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Patrick Sharma

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The Four Most Important Tasks for the World Bank's Next President

Posted: 04/ 5/2012 2:46 pm

The international development community is abuzz over President Obama's recent decision to nominate Dr. Jim Yong Kim -- infectious disease specialist, co-founder of the Boston-based nonprofit Partners in Health, and current president of Dartmouth College -- to succeed Robert Zoellick as president of the World Bank this June. Yet it is striking how little attention has been paid to what, exactly, Zoellick's successor should do over the coming years.

Here are four major tasks for the World Bank's next president, whoever he or she is.

1. Refocus the Bank's lending program. Populous middle-income countries like Brazil, India, China, Mexico, and Indonesia currently receive the bulk of the World Bank's loans. This makes sense given that the majority of the world's poor reside in these nations. However, these countries are growing fast and are increasingly able to obtain capital for development through savings and/or private borrowing. Given this, the Bank should limit its activities in these countries to projects that are explicitly aimed at improving the lives of the poor. The money that would then be freed up should be channeled to the group of fast growing, low-income countries that are graduating from the Bank's concessionary lending. This will then increase the Bank's ability to provide highly subsidized loans to the world's poorest nations, which remain in critical need of such assistance.

2. Expand the Bank's global activities. The Bank has an array of programs aimed at addressing development challenges that cut across national borders, such as climate change, fisheries depletion, public health, and financial regulation. Despite their growing importance, however, these and other non-traditional development activities remain a relatively small part of the Bank's work, as Nancy Birdsall of the Center for Global Development has noted. The next World Bank president should consider creating new lending instruments -- and new organizational structures -- that will allow the organization to play a more effective role in these areas over the coming years.

3. Embrace impact evaluation. The most important innovation in recent years in the field of international development has been the practice of conducting rigorous evaluations of development operations. Determining the impact that a given intervention, whether the provision of a bed net or the construction of a hydroelectric dam, has always been a difficult endeavor. But the growing use of randomized controlled trials (RTCs), in which inputs and outputs are carefully controlled and measured, has gone a long way toward demonstrating what does and does not work when it comes to helping the poor. The Bank has begun to acknowledge the importance of RTCs and other forms of impact evaluation, but more can be done to incorporate these insights into the organization's on-the-ground activities.

4. Reform the Bank's governance. Although Obama's choice has been generally well received, many have felt that the two other candidates, Nigerian Finance Minister Ngozi Okonjo-Iweala and Colombian economist José Antonio Ocampo, are more qualified and should be considered if for no other reason than it is high time that someone from a developing country lead the World Bank. That debate highlights the need to make the process of selecting the World Bank president more transparent. But reforming the Bank's governance is needed at other levels as well. Both the Bank and the International Monetary Fund (IMF) award senior management positions on the basis of nationality. Given the power that the Bank's high-level officials have in setting the organization's agenda, this should change. More importantly, the Bank's next president should seek to increase the role of its Board of Executive Directors, the 25 individuals who formally represent the Bank's member countries at the organization's DC headquarters. Currently, its executive directors do little more than vote on decisions already vetted by the organization's president and senior staff, meaning that in practice the Bank remains deeply undemocratic. Although this arrangement has allowed the Bank to avoid the inertia that plagues other international organizations, delegating more power to the executive directors could increase the Bank's legitimacy and provide a venue for long-term strategic thinking, which the organization currently lacks.

Achieving any one of these would be an important accomplishment for the Bank's next president. Based on their track records, each of the three candidates for the World Bank presidency appears up to the task. But we have to shift from focusing entirely on who the next Bank president should be and instead start holding the president accountable for what the Bank does in order to move the organization in the right direction.

This post originally appeared at New Deal 2.0

 

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