Chris Blattman

Tyler Cowen on the World Bank presidential race

A few questions:

1. It is widely recognized that the Bank’s board “interferes” in WB activities too much, often meeting two times a week and also pushing through contracts which should be stopped or reexamined.  Who can best stand up to that board when necessary?  Can that be done at all, while keeping the contract-addicted major economic powers still interested in the Bank?

2. The WB is financially fairly dependent on China, which for whatever reason prefers to borrow from the Bank rather than use its reserves to finance projects.  What should a president do if China starts seeing itself as “graduating” from this relationship?  Or what if China falls apart economically?  Will the World Bank end up like the UN, losing some of its talent and being hat in hand, asking for funds?

…Maybe, maybe, maybe — if you knew the major candidates well — you could have some sense who would perform better at those tasks.  And at about fifty others.  Maybe.  Maybe not.

More important and unanswered questions from him here.

It is a good point: in choosing a candidate, focus on the strategic challenges ahead.

I think you could come up with a slightly longer list of strategic questions that are easier to answer, such as “The new President will attempt to steer the Bank in one new direction in the first year. What is that direction?” This may be easier to predict. And more within the President’s usual role.

The big worry about Kim is that he will take it in a health direction, which is odd for a Bank. On the other side, supporters point out this is one of the areas where the Bank has historically been successful.

These are all what we call instrumental rationales–we make our decision on the ends that matter.

I would like us to keep the focus on the means. That an illegitimate process will tend to deliver poor ends in general, even if the present end doesn’t look that bad.

Also: the best way to get the world asking these strategic and instrumental questions about who should lead the world’s financial institutions is to take the decision away from the American Presidency.

9 Responses

  1. Just learned through the CGD interview that Okonjo-Iweala is a survivor of the Biafra war, as such, if I had any say she’d automatically get my vote.

  2. Matthew Kavanagh – you have a good point. Ocampo on the other hand, has been a serious (and successful) reformist, both at the UN and at the Colombian Government. Not to mention he is a great development economist. It would be great to see what he can do at the Bank.

  3. What makes us think that Okonjo-Iweala will take the Bank in a different direction and make serious reforms? After 20 years at the Bank she has been in lock step with a very orthodox agenda.

  4. My concern is that the WB is an exclusively pro-elites institution in a world where elites run amok. In that sense, anybody who’s got a history of not following elites around to try to make them happy is a good fit.

  5. Indeed. He hired me. That might make me an Ocampo booster but (1) I don’t like the appearance of partiality, (2) I don’t know the specific candidates well enough to know who would be the best pick, and (3) my main point is to argue against the US pick, whomever that might be, on the principle, so that the Board can make the most informed decision possible. We should not imagine they are immune to politics (indeed they are most influenced by the wealthiest countries) but it would be a far better process than the current one.

  6. Extra points for Ocampo. Are you aware that he might be sitting in a door next to yours this fall?

  7. On argument made in favor of the status quo is that wresting control of the Bank presidency away from the US will make the US less likely to fund the bank in the future. It’s quite easy to imagine a grandstanding congressman making exactly this argument. Most people in the “development” community would consider this a bad outcome, but I’d actually like to hear a more full-throated defense of the bank. Would the Bank’s demise actually be so catastrophic? (For people in poor countries, I mean, not for international bureaucrats with cushy sinecures.)

  8. Those are some tough questions. I’d hate to have to say, in public, whether I’d “stand up to the U.S. President, fold, or meet him halfway,” or how I would “finesse” project demands involving the West Bank.

    My guess is that CGDev’s questions next week will be easier, and less specific.

    I wonder if the candidates should be asked, “What steps would you take to reform the World Bank presidential selection process in your first year, if any, and why?” But that would seem to be as tough a question as Tyler Cowen’s…

  9. Chris,

    We completely agree with you. The appointment of the World Bank President is an illegitimate process, derived from an embarrassingly antique agreement that doesn’t currently reflect the status quo of today’s world.

    However, in this particular case, the end is as important as the means because they are self-fulfilling. There is a general consensus that the Bank, along with other international institutions such as the WTO and the IMF, need to undergo structural reforms to incorporate emerging economies and developing countries more integrally into their decision-making processes.

    If Okonjo-Iweala or Ocampo are appointed, the first step will be taken to the path of reform. If Jim Kim is appointed, we can assume reforms are to be superficial, if existant at all. If then the BRICS do go through with their plan of creating a southern development bank, the World Bank will be undermined, tainted with undemocratic mechanisms and a history of policies (Washington Consensus) that have treated the developing world in condescending paternalism.

    We wrote a piece about it here: http://actloud.org/2012/04/02/the-future-of-the-world-bank-and-american-hegemonic-power-2/

    Best,
    Act Loud Team

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