Ideas to Action:

Independent research for global prosperity

Share

In a few days, the board of the World Bank will choose a new president. There are three candidates: an American physician and anthropologist (Jim Yong Kim), a Colombian economist (José Antonio Ocampo), and a Nigerian economist (Ngozi Okonjo-Iweala). All 12 presidents in the 66-year history of the World Bank have been American.

Lant Pritchett has called for the board to make its selection process transparent. He says in effect: If you’re going to choose an American for the 13th time in a row, transparently explain to the world what your criteria are, and why Kim dominates the other candidates on those criteria. This is a reasonable request of an institution that has championed transparency.

What should those criteria be? Many observers like the idea of a health expert at the helm of the Bank, and have questioned whether economic expertise is important. Tom Bollyky of the Council on Foreign Relations thoughtfully writes,

“[Kim’s] experience fighting infectious disease and mobilizing affordable treatments for the poor is more relevant than a deep understanding of capital markets.”

I can see where this reasoning comes from; health has taken on a rising importance in the development field. But apart from whether or not this opinion is correct, it is not clear that the Bank’s board has the authority to take this view.

The Bank’s articles of agreement, as amended in 1989, are the authority under which the board serves its shareholders. They specify that “the Bank shall be guided in all its decisions” by (only) five purposes. Those five purposes read, in part:

“(i) To assist in the reconstruction and development of territories of members by facilitating the investment of capital for productive purposes…”

“(ii) To promote private foreign investment by means of guarantees or participations in loans and other investments made by private investors…”

“(iii) To promote the long-range balanced growth of international trade and the maintenance of equilibrium in balances of payments by encouraging international investment for the development of the productive resources of members…”

“(iv) To arrange the loans made or guaranteed by it in relation to international loans through other channels so that the more useful and urgent projects, large and small alike, will be dealt with first.”

“(v) To conduct its operations with due regard to the effect of international investment on business conditions in the territories of members…”

I am not a lawyer. But it is difficult to understand how anyone could read the above and conclude that Kim has the training or professional background to achieve any of these goals better than Ocampo or Okonjo-Iweala. Both Ocampo and Okonjo-Iweala—having doctoral training in economics, having served as finance ministers of major emerging-market countries, and having worked for several years in either the United Nations (Ocampo) or the World Bank (Okonjo-Iweala)—have world-class expertise in all five of the above areas.

Kim, a highly intelligent man about whom there is a long list of things to admire, does not have any such training or experience. I do not question that he could serve some of the Bank’s five purposes to some degree. Rather, I ask: What is the basis to believe that the other two candidates cannot serve those purposes better?

I can see three paths for the Bank’s board that would be fully transparent and within the authority given them by the Bank’s shareholders:

  1. The board could propose to amend the Articles of Agreement to specify that the president must be American, regardless of qualifications.
  2. The board could propose to amend the Articles of Agreement to specify the new role of the World Bank for the 21st century, a role that does not principally involve promoting balanced growth via investment and trade, but instead requires the kinds of skills that  physicians can offer. A new role of the Bank could be specified, for example, as supporting the ongoing provision of health services.
  3. The board could select a president with the training and expertise that best serve the Bank’s five purposes as described in the existing Articles of Agreement, and transparently explain how that person best serves those purposes.

Any other course smacks of opacity and illegitimacy. To those with greater knowledge of law and of the Bank board’s fiduciary responsibilities: What am I missing?