Why Jim Yong Kim won’t change the World Bank

By Felix Salmon
April 9, 2012

Thomas Bollyky has a subtle and slightly confusing op-ed in the NYT today, entitled “How to Fix the World Bank”. Worldbankpresident.org, your one-stop shop for all news on the race, calls it “an important endorsement for Jim Kim, and for change at the World Bank”. But while it’s the latter — Bollyky’s case for change is strong and compelling — it’s by no means the former. Indeed, Kim in many ways represents the status quo ante, and a vote against change at the Bank.

The heart of Bollyky’s argument is the undeniable case that since the world has changed, the Bank needs to change too.

An election based on American citizenship, as opposed to a vision for institutional leadership, limits the support from shareholders that the president of the World Bank needs to enact bold reforms.

As a result, the World Bank remains largely stuck in an operational model of providing country-specific loans and grants that are increasingly irrelevant to its institutional mission of reducing global poverty…

The pressing challenges in international development have changed. While fewer countries are very poor, many of their citizens remain so. The number of people living on less than $2 per day has declined as a share of the world’s population but has stayed around 2.5 billion since 1981. Income disparities have increased. More than two-thirds of the world’s poorest people now live in middle-income countries, where health care, education and environmental regulations lag far behind economic growth. Persistent poverty, when combined with limited governance and unprecedented rates of urbanization, has produced huge slums, which now house nearly one billion people in developing countries. Many of the emerging threats to global prosperity are collective problems that no government alone can solve: climate change, water shortages, inadequate agricultural productivity.

The World Bank is designed along simplistic lines, even if the problems it faces are anything but. The world’s poor live in poor countries, is the implied syllogism, so we should lend those countries money to help them develop and become richer. If we solve the problem of poor countries, we’ll solve the problem of poverty.

This approach became outdated somewhere around the millennium. In 1990, 93% of the world’s poor lived in low-income countries. By 2007, three-quarters of the world’s poor lived in middle-income countries. So if the World Bank is still focused on lending money to low-income countries, it’s by definition missing most of the world’s poor.

Bollyky says that Kim’s inexperience in government will be damning “only if he is forced to lead an institution largely devoted to providing the country-by-country loans and grants that fewer and fewer governments need.” But that is the US vision of the World Bank. Moreover, precisely because he’s unfamiliar with World Bank bureaucracy, Kim is the least qualified candidate if you want someone who is going to radically revamp the way the Bank works.

If you want to understand what the Obama administration thinks the job of the World Bank is, all you need to do is read Barack Obama’s own remarks when he nominated Jim Kim to lead the institution. First, he said that Bob Zoellick “has been a strong and effective leader at the bank for the last five years” — which gives you an idea of what the US considers “strong and effective” in this context. Then, we got this:

The World Bank is more than just a bank. It’s one of the most powerful tools we have to reduce poverty and raise standards of living in some of the poorest countries on the planet…

Ultimately, when a nation goes from poverty to prosperity, it makes the world stronger and more secure for everybody.

Obama here is talking very explicitly in the old language, where the Bank targets the poorest countries on the planet, and tries to help them from poverty to prosperity. That’s sad, because if you look at the the history of the World Bank, it has been quite bad at shepherding countries from poverty to prosperity: it’s been most active in countries where that hasn’t happened, and meanwhile the countries which have managed the change have done so largely on their own, without much in the way of World Bank assistance.

As Bollyky says, what the Bank should do is revamp its architecture so that it can target poverty wherever it is found around the world, rather than working mainly in the world’s poorest countries. And at the same time, it must play a coordinating role in addressing cross-border issues, especially in a world where one country’s necessary crop irrigation looks to its neighbor very much like the theft of precious water.

But the World Bank won’t move far in that direction so long as its president is imposed by fiat of the US. In order to work effectively at the sub-national and international level, the World Bank needs to be a genuinely international organization, run by and for the whole world, rather than being viewed as a means for the US to project “soft power” in Africa and elsewhere. For that reason alone the president of the World Bank should not be a US citizen, and in fact it would probably be helpful if the US didn’t put forward an official nominee at all. After all, as Bollyky notes, the US already has a veto over the Bank’s presidency: that should be more than enough.

More to the point, if the president of the World Bank is going to come in with a mandate to fundamentally change the way that the organization works, then that person really has to be very clear about what they want to achieve before the decision to appoint them is made. Both Okonjo-Iweala and Ocampo are happy to answer detailed questions, in public, about their vision for the Bank; Kim isn’t. And he can’t be vague now if he wants to be decisive once in office.

Bollyky concludes by saying, quite rightly, that “Kim needs to be candid and specific with shareholders and the public about his agenda for revitalizing the World Bank”. Another way of putting that is to say that if Kim is not candid and specific with shareholders and the public about his agenda, then he should not become president of the organization. The time for “listening tours” is over. He needs to start talking, now. Because you can’t have a mandate if the electorate has no idea what it’s voting for.

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