What’s Your Opinion?

Please leave a comment if you would like to weigh in on this question. Does World Bank Head nominee Jim Yong Kim set a high bar for the World Bank, or is he simply unqualified? The sharp divergence of opinion that is bound to make his nomination controversial and heated.  As some line up against him some others, like Paul Krugman, see him as an inspired choice.

My original post on Dr. Kim is here.

Previous World Bank presidents have been mostly former high-profile U.S. government officials with deep international experience. The outgoing president, Robert Zoellick, who will step down in June, was President George W. Bush’s trade representative and deputy secretary of state. He was preceded by Paul Wolfowitz, who was Bush’s deputy secretary of defense. Unlike three of the last four World Bank presidents, Kim’s not a banker. Unlike both of the Bush administration’s picks, he’s not a diplomat or an foreign policy hand. Unlike other named candidates Jeffrey Sachs, Ngozi Okonjo-Iweala and Jose Antonio Ocampo, he’s not an economist or economic policymaker. He has no experience in policy making, economics or development. Kim is a completely new direction for the World Bank.

Does the World Bank Need A New Direction?

Some say the World Bank’s priorities are changing. Development expert Todd Moss explains that  fund recipients India, Vietnam, Ghana, Nigeria and Mongolia will soon be growing their way out of the International Development Association, which primarily serves the world’s poorest countries, and with rising incomes, they will need less help from the bank, and resources will shift to those countries that haven’t been able to take advantage of rising global prosperity. Nearly all of these 30 something low-income nations are fragile, post-conflict zones in Sub-Saharan Africa with needs that are substantially different from those of rapidly developing countries like India.

Kim is primarily known as a force with the global health community. He and Paul Farmer founded the “Partners in Health” organization, which pioneered the delivery of advanced health treatment to deeply rural, impoverished nations such as Haiti. In that world, he’s known as unusually able to bridge the divide between the activist and establishment communities. He moved from Partners in Health to the World Health organization and Dartmouth College, and he managed to keep both constituencies happy.

A Man of Vision and Purpose

Kim’s unconventional career stemmed from  frustration with the medical establishment, which led him to focus on the toughest diseases to treat — AIDS, and tuberculosis in the poorest, hardest-to-reach corners of the world. He needed to battle the prevailing wisdom that it wasn’t worth expending scarce resources to treat those diseases in those areas and efforts would not be successful.  Surgeon and public health researcher Atul Gawande says that Kim and Farmer proved the conventional wisdom wrong on a localized level, and then figured out how to scale that.

Gawande describes Kim as the operational genius of Partners in Health. “He’s sort of a natural executive…Farmer is a saint and a visionary. But Jim could see the vision and turn it into action.”

Kim is capable of pulling off difficult bureaucratic coups too. He persuaded the World Health Organization to reclassify “second-line” tuberculosis drugs as “essential medicines.” Second-line drugs are used when drug-resistant disease foils basic treatments, but were extremely expensive.  Kim made the case to drug companies that the markets could be far larger, particularly if the World Health Organization would reclassify them as “essential drugs,” putting some funding behind them. He also allayed the perception that many in the medical community held that it would be dangerous to distribute these drugs widely. The concern was that distributing the second-line antibiotics would breed resistant strains that no drugs could cure, as some doctors and nurses peddled drugs on black markets, desperate patients sold their antibiotics to buy food, and uneducated pharmacists mixed first-line TB drugs with cough medicine. Kim, using a model developed for the meningococcal vaccine, founded “The Green Light Committee” to serve as the distributor for second-line drugs.  TB programs seeking to take advantage of the lower prices needed to prove to the committee that they had a good plan and directly observed treatment program that wouldn’t breed further resistance.”

By 2000, the costs of the drugs dropped by 90%.  As a result, Kim won a MacArthur genius grant. In 2004, and was named director of the World Health Organization’s HIV/AIDS department, where he ran the “3×5” campaign, which put three million new HIV/AIDS patients in developing countries on antiretroviral drugs by 2007). In 2006. He made Time’s list of the 100 most influential people in the world, and, in 2009, hbecame president of Dartmouth College.

The Wrong Man for the Job?

Still, some in the global development community are expressing concerns that Kim’s experience in world health isn’t necessarily the right experience for his new job. Amanda Glassman, director of global heath at the Center for Global Development, is critical:

“The World Bank is staffed mainly by economists,”Glassman says , “so they have a different view on these questions than a World Health Organization or a UNICEF. Having an economist’s perspective on those issues is important. I wouldn’t want to see the World Bank repeating things done better by other institutions. Their focus on economics and financing is a great one and should be nurtured rather than beaten down.”

William Eastman, a former World Bank economist has voiced a similar concern:

“You have to have the mind-set to allocate scarce funds, rather than approaching the problem as if we have unlimited resources for suffering people. Frankly, I see some danger signs in this kind of pick.”

Lant Pritchett, a tenured professor at Harvard’s Kennedy School of Government who who teaches courses in the practice of international development and worked at the World Bank for 17 years, is sharply blasting Kim’s nomination as “a terrible idea.”  Angola, South Africa and Nigeria have nominated competing candidate, Ngozi Okonjo-Iweala, a woman who was the Nigerian finance minister and a former World Bank official, whom Pritchett insists is much more qualified than Kim.  He points out that the U.S. has less than a 20% share of board votes and though he gives Kim a 60% chance of being appointed, he says that countries like India and China could oppose Kim’s nomination and press for Okonjo-Iweala.

“It’s an embarrassment to the U.S. You cannot with a straight face say this person is the most qualified to lead the World Bank. There is no way you can say with a straight face that this man is more qualified to head the World Bank than Ngozi,” insists Pritchett. Okonjo-Iweala has tackled corruption in Nigeria and because she has worked inside the Bank and as the Bank’s government counterpart in a developing country with complex problems, Pritchett insists she has precisely the kind of experience needed in a World Bank leader. “At best, Kim has worked with ministers of health, but they are in one of many, many government agencies,” says Pritchett. “A minister of finance has to make hard choices across sectors. Having the experience of a minister of finance is the optimal experience for being president of the World Bank.” Adds Pritchett, nominating Kim “is like picking the short stop for the New York Yankees out of the scrub leagues.”

Pritchett points out that the World Bank, whose mission is to reduce global poverty by providing financial resources and sharing expertise with developing nations, works with fragile governments like Pakistan and Afghanistan on complex development issues, from raising tax revenues to elevating GDP to reforming education. Pritchett sees an important distinction between the kind of “charity work” Kim has done, and the complex tasks engaged in by the World Bank.

Related: Here’s a Washington Post article on the pros and cons of having a doctor run the World Bank. And here’s a video of his views on leadership.

Or a Much Needed Change?

Gawande isn’t concerned. “I don’t think this means that health will displace other things,” he says. “In Kim, you have someone coming to the table who has demonstrated through his career that he is fundamentally committed to the question, ‘Do the results change on the ground?’ And he’s not dogmatic about it. He’s the sort of person who will take the criticisms around aid and also take the way it can be empowering and figure out an empirical way forward.” Kim’s nomination has already been endorsed by one leader of a developing country: Paul Kagame, the president of Rwanda.

The World Bank in Perspective

Despite its name, the World Bank not actually a bank, but an international development organization with 187 member countries dedicated to fighting poverty. The bank raises money from its members and sells bonds on international financial markets, using the money to provide low-interest loans to developing countries. Last year, the Work Bank issued $57.3 billion in loans, grants and loan guarantees. It is involved in 1,800 projects, from road maintenance in Vietnam to raising AIDS-prevention awareness in Guinea to helping rebuild Haiti after that country’s devastating 2010 earthquake. From its base in Washington, the World Bank oversees 10,000 employees, including 3,000 outside the United States. Its overseas staff includes engineers, environmental scientists and financial analysts.

The World Bank has dual roles that are contradictory: that of a political organization and that of a practical organization. As a political organization, it must meet the demands of donor and borrowing governments, private capital markets, and other international organizations. As an action-oriented organization, it must be neutral, specializing in development aid, technical assistance, and loans. The World Bank’s obligations to donor countries and private capital markets have caused it to adopt policies which dictate that poverty is best alleviated by the implementation of “market” policies.

Kim’s nomination appears to tilt the organization toward it’s action oriented role, as opposed to it’s political side.  The question is whether he is equipped to handle the complexities of economic theory that have governed the Bank’s policies, and have been highly politicized.

A Political Minefield?

In the 1990s, the World Bank and the IMF forged the Washington Consensus, policies which included deregulation and liberalization of markets, privatization and the downscaling of government. The Washington Consensus has been criticized for ignoring equity, employment and how reforms like privatization are carried out. Many believe that the Washington Consensus placed too much emphasis on the growth of GDP, and not enough on the permanence of growth or on whether growth contributed to better living standards. Some critics also claim that the World Bank has consistently pushed a neoliberal agenda, imposing policies on developing countries which have been damaging, destructive and anti-developmental, and some analysis shows that the World Bank has increased poverty and been detrimental to the environmentpublic health and cultural diversity.

It has also been suggested that the World Bank is an instrument for the promotion of US or Western interests in certain regions of the world. South American nations have established the Bank of the South in order to reduce US influence in the region. In 2008, a World Bank report which found that biofuels had driven food prices up 75% was not published. Officials confided that they believed it was suppressed to avoid embarrassing the then-President of the United States, George W. Bush.

Critics have argued that the free market reform policies the Bank advocates are often harmful to economic development if implemented too quickly (“shock therapy“), or in the wrong sequence or in weak, uncompetitive economies. In Masters of Illusion: The World Bank and the Poverty of Nations (1996), Catherine Caufield argued that the assumptions and structure of the World Bank harms southern nations.

Some Personal Observations

In conclusion, it’s clear to see why a seasoned political appointee with economic credentials has always served as Bank President. Regardless of who serves, the position will be subject to intense political pressure, and will require hard economic decisions. It appears unlikely that the candidacy of a developing nation nominee would be supported by the Board of Directors, so Kim is likely to win the position.

Kim’s strengths are his activist vision, and ability to handle difficult tasks head on, as well as the ability to take the bank in a new, less politicized direction. For once, the foxes may not be guarding the hen house. He will face a steep learning curve, but he is intelligent, realistic and capable, and appears to be just the outside candidate that is needed at this critical time.

I wonder whether he will exert the influence to steer the Bank from some of its austerity policies toward a more balanced approach. I think it’s worth a shot.

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