03/14/2012 11:35 am ET Updated May 14, 2012

Choosing the Next President of the World Bank

Robert Zoellick's recent announcement that he will step down as president of the World Bank in June has cast new light on an old problem: who should lead the Bank and how should he or she be chosen?

Since their birth at the Bretton Woods Conference of 1944, the Bank and its sister institution, the International Monetary Fund (IMF), have served as stewards of the global economy. Founded during the waning days of World War II, the organizations were intended to create the economic conditions that would lead to a lasting peace. Although not without serious flaws, both institutions have upheld this mandate: the IMF by serving as a lender of last resort to countries facing short-term financial problems and the Bank by providing money and advice to poor countries looking to accelerate their growth.

However, throughout their history the Bank and IMF have been plagued by a crisis of governance. Despite the fact that the two institutions are international in nature, the United States and Europe retain complete control over their leadership. European governments are allowed to select the IMF's managing director, and the U.S. has the privilege of appointing the World Bank's president. The result of an agreement between the organizations' founders, this system is clearly unsuited for today's world. With China and India serving as engines of the global economy and Africa and Latin America growing much faster than Europe and North America, it is high time that we rethink how the leadership of these institutions is chosen.

What would a better process look like? First, the goal should be to select the most qualified individual, regardless of nationality. Instead of European officials choosing a European to run the IMF and the U.S. president choosing a U.S. citizen to head the World Bank, a reformed selection process would recognize that the developing world is full of talented leaders. Once quotas are out of the way, a formal nominating body, comprised of representatives from all of the Bank and IMF's member states, could identify, vet, and vote on candidates. While leaving open the possibility of deal making and potentially slowing down the process, a more transparent selection system would ensure that all voices get heard.

Just as importantly, an open, merit-based process has the potential to spur debate over the qualities the next president of the World Bank and/or managing director of the IMF needs to be successful. The world economy is in a period of significant upheaval, and the Bretton Woods institutions must change if they are to continue to meet their goals. For the World Bank, the challenges are many. On one hand, with more and more developing countries able to borrow on the private market, demand for the organization's funding is running out. At the same time, the major developmental issues of the future will require coordination that only the Bank can provide. Whether climate change, migration, water scarcity, or access to energy, the Bank's work is increasingly global in scope, and its next president must recognize that unprecedented levels of cross-border collaboration will be needed to solve these problems.

A person from the developing world would be best suited to guide the organization into this next phase. Although Hillary Clinton and Jeffrey Sachs are intriguing candidates to replace Zoellick, neither has the combination of development and managerial experience needed to lead the institution during this crucial chapter. This is particularly evident when people like former Brazilian president Lula da Silva and Indian-born PepsiCo CEO Indra Nooyi are available for the job.

Given that it is an election year, it is highly likely that President Obama will play it safe and tap an American to fill Zoellick's shoes. Similarly, it seems that institutional inertia and a lack of widespread interest will keep the Bank and IMF from changing the way they appoint their leaders, as evidenced by Christine Lagarde's quick ascension to the IMF managing directorship last summer.

Although it was admirable that European officials selected a female to head the IMF, going forward it is crucial that the Bretton Woods institutions face up to reality and reform the antiquated way in which they select their leaders. Continued obliviousness to the changing realties of global power threatens to consign the World Bank and IMF to irrelevance, a fate we can scarcely afford in a time of increased global connectedness and challenge.