« Inflation Threat Alert: Blue (Guarded) | Main | Thomas Palley: The Case Against Inflation Targeting »

Thursday, April 19, 2007

Kenneth Rogoff: Time for Change at the World Bank

Kenneth Rogoff wants changes in the selection process for the leadership at the World Bank and the International Monetary Fund:

The World Bank at bay, by Kenneth Rogoff, Commentary, Project Syndicate: Will World Bank president Paul Wolfowitz's troubles finally catalyse real change at the World Bank? Will there finally be an end to the archaic practice by which the president of the United States unilaterally appoints the head of the world's most important development agency?

Facing an extraordinary rebuke from the Bank's ministerial oversight committee and open revolt from his professional staff, Wolfowitz has faint hope of limping through the last three years of his term. ... At a time when the Bank has been emphasising high governance standards as the key to development, the recent revelation[s] ... have dealt a serious blow to the Bank's credibility.

But even if Wolfowitz is eventually forced to resign, nothing will be gained if the US president George Bush is allowed summarily to choose his replacement, as US presidents have been doing ever since the Bank was founded after the second world war. Instead, the Bank's head should be chosen in an open and transparent process that aims to select the best-qualified candidate, whether from the US, Europe, or the developing world.

Indeed, a big part of Wolfowitz's weakness today is the way he came to his job, as an in-your-face appointment from a US administration weak at international cooperation. The World Bank is a development finance institution. But Wolfowitz's background ... gave him no real expertise or experience in either area. Instead, his claim to fame was his role as architect of America's failed war in Iraq... [I]t seems inconceivable that an open, transparent, and multilateral selection process would have chosen him to head the World Bank. ...

I am sympathetic to the Bush administration's desire to catalyze change at the Bank. I have long advocated shifting the Bank... from lending to outright grants, a policy that the Bush administration strongly endorses. But choosing someone with no obvious background or experience in economic development was not the way to make progress on this front.

A more open selection process, indeed, would have zoomed in on the fact that Wolfowitz's girlfriend worked at the Bank. This may seem a trivial issue, but it is not, given the Bank's strong policies to protect against nepotism. ...

Why does the world meekly go along ... and let the US dictate the Bank's top position? It is a sorry tale of poor global governance. Europe does not get in America's way because it wants to maintain Europe's equally out-dated privilege of appointing the head of the International Monetary Fund... Asia has little choice but to defer to the US and Europe's shenanigans because it is grossly under-represented in both organisations. As for Africa, its leaders are loath to do or say anything that might interrupt the flow of World Bank largesse. ...

How can the Bank and the IMF continue to go around lecturing developing economies on good governance and transparency but fail to allow change in their own houses?

Now and again, both organisations pay lip service to the issue. But so far, they have exhibited no real desire for change. To be fair, the IMF's leadership is making a determined effort to give dynamic emerging economies, particularly in Asia, a bigger say in IMF governance. ... Unfortunately, the IMF's rebalancing efforts are proceeding at a glacial pace. At the World Bank, nothing seems to be happening at all.

Perhaps ... the Wolfowitz debacle will prove to be the catalyst. Maybe at last, the next World Bank or IMF president will come from outside their usual domains. ... One way or the other, the Bank and the IMF leadership selection process urgently needs to be revamped. What the Wolfowitz debacle tells us most clearly is that the time for patience with the status quo is over.

Like parents of teenagers, or so it seems to me, the U.S. is having trouble realizing that the rest of the world is growing up and wants to have its own say about things rather than letting the U.S. make all the important decisions. It's a hard process - one that can lead to lots of fights if the "parent" doesn't recognize the desire for independence and respect and continues to try and impose its will on the maturing teen in the same way as before rather than allowing relationship to mature. Anyway, the interactions of the U.S. with the rest of the world often remind me of the struggle between parents and teens during the development process and I see us making many of the same mistakes parents make when they are unwilling to cede any control and authority to their maturing children. But whether you agree with my analogy or not (and I don't expect all will), as other countries develop and mature, we will have to find a way to give them a voice at the table.

    Posted by on Thursday, April 19, 2007 at 11:10 AM in Economics, International Finance, International Trade, Politics | Permalink  TrackBack (1)  Comments (8)

    TrackBack

    TrackBack URL for this entry:
    https://www.typepad.com/services/trackback/6a00d83451b33869e200d8341d368953ef

    Listed below are links to weblogs that reference Kenneth Rogoff: Time for Change at the World Bank:

    » Kenneth Rogoff: Time for Change at the World Bank from EconWatch.com

    [Source: Economist's View] quoted: The World Bank at bay, by Kenneth Rogoff, Commentary, Project Syndicate: Will World Bank president Paul Wolfowitz's troubles finally catalyse real change at the World Bank? Will there finally be an end to the archaic ... [Read More]

    Tracked on Friday, April 20, 2007 at 06:45 AM


    Comments

    Feed You can follow this conversation by subscribing to the comment feed for this post.