The World Bank’s influence is waning. Some point to the emerging Asian Infrastructure Investment Bank as evidence of the body’s declining power, but it is the World Bank’s own projections that illustrate the change. Thirty-six countries will graduate from World Bank loans over the next four years (see the above gif).
The World Bank maintains considerable pull. World leaders still flock to the World Bank and International Monetary Fund’s spring meetings in Washington, D.C., which started late last week and run through the weekend. Both bodies were important and visible players in the Ebola response and recovery in West Africa.
But that power, especially in developing countries is in flux. And it may have reached a point where it actually needs to consider its place in the world going forward.
“[A]s the World Bank takes a good look at itself in the mirror, here’s the hard question it needs to face. It’s easy to list global problems that need solving. But is the World Bank only trying to justify its continued existence by looking for new tasks? Or can the World Bank identify areas where its own specific skills and capabilities will have a high payoff for economic development?,” asked economist Timothy Taylor in his blog.
The answers may be in some part tied to the amount of power the United States holds in the world. The largest financier of the World Bank and the de facto chooser of its president, the United States has seen its own power decline in the past few years. Several U.S. officials and analysts told the New York Times that times are changing and the United States is falling behind.
“It’s almost handing over legitimacy to the rising powers,” Arvind Subramanian, the chief economic adviser to the government of India and former researcher with U.S. think tank the Center for Global Development, said of the United States in the New York Times article. “People can’t be too public about these things, but I would argue this is the single most important issue of these spring meetings.”
The World Bank is nearing 75 years old. It was founded when the global political landscape was very different from today’s. The World Bank needs to adapt to changing times, experts say.
“On its current path, the World Bank will soon enough be viewed as no longer essential. It is ultimately up to its shareholders whether they want to change that picture,” say Scott Morris and Madeleine Gleave in a policy paper for the Center for Global Development.
Morris and Gleave recommend that it moves beyond acting largely as a lender to low- and middle-income countries. Possibilities include changing lending rules, shift more to a research-based development body or take on more crisis-response work as it did in West Africa.
Chris Blattman reacted to Taylor’s blog post and the findings from Morris and Gleave with a more humble recommendation.
“Honestly, a retreat to what the Bank does best – helping get roads and power plants built, and underwriting highly decentralized development programs (cash transfers, school and clinic building, and so on) – might be the safest strategy, given that the pipeline of aid into these places is unlikely to stop pumping,” he blogged.
The World Bank president knows this problem well. He campaigned against the World Bank’s policies decades ago. Under his tenure, attempts have been made to overhaul the internal structures of the Bank. There is not necessarily agreement as to how the Bank should change in the coming years, but there is consensus that change is necessary.
With that known, what will Dr. Jim Yong Kim do?