How to Fix the World Bank

For the first time since the World Bank’s creation at the end of World War II, the United States is facing a real challenge over the bank’s leadership. Leaders of some developing and emerging economies have refused to support President Obama’s unexpected choice of Jim Yong Kim, the president of Dartmouth College, to lead the bank.

As the bank’s executive board prepares to vote on April 18, the Americans are likely to get their way, since an 85 percent supermajority of the bank’s voting shares are needed to appoint a president, and the United States is the largest shareholder. But the controversy is not going away. The Economist and Financial Times have endorsed Dr. Kim’s main competitor, Ngozi Okonjo-Iweala, an economist who is Nigeria’s finance minister and a former managing director of the bank. José Antonio Ocampo, a former Colombian finance minister and high-ranking United Nations official, has also been put forward as an alternative. Petitions are circulating among former bank officials and economists supporting the alternatives to Dr. Kim.

The controversy around Dr. Kim’s nomination is understandable. For decades, America has effectively had unilateral control over who gets to lead the World Bank. Mr. Obama’s unconventional pick of Dr. Kim, a physician and anthropologist, has opened the door to developing countries to put forward their own candidates whose economic and banking qualifications more closely resemble those of past leaders of the bank.

Regardless of whether Dr. Kim is the right choice — and I happen to believe he is an inspired choice — his candidacy and the bank will suffer unless the United States takes the high ground and uses this controversy to reform how the institution is governed. Only by embracing a competitive election process can the United States ensure that Dr. Kim will have the mandate to revitalize an institution long resistant to change.

Having an American at the helm of the bank partly served to reassure Wall Street, originally the main supplier of the bank’s capital. With the globalization of capital markets, this justification for the arrangement is long outdated.

Without a competitive selection process, the best leadership ideas cannot emerge. Conversely, 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. With the spectacular economic growth of many developing countries in the last decade, commercial investment in many emerging markets is booming. The typical aid-recipient country receives donor financing worth less than 1 percent of its income.

The pressing challenges in international development have also 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.

Critics say that Dr. Kim lacks basic qualifications for the job: government management experience and expertise in macroeconomics and finance. But Dr. Kim is a refreshing change from the bankers, business executives and politicians who have long led the bank.

He is revered by public health advocates for his work on H.I.V./AIDS and drug-resistant tuberculosis as a World Health Organization official and as a founder of the advocacy and research organization Partners in Health. Dr. Kim was an early adopter of the data-driven approaches and rigorous evaluations that identify what works best in development and build accountability for their implementation.

At a time when many development challenges know no borders, his experience fighting infectious disease and mobilizing affordable treatments for the poor is more relevant than a deep understanding of capital markets. (And while Dartmouth is a much smaller institution than the World Bank, Dr. Kim demonstrated managerial resolve at the college in taking on the $100 million operating deficit that he inherited with budget cuts and layoffs, over objections from the faculty.)

Dr. Kim’s lack of financial expertise and government experience are 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. Accordingly, the major qualification that Dr. Kim lacks to lead the World Bank is a mandate for change.

Past reform-minded World Bank presidents have recognized the imperative of adapting to changing needs. Fifteen years ago, James D. Wolfensohn pushed to transform the institution into a “knowledge bank” that promoted the best ideas to address the biggest challenges in global poverty. Robert B. Zoellick, the departing president, opened bank databases to outside researchers and created trust funds to tackle transnational problems like spiking global food prices. Progress on reforms remains halting, however, with a bureaucracy in which performance has traditionally been assessed on the volume of loan and grant disbursements, rather than the effectiveness of the programs financed to help the poor.

Dr. Kim and the United States should demonstrate their commitment to institutional reform by announcing their support for adopting the same voting structure at the World Bank that many regional development banks have, in which leaders must win a majority of country votes, not only those of the largest shareholders.

Under the voting system that the regional banks use, the United States and Europe would still hold more shares, but decision making would be more inclusive — giving small and poor countries, as well as emerging economies like Brazil, China and Turkey a meaningful say in selecting a leader. The United States would not give up its veto, but would give the same collective veto power to developing countries, as a group, if they were determined to block the election of a president that did not represent the interests of the institution. I believe that Dr. Kim would win if this new election system were in place today, but the change would compel the United States to do a better job of persuading other countries of the merits of his candidacy. Meanwhile, Dr. Kim needs to be candid and specific with shareholders and the public about his agenda for revitalizing the World Bank, and why he is the most qualified candidate to lead it.

President Obama has made an inspired nomination of an unconventional candidate to lead the World Bank back into relevance. The United States must now vindicate that choice by embracing a competitive election process that would give Dr. Kim the mandate he needs to advance the interests of the world’s poor, as well as America’s interests.

Thomas J. Bollyky is the senior fellow for global health, economics and development at the Council on Foreign Relations.

Deja una respuesta

Tu dirección de correo electrónico no será publicada. Los campos obligatorios están marcados con *