User:ShawnieDiaz/Mexico and the World Bank

Mexico's History with The World Bank
Mexico now has the second-largest economy in Latin America, it joined the World Bank in 1945, since then the two have worked to further improve Mexico's management system to natural and financial disasters. Mexico is part of a constituency in the board of the World Bank, Constituency of EDS18 that also pertains to Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, and Spain. Mexico's voting power in the World Bank pertains to 1.44% in the IBRD, .46% in the IDA, and .98% in the IFC. The new Programmatic Approach in Disaster Risk Managment was a renewed commitment by the World Bank that in 2012 allowed for a more effective collaboration between the Mexican Government and the World Bank. Not only was the new approach a more effective collaboration but also allowed for flexibility and responsiveness to the needs within a particular subject requiring the attention of the Bank. The approach has three primary goals, they include strengthening Mexico's risk management systems, supporting the climate resilience actives, and building collaboration not only within Mexico's risk management but to other regions.

IFI and The World Bank
The International Financial Institutions (IFI) aid in promoting economic development by providing financial and technical support for developing countries. The World Bank is a key International Financial Institution that focuses on aiding a country by reducing poverty and promoting a sustainable development in that country. IFIs as a result of their possible aid toward countries hold power in shaping global economic policies which at time has led to some questionable choice on both parties and as a result called the IFI into reform. The World Bank Pertains to 5 separate Branches, the International Bank for Reconstruction and Development (IBRD), International Development Association (IDA), International Finance Corporation (IFC), Multilateral Investment Guarantee Agency (MIGA), and International Centre for Settlement of Investment Disputes (ICSID).

Mexico and the IFI
Mexico has 255 projects with the World Bank and a total commitment amount of 61,570,150,464.69 in US dollars. The Multilateral Investment Guarantee Agency (MIGA) is one of the branches of the World Bank, that was created as a means to provide insurance in promoting foreign direct investment to less developed countries. MIGA aided in managing the risk of political interests and breach of contract. MIGA issued a transaction of 1.85 billion dollars to Holding plc of the United Kingdom (HSBC), this guarantee aims to provide relief for HSBC's subsidiaries in Mexico. Under MIGA, Mexico has guaranteed help to mitigate and risks that might occur in foreign investment and had support in sustainable projects. Such as that of HSBC which is aimed at financing environment friendly projects such as renewable energy, clean transportation and sustainable agriculture projects. The World Bank had managed to aid Mexico in growing its economy by 3.2% and lowering the poverty rate form 43.9% to 36.3%.

Although MIGA has played a significant role in supporting these projects, there are some aspects of MIGA that Mexico should consider when looking at its relationship. MIGA although know for helping to facilitate foreign investment many not cover all potential risks that a country may be facing. MIGA provides two options in terms of insurance, one being political risk insurance and the other being contract breach. MIGA is able to fully ensure a country in the first insurance but fails in the second due to a credit threshold. As such the Bank in issuing out its loans implements conditions that countries must accept, many of the conditions align only with the belief that the Bank holds and not the belief that the countries needing the loans belief, often leading to issues between the two. Looking at Mexico's greener approach it is important to note that there has been some controversy regarding the Bank, due to some of its financed projects that have had environmental impacts.