Middle Income Countries (MICs) are extremely diverse with differing development needs, and the World Bank works with them in their roles as clients, shareholders, and global actors to meet these needs.
In some MICs, the World Bank continues to have a substantial lending program in support of the country’s development goals. In other MICs, World Bank lending is decreasing while demand for knowledge and advisory services to meet development challenges is increasing. Other MICs have ceased borrowing from the World Bank altogether and solely access the World Bank’s knowledge and advisory services, in many instances on a reimbursable basis, to meet ongoing challenges and in support of implementation of a country’s own-financed programs.
Partnering with MICs as Global Actors
Middle income countries are critical drivers of the world economy, with knowledge and resources to share. The World Bank is working with MICs in their roles as global actors and development partners, supporting middle income countries in their leadership roles in international fora, such as the G20 and APEC; as development partners; and as key shareholders of the World Bank. Inclusive and sustainable growth and development in middle income countries provides positive spillovers to the rest of the world in terms of poverty reduction, international financial stability, and cross-border global issues, such as climate change, energy, food and water security, and international trade. The World Bank is deepening its efforts to partner with MICs at the country, regional, and global levels to address these and other issues.
Working with MICs to Meet Second-generation Development Challenges
At the same time, MICs have unfinished development agendas and risk being “trapped” in middle income status if they do not further their own economic, social, and structural transformation. As countries reach middle income status, they encounter ‘second generation’ or ‘frontier’ reform challenges that reflect the more advanced stage of their development. Challenges such as lifestyle diseases, aging populations, pension reform, tertiary education, social inequality, competitiveness, trade and tax policy, financial literacy, green growth, and urbanization are typical. The World Bank, with its experience engaging with MICs, ability to share experiences and lessons learned from across the globe, and ability to tailor and package convening, knowledge, and financial products and services, is playing a valuable role in responding to MIC demand to address reform challenges. Many of these challenges cut across disciplines and/or are multi-sectoral, requiring an integrated, holistic approach.
Strengthening the Knowledge Partnership and Facilitating Cross-Country Learning
Middle Income Countries draw on the World Bank’s knowledge and advisory services and also contribute to the Bank’s knowledge base. The World Bank produces just-in-time notes, pieces of analysis, and flagship reports—such as China 2030 and Golden Growth - in partnership with and in response to MIC requests.
In addition, some 40 countries to date have reimbursed (in part or in full) the World Bank for knowledge and advisory services in a range of sectors and covering a broad spectrum of issues. Such countries engage the World Bank as an objective and trusted development partner. The steady increase in the provision of reimbursable advisory services by the World Bank is indicative of many MICs’ appreciation for the breadth and depth of international experience that the World Bank is able to bring. Over time, clients have expanded from central government institutions to sub-national government entities, state-owned enterprises, and other non-sovereign entities.
The World Bank has also been partnering increasingly with MICs to broker South-South knowledge exchanges, including between MICs and middle and lower-income countries, expanding the World Bank’s ability to share such experiences across the globe. This includes through the World Bank Institute’s South-South Facility, global programs and partnerships, lending operations, and other mechanisms. Many MICs are also looking to the World Bank for support as they establish knowledge hubs to more strategically and systematically undertake cross-country learning and knowledge sharing on their own.
Providing a Range of Financial Services
The World Bank Group is bringing together the best of its public and private sector arms (IBRD, IFC, and MIGA) to partner with MICs in responding to their development and reform challenges, meeting those needs by drawing on an array of financial products. IBRD’s financial products are evolving to increasingly support MICs in areas such as financial risk, exposure to natural disasters, and asset management, as well as at the sub-national level.
The World Bank is also adapting its business model to be more responsive, flexible, and innovative, for example streamlining investment lending processes and exploring how best to increase the use of countries’ financial management, procurement, and social and environmental systems. The World Bank is developing new instruments, such as the Program-for-Results Financing, and is revising its guarantees policy to encourage additional private sector investment in MICs.