at a level that increases GDP and employment sufficiently the government should be spending more in order to offset the decline in private spending.
Keynesian theory has been shown as responsible for post-war boom years, before the 1970s, when public sector investment was at its highest across Europe encouraged by the Marshall Plan. An important component of economic output is business investment, but there is no reason to expect it to stabilize at full utilization of the economy's resources. High business profits do not lead to increased economic growth. Economists Kenneth Rogoff and Carmen Reinhart wrote in April 2013, "Austerity works without structural reforms – for example, changes in taxes and labor market policies – and if poorly designed, can disproportionately hit the poor and middle class. Our consistent advice has been to avoid withdrawing fiscal stimulus too a position identical to that of most mainstream economists." Other Economists go further, with Hermann
The United Nations is an intergovernmental organization, tasked to maintain international peace and security, develop friendly relations among nations, achieve international co-operation and be a centre for harmonizing the actions of nations. The headquarters of the UN is in Manhattan, New York City, is subject to extraterritoriality. Further main offices are situated in Geneva, Nairobi and The Hague; the organization is financed by voluntary contributions from its member states. Its objectives include maintaining international peace and security, protecting human rights, delivering humanitarian aid, promoting sustainable development and upholding international law; the UN is the largest, most familiar, most internationally represented and most powerful intergovernmental organization in the world. In 24 October 1945, at the end of World War II, the organization was established with the aim of preventing future wars. At its founding, the UN had 51 member states; the UN is the successor of the ineffective League of Nations.
On 25 April 1945, 50 governments met in San Francisco for a conference and started drafting the UN Charter, adopted on 25 June 1945 in the San Francisco Opera House, signed on 26 June 1945 in the Herbst Theatre auditorium in the Veterans War Memorial Building. This charter took effect on 24 October 1945; the UN's mission to preserve world peace was complicated in its early decades during the Cold War between the United States and Soviet Union and their respective allies. Its missions have consisted of unarmed military observers and armed troops with monitoring and confidence-building roles; the organization's membership grew following widespread decolonization which started in the 1960s. Since 80 former colonies had gained independence, including 11 trust territories, which were monitored by the Trusteeship Council. By the 1970s its budget for economic and social development programmes far outstripped its spending on peacekeeping. After the end of the Cold War, the UN shifted and expanded its field operations, undertaking a wide variety of complex tasks.
The UN has six principal organs: the General Assembly. The UN System agencies include the World Bank Group, the World Health Organization, the World Food Programme, UNESCO, UNICEF; the UN's most prominent officer is the Secretary-General, an office held by Portuguese politician and diplomat António Guterres since 1 January 2017. Non-governmental organizations may be granted consultative status with ECOSOC and other agencies to participate in the UN's work; the organization, its officers and its agencies have won many Nobel Peace Prizes. Other evaluations of the UN's effectiveness have been mixed; some commentators believe the organization to be an important force for peace and human development, while others have called the organization ineffective, biased, or corrupt. In the century prior to the UN's creation, several international treaty organizations such as the International Committee of the Red Cross was formed to ensure protection and assistance for victims of armed conflict and strife.
In 1914, a political assassination in Sarajevo set off a chain of events that led to the outbreak of World War I. As more and more young men were sent down into the trenches, influential voices in the United States and Britain began calling for the establishment of a permanent international body to maintain peace in the postwar world. President Woodrow Wilson became a vocal advocate of this concept, in 1918 he included a sketch of the international body in his 14-point proposal to end the war. In November 1918, the Central Powers agreed to an armistice to halt the killing in World War I. Two months the Allies met with Germany and Austria-Hungary at Versailles to hammer out formal peace terms. President Wilson wanted peace, but the United Kingdom and France disagreed, forcing harsh war reparations on their former enemies; the League of Nations was approved, in the summer of 1919 Wilson presented the Treaty of Versailles and the Covenant of the League of Nations to the US Senate for ratification.
On January 10, 1920, the League of Nations formally comes into being when the Covenant of the League of Nations, ratified by 42 nations in 1919, takes effect. However, at some point the League became ineffective when it failed to act against the Japanese invasion of Manchuria as in February 1933, 40 nations voted for Japan to withdraw from Manchuria but Japan voted against it and walked out of the League instead of withdrawing from Manchuria, it failed against the Second Italo-Ethiopian War despite trying to talk to Benito Mussolini as he used the time to send an army to Africa, so the League had a plan for Mussolini to just take a part of Ethiopia, but he ignored the League and invaded Ethiopia, the League tried putting sanctions on Italy, but Italy had conquered Ethiopia and the League had failed. After Italy conquered Ethiopia and other nations left the league, but all of them realised that they began to re-arm as fast as possible. During 1938, Britain and France tried negotiating directly with Hitler but this failed in 1939 when Hitler invaded Czechoslovakia.
When war broke out in 1939, the League closed down and its headquarters in Geneva remained empty throughout the war. The earliest concrete plan for a new world organization began under the aegis of the U. S. State Department in 1939; the text of the "Declaration by United Nations" was drafted at the White House on December 29, 1941, by President Franklin D. Roosevelt, Prime Minister Winston Churchill, Roosevelt aide Harry Hopkins
Political economy is the study of production and trade and their relations with law and government. As a discipline, political economy originated in moral philosophy, in the 18th century, to explore the administration of states' wealth, with "political" signifying the Greek word polity and "economy" signifying the Greek word "okonomie"; the earliest works of political economy are attributed to the British scholars Adam Smith, Thomas Malthus, David Ricardo, although they were preceded by the work of the French physiocrats, such as François Quesnay and Anne-Robert-Jacques Turgot. In the late 19th century, the term "economics" began to replace the term "political economy" with the rise of mathematical modelling coinciding with the publication of an influential textbook by Alfred Marshall in 1890. Earlier, William Stanley Jevons, a proponent of mathematical methods applied to the subject, advocated economics for brevity and with the hope of the term becoming "the recognised name of a science".
Citation measurement metrics from Google Ngram Viewer indicate that use of the term "economics" began to overshadow "political economy" around 1910, becoming the preferred term for the discipline by 1920. Today, the term "economics" refers to the narrow study of the economy absent other political and social considerations while the term "political economy" represents a distinct and competing approach. Political economy, where it is not used as a synonym for economics, may refer to different things. From an academic standpoint, the term may reference Marxian economics, applied public choice approaches emanating from the Chicago school and the Virginia school. In common parlance, "political economy" may refer to the advice given by economists to the government or public on general economic policy or on specific economic proposals developed by political scientists. A growing mainstream literature from the 1970s has expanded beyond the model of economic policy in which planners maximize utility of a representative individual toward examining how political forces affect the choice of economic policies as to distributional conflicts and political institutions.
It is available as a stand-alone area of study in certain universities. Political economy meant the study of the conditions under which production or consumption within limited parameters was organized in nation-states. In that way, political economy expanded the emphasis of economics, which comes from the Greek oikos and nomos. Political economy was thus meant to express the laws of production of wealth at the state level, just as economics was the ordering of the home; the phrase économie politique first appeared in France in 1615 with the well-known book by Antoine de Montchrétien, Traité de l’economie politique. The French physiocrats were the first exponents of political economy, although the intellectual responses of Adam Smith, John Stuart Mill, David Ricardo, Henry George and Karl Marx to the physiocrats receives much greater attention; the world's first professorship in political economy was established in 1754 at the University of Naples Federico II in southern Italy. The Neapolitan philosopher Antonio Genovesi was the first tenured professor.
In 1763, Joseph von Sonnenfels was appointed a Political Economy chair at the University of Vienna, Austria. Thomas Malthus, in 1805, became England's first professor of political economy, at the East India Company College, Hertfordshire. In its contemporary meaning, political economy refers to different yet related approaches to studying economic and related behaviours, ranging from the combination of economics with other fields to the use of different, fundamental assumptions that challenge earlier economic assumptions: Political economy most refers to interdisciplinary studies drawing upon economics and political science in explaining how political institutions, the political environment, the economic system—capitalist, communist, or mixed—influence each other; the Journal of Economic Literature classification codes associate political economy with three sub-areas: the role of government and/or class and power relationships in resource allocation for each type of economic system. Much of the political economy approach is derived from public choice theory on the one hand and radical political economics on the other hand, both dating from the 1960s.
Public choice theory is a microfoundations theory, intertwined with political economy. Both approaches model voters and bureaucrats as behaving in self-interested ways, in contrast to a view, ascribed to earlier mainstream economists, of government officials trying to maximize individual utilities from some kind of social welfare function; as such and political scientists associate political economy with approaches using rational-choice assumptions in game theory and in examining phenomena beyond economics' standard remit, such as government failure and complex decision making in which context the term "positive political economy" is common. Other "traditional" topics include analysis of such public policy issues as economic regulation, rent-seeking, market protection, institutional corruption and distributional politics. Empirical analysis includes the influence of elections on the choice of economic policy and forecasting models of electoral outcome
International relations or international affairs — also referred to as international studies, global studies, or global affairs — is the study of interconnectedness of politics and law on a global level. Depending on the academic institution, it is either a field of political science, an interdisciplinary academic field similar to global studies, or an independent academic discipline in which students take a variety of internationally focused courses in social science and humanities disciplines. In all cases, the field studies relationships between political entities such as sovereign states, inter-governmental organizations, international non-governmental organizations, other non-governmental organizations, multinational corporations, the wider world-systems produced by this interaction. International relations is an academic and a public policy field, so can be positive and normative, because it analyses and formulates the foreign policy of a given state; as political activity, international relations dates from the time of the Greek historian Thucydides, and, in the early 20th century, became a discrete academic field within political science.
In practice, international relations and international affairs forms a separate academic program or field from political science, the courses taught therein are interdisciplinary. For example, international relations draws from the fields of politics, international law, communication studies, demography, sociology, criminology and gender studies; the scope of international relations encompasses issues such as globalization, diplomatic relations, state sovereignty, international security, ecological sustainability, nuclear proliferation, economic development, global finance and human rights. The history of international relations can be traced back to thousands of years ago; the history of international relations based on sovereign states and many more types are traced back to the Peace of Westphalia of 1648, a stepping stone in the development of the modern state system. Prior to this the European medieval organization of political authority was based on a vaguely hierarchical religious order.
Contrary to popular belief, Westphalia still embodied layered systems of sovereignty within the Holy Roman Empire. More than the Peace of Westphalia, the Treaty of Utrecht of 1713 is thought to reflect an emerging norm that sovereigns had no internal equals within a defined territory and no external superiors as the ultimate authority within the territory's sovereign borders; the centuries of 1500 to 1789 saw the rise of the independent, sovereign states, the institutionalization of diplomacy and armies. The French Revolution added to this the new idea that not princes or an oligarchy, but the citizenry of a state, defined as the nation, should be defined as sovereign; such a state in which the nation is sovereign would thence be termed a nation-state. The term republic became its synonym. An alternative model of the nation-state was developed in reaction to the French republican concept by the Germans and others, who instead of giving the citizenry sovereignty, kept the princes and nobility, but defined nation-statehood in ethnic-linguistic terms, establishing the if fulfilled ideal that all people speaking one language should belong to one state only.
The same claim to sovereignty was made for both forms of nation-state. The particular European system supposing the sovereign equality of states was exported to the Americas and Asia via colonialism and the "standards of civilization"; the contemporary international system was established through decolonization during the Cold War. However, this is somewhat over-simplified. While the nation-state system is considered "modern", many states have not incorporated the system and are termed "pre-modern". Further, a handful of states have moved beyond insistence on full sovereignty, can be considered "post-modern"; the ability of contemporary IR discourse to explain the relations of these different types of states is disputed. "Levels of analysis" is a way of looking at the international system, which includes the individual level, the domestic state as a unit, the international level of transnational and intergovernmental affairs, the global level. What is explicitly recognized as international relations theory was not developed until after World War I, is dealt with in more detail below.
IR theory, has a long tradition of drawing on the work of other social sciences. The use of capitalizations of the "I" and "R" in international relations aims to distinguish the academic discipline of international relations from the phenomena of international relations. Many cite Sun Tzu's The Art of War, Thucydides' History of the Peloponnesian War, Chanakya's Arthashastra, as the inspiration for realist theory, with Hobbes' Leviathan and Machiavelli's The Prince providing further elaboration. Liberalism draws upon the work of Kant and Rousseau, with the work of the former being cited as the first elaboration of democratic peace theory. Though contemporary human rights is different from the type of rights envisioned under natural
International Monetary Fund
The International Monetary Fund is an international organization headquartered in Washington, D. C. consisting of "189 countries working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, reduce poverty around the world." Formed in 1944 at the Bretton Woods Conference by the ideas of Harry Dexter White and John Maynard Keynes, it came into formal existence in 1945 with 29 member countries and the goal of reconstructing the international payment system. It now plays a central role in the management of balance of payments difficulties and international financial crises. Countries contribute funds to a pool through a quota system from which countries experiencing balance of payments problems can borrow money; as of 2016, the fund had SDR477 billion. Through the fund, other activities such as the gathering of statistics and analysis, surveillance of its members' economies and the demand for particular policies, the IMF works to improve the economies of its member countries.
The organisation's objectives stated in the Articles of Agreement are: to promote international monetary co-operation, international trade, high employment, exchange-rate stability, sustainable economic growth, making resources available to member countries in financial difficulty. IMF funds come from two major sources:quotas and loans. Quotas, which are pooled funds of member nations, generate most IMF funds; the size of a member's quota depends on its financial importance in the world. Nations with larger economic importance have larger quotas; the quotas are increased periodically as a means of boosting the IMF's resources. The current Managing Director and Chairwoman of the International Monetary Fund is French lawyer and former politician, Christine Lagarde, who has held the post since 5 July 2011. Gita Gopinath was appointed as Chief Economist of IMF from October 1, 2018, she received her Ph. D. in economics from Princeton University. According to the IMF itself, it works to foster global growth and economic stability by providing policy advice and financing the members by working with developing nations to help them achieve macroeconomic stability and reduce poverty.
The rationale for this is that private international capital markets function imperfectly and many countries have limited access to financial markets. Such market imperfections, together with balance-of-payments financing, provide the justification for official financing, without which many countries could only correct large external payment imbalances through measures with adverse economic consequences; the IMF provides alternate sources of financing. Upon the founding of the IMF, its three primary functions were: to oversee the fixed exchange rate arrangements between countries, thus helping national governments manage their exchange rates and allowing these governments to prioritize economic growth, to provide short-term capital to aid the balance of payments; this assistance was meant to prevent the spread of international economic crises. The IMF was intended to help mend the pieces of the international economy after the Great Depression and World War II; as well, to provide capital investments for economic growth and projects such as infrastructure.
The IMF's role was fundamentally altered by the floating exchange rates post-1971. It shifted to examining the economic policies of countries with IMF loan agreements to determine if a shortage of capital was due to economic fluctuations or economic policy; the IMF researched what types of government policy would ensure economic recovery. A particular concern of the IMF was to prevent financial crisis, such as those in Mexico 1982, Brazil in 1987, East Asia in 1997–98 and Russia in 1998, from spreading and threatening the entire global financial and currency system; the challenge was to promote and implement policy that reduced the frequency of crises among the emerging market countries the middle-income countries which are vulnerable to massive capital outflows. Rather than maintaining a position of oversight of only exchange rates, their function became one of surveillance of the overall macroeconomic performance of member countries, their role became a lot more active because the IMF now manages economic policy rather than just exchange rates.
In addition, the IMF negotiates conditions on lending and loans under their policy of conditionality, established in the 1950s. Low-income countries can borrow on concessional terms, which means there is a period of time with no interest rates, through the Extended Credit Facility, the Standby Credit Facility and the Rapid Credit Facility. Nonconcessional loans, which include interest rates, are provided through Stand-By Arrangements, the Flexible Credit Line, the Precautionary and Liquidity Line, the Extended Fund Facility; the IMF provides emergency assistance via the Rapid Financing Instrument to members facing urgent balance-of-payments needs. The IMF is mandated to oversee the international monetary and financial system and monitor the economic and financial policies of its member countries; this activity facilitates international co-operation. Since the demise of the Bretton Woods system of fixed exchange rates in the early 1970s, surveillance has evolved by way of changes in procedures rather than through the adoption of new obligations.
The responsibilities changed from those of guardian to those of overseer of members' policies. The Fund analyses the appropriateness of each member country's economic and financial policies for achieving orderly economic growth, assesses the consequences of these policies for other countries and for the global e
Development aid or development cooperation is financial aid given by governments and other agencies to support the economic, environmental and political development of developing countries. It is distinguished from humanitarian aid by focusing on alleviating poverty in the long term, rather than a short term response; the term development cooperation, used, for example, by the World Health Organization, is used to express the idea that a partnership should exist between donor and recipient, rather than the traditional situation in which the relationship was dominated by the wealth and specialised knowledge of one side. Most development aid comes from the Western industrialised countries but some poorer countries contribute aid. Aid may be bilateral: given from one country directly to another; the proportion is about 70% bilateral 30% multilateral. About 80–85% of developmental aid comes from government sources as official development assistance; the remaining 15–20% comes from private organisations such as "non-governmental organisations", foundations and other development charities.
In addition, remittances received from migrants working or living in diaspora form a significant amount of international transfer. Some governments include military assistance in the notion "foreign aid", although many NGOs tend to disapprove of this. Official development assistance is a measure of government-contributed aid, compiled by the Development Assistance Committee of the Organisation for Economic Co-operation and Development since 1969; the DAC consists of 34 of the largest aid-donating countries. The concept of development aid goes back to the colonial era at the turn of the twentieth century, in particular to the British policy of colonial development that emerged during that period; the traditional government policy had tended to favor laissez-faire style economics, with the free market for capital and goods dictating the economic role that colonies played in the British Empire. Changes in attitudes towards the moral purpose of the Empire, the role that government could play in the promotion of welfare led to a more proactive policy of economic and developmental assistance towards poor colonies.
The first challenge to Britain was the economic crisis that occurred after World War I. Prior to the passage of the 1929 Colonial Development Act, the doctrine that governed Britain with their territories was that of financial self-sufficiency. What this meant was that the colonies were responsible for themselves. Britain was not going to use the money that belongs to the metropole to pay for things in the colonies; the colonies did not only have to pay for infrastructural development but they were responsible for the salaries of British officials that worked in the colonies. The colonies generated the revenues to pay for these through different forms of taxations; the standard taxation was the export taxes. Goods going out of the colonies were taxed and those coming in were taxed; these generate significant revenues. Apart from these taxes, the colonizers introduced two other forms of taxes: hut labor tax; the hut tax is akin to a property tax today. Every grown up adult male had their own hut; each of these had to pay a tax.
Labor tax was the work that the people had to do with meager stipends. As the economic crisis widened and had significant impact on the colonies, revenues generated from taxes continued to decline, having a significant impact on the colonies. While this was going on, Britain experienced major unemployment rates. Parliament began to discuss ways in which they could deal with Britain's unemployment rates and at the same time respond to some of the urgent needs of the colonies; this process culminated in the passage of the Colonial Development Act in 1929, which established a Colonial Development Advisory Committee under the authority of the Secretary of State for the Colonies Lord Passfield. Its initial annual budget of £1 million was spent on schemes designed to develop the infrastructure of transport, electrical power and water supply in colonies and dominions abroad for the furtherance of imperial trade; the 1929 Act, though meager in the resources it made available for development, was a significant Act because it opened the door for Britain to make future investments in the colonies.
It was a major shift in colonial development. The doctrine of financial self-sufficiency was abandoned and Britain could now use metropolitan funds to develop the colonies. By the late 1930s after the British West Indian labour unrest of 1934–1939, it was clear that this initial scheme was far too limited in scope. A Royal Commission under Lord Moyne was sent to investigate the living conditions in the British West Indies and it published its Report in 1940 which exposed the horrendous living conditions there. Amidst increasing criticism of Britain's colonial policies from abroad and at home, the commission was a performance to showcase Britain's "benevolent" attitude towards its colonial subjects; the Commission's recommendations urged health and education initiatives along with increased sugar subsidies to stave off a complete and total economic meltdown. The Colonial Office, eager to prevent instability while the country was at war, began funneling large sums of cash into the region; the Colonial Development and Welfare Act was passed in 1
The World Bank is an international financial institution that provides loans to countries of the world for capital projects. It comprises two institutions: the International Bank for Reconstruction and Development, the International Development Association; the World Bank is a component of the World Bank Group. The World Bank's most recent stated goal is the reduction of poverty; as of November 2018, the largest recipients of world bank loans were India and China, through loans from IBRD. The World Bank is different from the World Bank Group, an extended family of five international organizations: International Bank for Reconstruction and Development International Development Association International Finance Corporation Multilateral Investment Guarantee Agency International Centre for Settlement of Investment Disputes The World Bank was created at the 1944 Bretton Woods Conference along with the International Monetary Fund; the president of the World Bank is, traditionally, an American. The World Bank and the IMF are both based in Washington, D.
C. and work with each other. Although many countries were represented at the Bretton Woods Conference, the United States and United Kingdom were the most powerful in attendance and dominated the negotiations; the intention behind the founding of the World Bank was to provide temporary loans to low-income countries which were unable to obtain loans commercially. The Bank may make loans and demand policy reforms from recipients. Before 1974, the reconstruction and development loans provided by the World Bank were small; the Bank's staff were aware of the need to instill confidence in the bank. Fiscal conservatism ruled, loan applications had to meet strict criteria; the first country to receive a World Bank loan was France. The Bank's president at the time, John McCloy, chose France over two other applicants and Chile; the loan was for US$250 million, half the amount requested, it came with strict conditions. France had to agree to produce a balanced budget and give priority of debt repayment to the World Bank over other governments.
World Bank staff monitored the use of the funds to ensure that the French government met the conditions. In addition, before the loan was approved, the United States State Department told the French government that its members associated with the Communist Party would first have to be removed; the French government complied and removed the Communist coalition government - the so-called tripartite. Within hours, the loan to France was approved; when the Marshall Plan went into effect in 1947, many European countries began receiving aid from other sources. Faced with this competition, the World Bank shifted its focus to non-European countries; until 1968, its loans were earmarked for the construction of infrastructure works, such as seaports, highway systems, power plants, that would generate enough income to enable a borrower country to repay the loan. In 1960, the International Development Association was formed, providing soft loans to developing countries. From 1974 to 1980 the bank concentrated on meeting the basic needs of people in the developing world.
The size and number of loans to borrowers was increased as loan targets expanded from infrastructure into social services and other sectors. These changes can be attributed to Robert McNamara, appointed to the presidency in 1968 by Lyndon B. Johnson. McNamara implored bank treasurer Eugene Rotberg to seek out new sources of capital outside of the northern banks, the primary sources of funding. Rotberg used the global bond market to increase the capital available to the bank. 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%. In 1980 the World Bank Administrative Tribunal was established to decide on disputes between the World Bank Group and its staff where allegation of non-observance of contracts of employment or terms of appointment had not been honored. In 1980 McNamara was succeeded by Alden W. Clausen. Clausen crafted a different mission emphasis, his 1982 decision to replace the bank's Chief Economist, Hollis B.
Chenery, with Anne Krueger was an example of this new focus. Krueger was known for her criticism of development funding and for describing Third World governments as "rent-seeking states". During the 1980s the bank emphasized lending to service Third-World debt, structural adjustment policies designed to streamline the economies of developing nations. UNICEF reported in the late 1980s that the structural adjustment programs of the World Bank had been responsible for "reduced health and educational levels for tens of millions of children in Asia, Latin America, Africa". Beginning in 1989, in response to harsh criticism from many groups, the bank began including environmental groups and NGOs in its loans to mitigate the past effects of its development policies that had prompted the criticism, it formed an implementing agency, in accordance with the Montreal Protocols, to stop ozone-depletion damage to the Earth's atmosphere by phasing out the use of 95% of ozone-depleting chemicals, with a target date of 2015.
Since in accordance with its so-called "Six Strategic Themes", the bank has put various additional policies into effect to preserve the environment while promoting development. For example, in 1991 the bank announced that to protect against deforestation in the Amazon, it would not finance any commercial logging or infrastructure projects that harm the en