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Eye on the IFIs

Look to Developing World for Solutions, Says New World Bank Chief

WASHINGTON, Jul 18 2012 (IPS) - Speaking on Wednesday at his first major public address, new World Bank President Jim Yong Kim said the institution needs to be more flexible and responsive, as well as more open to innovations coming from the developing world.

Anticipation remains high in global development circles over Kim’s election to head the bank, given his widely lauded background in public health. Credit: Public domain

“We have to realise that it may be that it’s the most financially constrained areas where the greatest social innovations come from, that the pressure of those financial constraints can lead to great innovations – we have to be open to it,” Kim said.

“I think that’s the new world: lessons will come from everywhere. It’s not rich countries imparting their lessons on poor countries; lessons are going in every direction.”

A little over two weeks in the job, Kim said he is still “taking the temperature” of the multilateral funder, but offered initial reactions in a wide-ranging discussion at the Brookings Institution, a think tank here.

Anticipation remains high in global development circles over Kim’s election to head the bank, given his widely lauded background in public health.

“As a physician who has worked with the World Health Organisation and nongovernmental organisations to bring health care to marginalised communities, often in developing countries, Kim is the first leader of the bank without a traditional economics or political background,” Jessica Evans, a researcher on international financial institutions with Human Rights Watch here in Washington, told IPS following Kim’s talk.

“This experience should motivate him to lead the World Bank in bridging the false divide between development and human rights.”

On Wednesday, Kim said that “The world has changed and there are many lessons from the developing countries that can be useful.”

He pointed in particular to Latin America, characterising the region as “a fountain of innovation that can be useful all over the world … the model of social protection that has been pioneered in Latin America, we’re taking that to other parts of the world and I think that’s the future.”

With analysis of the impact of the ongoing European economic crisis on the developing world currently taking up significant time at the bank, Kim suggested that potentially key solutions could likewise be found in Latin America.

“We look at how Latin American countries were able to weather the economic crisis fairly well … what did they do?” he asked.

“They opened up their economies; they developed social-protection programmes like Progreso (in Mexico), Bolsa Familia in Brazil; they reduced income inequalities. This is how we can learn from developing and middle-income countries in thinking about responding to the economic crisis.”

He also pointed to the experience in South Korea during the last major international economic crisis, in the late 1990s. At that time, he said, ordinary Koreans started to give away around a billion dollars’ worth of their own gold and jewellery, to contribute to the country’s recovery.

“The issue was a very fundamental solidarity,” Kim said. “It strikes me that solidarity is a major question in the crisis today.”

Europe looming

The World Bank’s response to the economic meltdown in Europe has been of significant concern for development experts for months, amidst worries that the institution is not moving fast enough to halt the danger posed to developing countries.

“Developing countries are now the engine driving the global economy, accounting for around two-thirds of global growth,” Kim said on Wednesday. But “even if the crisis in the euro area is contained, it could still reduce growth in most of the world’s regions by as much as 1.5 percent.”

He noted that a major crisis in Europe could reduce gross domestic product in developing countries by four percent or more, “enough to trigger a deep recession everywhere. Such events threaten many of the recent achievements in the fight against poverty.”

While lauding Kim’s acknowledgment of the issue, Oxfam spokesperson Elizabeth Stuart told IPS in an e-mailed statement on Wednesday, “The World Bank needs to take fast action to protect developing countries from Europe’s debt crisis.”

Stuart notes that as the International Monetary Fund is bailing out Europe, “the World Bank needs to step up efforts to assist poor countries threatened by the euro zone crisis. It’s time for a bold new World Bank that acts in the interests of all its members, but especially those now most at risk.”

The institution’s ability to move nimbly and flexibly has clearly been noted within the bank itself, and appears to be a priority for Kim as he takes over the presidency.

Over the past few weeks, Kim says, he has been asking employees to define what they see as the institution’s best work. The overwhelming response, he reports, has been “when the bank moves quickly”.

“One-and-a-half billion people live in areas affected by fragility and conflict. No low-income fragile or conflict-affected country is on track to achieve even a single Millennium Development Goal,” he said.

“These countries need a World Bank that is far more responsive than it is today, and capable of delivering the right financial and technical support at the right time.”

Arab Spring lessons

Part of ensuring that mix will be a major new focus on partnerships with civil society.

“Growth and development have to be inclusive, ensuring that their benefits are broadly shared. As young people in Egypt and Tunisia have reminded us, even in middle-income countries, development gains have been uneven and incomplete,” Kim said.

Taking heed of “the lessons of the Arab Spring”, Kim announced the mid-June creation of a new initiative, the Global Partnership for Social Accountability, “the first time the World Bank will be allocating specific resources from its income to support a partnership with civil society.”

Human Rights Watch’s Evans told IPS that the onus will now be on the bank to put its weight behind this commitment to civil society, “by pressing countries to protect the rights to freedom of expression, assembly, and association and speaking out when these rights are violated.”

“Kim should lead the World Bank to work tenaciously to open space for civil society and the media,” she said, “and to promote government accountability.”

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