The race for President of the World Bank Group is on. Of all the previous presidential races for the Bank, this is the first one I’ve heard of before it had already happened. This is because of the long standing tradition that the president be a citizen of the United States. This exists because voting power is roughly proportional to GDP size. The U.S. and Europe have long been able to dominate any vote they agree on. In return for Europe agreeing that the World Bank President be American, the United States agrees that the head of the IMF be European. This unofficial agreement held up recently when the French head of the IMF was replaced by France’s Finance Minister. So what’s all the noise about?
Obviously, this unofficial policy has few supporters among the rest of the world, and calls to end it have become increasingly vocal. The policy is corrupt, misguided, and undermines the credibility of the Bank in the developing world (on top of the Bank’s actions undermining itself). And the rest of the world does not lack in qualified applicants. The bank often preaches in favor meritocracy and against corrupt political horse-trading, but does so itself.
Here’s the race so far: Jeffery Sachs, an American developmental economist, campaigned for the nomination as the United States’ chosen candidate. He is well respected and has a lot of experience in the world’s poorest regions. His campaign was based on the logic that the World Bank, the world’s largest development organization, should have a development expert as its head rather than a corporate executive/banker. He blamed the Bank’s past mistakes partially on this mismatch. He did not get the nomination and quickly endorsed Barak Obama’s choice.
Jim Yong Kim was chosen by Barak Obama as America’s choice. It was certainly unconventional. Kim is a global development/health expert, anthropologist and current president of Dartmouth University. Though he has many good qualities, he has no specialization in economics, but he’s certainly smart enough to be able to understand it. He had made some comments criticizing the Bank in the past, saying that the quest for GDP growth has made millions worse off, praised Cuba’s health and “social equality” achievements and other such comments that can be taken out of context/qualified to the liking of his detractors/supporters.
Another candidate, an economist this time, was the former finance minister from Columbia, José Antonio Ocampo. He was finance minister for two years in the 90s, during which time the budget deficit rose sharply. He recently dropped out in support of the last candidate.
Ngozi Okonjo-Iweala, a second term minister of economic development and finance in Nigeria, and a former managing director of the World Bank, entered the race because leaders from across the developing world urged her to join it. She has made some progress in fighting corruption and cleaning up finances in Nigeria, and is a well-respected development expert. She has immense experience in every area the World Bank is involved, as both a member of the Bank and a member of a government negotiating with the Bank.
The Economist, Financial Times, José Antonio Ocampo, and the African Union have all argued that she is the best person for the job. And I find myself in agreement. Jeffery Sachs was right that the World Bank needs a development expert as its head, but it should also have a renowned economist and experienced public financier. Jim Yong Kim would make a fine president, and his expertise is certainly needed in the fight against poverty. But whatever traits qualify Kim for the presidency, Mrs. Okonjo-Iweala has as well, and then some. There is also the intangible; an African woman running the bank would be more efficient at shattering its image as a tool of rich world subjugation than any other action the Bank could take in the short run. Being from a developing country, and breaking the corrupt tradeoff between Europe and the U.S., criticisms that the Bank does not represent the interests of poor countries would immediately ring hollow.
Kim will probably win, as the corrupt political deal between Europe and the U.S. still stands. But for the first time people are talking openly about the possibility of the Bank president being someone who is qualified rather than American, as the Economist put it: “may the best woman win”.
3 comments:
Sachs sounds great via experience with development. One of the criticism that I have heard of the World Bank is that their policies towards developing nations are not always beneficial/tie them into debts that they can never pay off. IDK how true that is/something an anarcho friend told me half a decade ago.
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I should have posted this earlier. Kim is now the president for no reason besides being American. Not that I think he'll be bad at the job; he does have a lot of hands on development experience.
Anyway, that criticism of the Bank is true, but increasingly and significantly less so than it once was. Also, the past mistakes of the Bank were due to ignorance rather than some international conspiracy to keep people poor. Everyone benefits from poor people becoming richer so that would be a dumb conspiracy.
So, back in the day the Bank didn't really know much about developing countries. If you look at a list of past presidents they were all corporate executives/bankers. Good businessmen I'm sure, but that doesn't mean they knew anything about poor countries. Additionally, even today the mechanisms of long term economic growth and development are only generally understood. Back in the day an economist came up with a very simple model as a theoretical exercise rather than anything intended for use. It became the basis of the Bank's strategy. Basically, with that guidance the Bank pursued a policy of lending to big projects and governments, many of which were corrupt and stole whatever they could and didn't have a long life expectancy. Meanwhile, little money reached actual poor people. This left a lot of countries with a lot of debt that had little chance of creating enough benefits for the countries to be able to pay them back. This is a very simplified answer, but the Bank today has a much more diverse staff with much higher levels of development experience. Though the Bank may have done more harm than good in its past it has the potential to be a net benefit if it continues to improve.
Oh thanks for the response! That makes sense. I understand it a lot better now.
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