After former World Bank Executive Director Moises Naim weighed in with ‘critical tips’, thoughtful commentary in the FT by former World Bank Vice Presidents, academics Ian Goldin and Danny Leipziger, and a robust rejoinder to Goldin from former World Bank staff member Percy Mistry highlight the issues the world should expect the World Bank’s owners and board to take into account as they prepare a shortlist of three, interview candidates, and select “by consensus” Robert Zoellick’s successor.
Taken together, these contributions enrich the rather bland criteria set out by the board in its announcement of what it will take into account.
What these four notes address is the Bank’s relevance in the modern world. All four hint, or say quite broadly, that there’s a problem, and that ‘something needs to be done’.
They are right.
The Bank has long been overtaken by private capital flows as the main source of finance for developing countries as a group. For Africa, that’s another matter, but for all the Bank’s basking in the continent’s progress, it’s fair to say that deregulation (yes, those dreadful, awful, horrible Structural Adjustment Programs), democracy and accountability, along with resources and an end to civil conflicts, have led to remarkable–if somewhat unevenly distributed–private sector-led growth.
Even on the official side of the balance sheet, the vertical funds (e.g., GEF, the Global Fund, the Global Partnership for Education, and, soon, the climate funds) transfer grant funds in quantities approaching the net transfers by IDA. The arrival of China as a ‘donor’ to Africa changes the game further in some countries, notably ones with resources China wants and is prepared to invest in infrastructure–often opaquely–to get its hands on. Naim put it well:
The Bank is more than a bank. It is a consulting company for developing countries, a multilateral organisation, an intensely political entity as well as a highly technical one. Its role as an international lending bank is declining relative to its advisory role.
Goldin points accurately to the Bank’s inability so far, alas, to come up with a narrative about the structural changes in the global economy in which countries, rich and poor, will operate over the next 30 years. Such a framework would anchor the Bank’s work, including its financing and its focus on which clients, on these important global issues, so that whether by knowledge or by its convening authority, the Bank’s owners could set a new direction. Leipziger suggests this is a major challenge, largely because of “neglect of long-simmering management problems and singular lack of vision in its leadership.” He goes on to say, “The Bank is losing its way because it has lost its edge,” attributing this to a series of ill-conceived and badly executed changes in how the Bank manages itself and recruits, selects, retains and promotes its staff.
It is little wonder, then, that think tanks, government research units and universities now challenge the Bank for intellectual clout with practical impact. One need only think of McKinsey’s iconic graphic about the effectiveness of energy investments and technology for addressing climate change as a key example of applied research that provokes new thinking and new conversations. Or how the Bank told Brazil that conditional cash transfers would never work, and then proudly ‘facilitated’ the contact between New York City and Brazil on Bolsa Familia. Or perhaps how the Bank arrived late to the game on randomized, double-blind evaluation methods, catching up only later with Esther Duflo and her colleagues at MIT’s Poverty Action Lab.
Leipziger summarizes this HR situation
“Its support for leading-edge work in sectors where countries need advice has evaporated and is not being rebuilt. These trends, long in the making, have been exacerbated in the last five years [under Robert Zoellick’s presidency.]”
Between a costly and poorly implemented decentralization program, and Bank management’s supine acquiescence to board demands for a “flat real budget”, the money to rebuild the Bank’s intellectual capacity just isn’t there. The Bank has turned to armies of junior interns, consultants and early retirees to meet this need, with new recruits given term contracts–generally two years even though five is supposed to be the norm. This had led, in turn, to even greater risk aversion by managers about hiring and by new hires about stepping too far from the Bank’s accepted wisdom.
Leipziger puts well what the new president’s priorities should be:
The first step is to restore a sense of purpose to the institution around a longer-term vision. Being tactically involved in a series of global events is no substitute for a visionary strategy. Second, serious internal reform efforts are long overdue; the Bank has done little of what it preaches to its clients. Third, and most important, the leadership of the Bank requires passion, a deep sense of commitment to solving the pressing issues of development.
This not-so-oblique criticism on “development by international meetings with new initiatives at each” and a Chinese preference for stability at all costs after Paul Wolfowitz’s disastrous two years is neatly summarized by the plea for setting priorities on “solving the pressing issues of development”. While Jim Wolfensohn was responsible for launching the Bank’s sprawling partnership business (which still needs some serious tidying and pruning), in his era the partnerships were to build friends after a fractious history with CSOs and global causes. Recently it’s become more about having followers, like on Facebook or Twitter, or doing favors for your friends or cultivating future employers, with little depth and few goals shared through concrete work together.
Goldin and Leipziger also agree on the underlying causes. While Goldin (presumably in a trial balloon for his own candidacy given his South African passport and career in academia as well as a stint at the Bank) put it
The response of many countries has been to load new mandates on to the Bank, as they consider it to be a more capable and compliant partner than the UN or other agencies. However, without the legitimacy, capacity or executive power to manage the widening range of global public goods, this mission creep is doomed to failure.
From this bleak assessment of what the new World Bank president must do, the Bank’s owners have to find someone who will
- set a clear direction and lead toward it
- review and change the Bank’s internal policies that get in the way of getting there (HR and the budget, to start, and perhaps a cold, hard look at whether decentralization makes sense)
- engage the owners and the Bank’s board on their role in this situation, and how they will restructure to let the Bank’s management lead and hold them accountable for doing so
It really doesn’t matter much the nationality of the candidate. A process–any process–that gets the right person who will be responsible for turning the Bank around will be merit-based. Why the Bank should be held to an ‘open and transparent’ standard that no other international organization or corporation follows is a question we should all be asking in the run-up to the nomination and the month-long process to the announcement during the Spring Meetings. Getting the right woman or man is too important to get wrong.