International Development Association

Definition

The International Development Association (IDA) is a financial institution that provides concessional loans and grants to the world's poorest countries to promote sustainable economic development and reduce inequality. Established in 1960 as part of the World Bank Group, the IDA plays a crucial role in supporting projects that aim to improve living conditions and stimulate economic growth in developing nations.

5 Must Know Facts For Your Next Test

1. The IDA primarily targets countries with per capita incomes below a certain threshold, providing resources for projects in sectors like health, education, and infrastructure.
2. Funding from the IDA is critical for addressing urgent issues such as climate change, food security, and public health crises in developing nations.
3. The IDA operates on a system of replenishments, where donor countries commit funds every three years to support its lending operations.
4. As of 2023, the IDA has helped over 1.5 billion people improve their living standards through investments in various development projects across member countries.
5. The IDA emphasizes partnerships with other international organizations, governments, and civil society to maximize the impact of its funding and align with broader development goals.

Review Questions

• How does the International Development Association support economic growth in developing countries?
  • The International Development Association supports economic growth in developing countries by providing concessional loans and grants that fund projects aimed at improving infrastructure, healthcare, education, and agriculture. By targeting the world's poorest nations, the IDA ensures that resources are allocated where they are needed most. These investments not only help alleviate poverty but also create jobs and stimulate economic activity within these countries.
• Evaluate the significance of the IDA's partnership with other organizations in achieving sustainable development goals.
  • The significance of the IDA's partnerships with other organizations lies in its ability to leverage additional resources and expertise to tackle complex global challenges. By collaborating with entities like the United Nations and various NGOs, the IDA enhances its effectiveness in promoting sustainable development goals. These partnerships enable a more integrated approach to addressing issues such as poverty reduction and environmental sustainability, resulting in more impactful outcomes for communities around the world.
• Assess the challenges faced by the International Development Association in its mission to reduce inequality and promote development among low-income countries.
  • The International Development Association faces several challenges in its mission to reduce inequality and promote development among low-income countries. These include limited funding due to economic constraints on donor nations, political instability within recipient countries that can hinder project implementation, and the growing impacts of climate change that disproportionately affect vulnerable populations. Additionally, ensuring effective monitoring and evaluation of funded projects can be difficult, making it challenging to demonstrate tangible results and secure ongoing support from donor nations.

Related terms

World Bank: An international financial institution that provides loans and grants to the governments of developing countries for the purpose of pursuing capital projects.

Concessional Loans: Loans offered on terms significantly more generous than market loans, including lower interest rates and extended repayment periods, designed to help low-income countries.

Sustainable Development Goals: A collection of 17 global goals set by the United Nations in 2015 to address various global challenges, including poverty, inequality, and climate change, which are often supported through IDA funding.