The World Bank has a new president

Well, Bob Zoellick is it.  The good news is that he is a graduate of the Kennedy School. The bad news is that I do not think he spent much of his time there or since thinking seriously about development policy. While at USTR and at State, his approach to developing countries was largely shaped by the narrow perspectives that these positions inevitably impose. And his take on the reforms needed by developing countries remains, as far as I can tell, quite conventional, circa 1980, with a splash of "augmented" Washington Consensus thinking added in.  This is from a speech he gave in 2002:

Latin America today stands in the middle of a bridge spanning the chasm between statist stagnation and free market dynamism. It is unwise to stop in the middle of a bridge and say, “I have walked in this direction long enough-I will now turn left or right.”

The first generation of economic reforms often depended on executive actions to counter crises. The second generation necessitates executive-legislative compacts to achieve long-term transformations:fiscal controls in federal systems; transparent legal and regulatory regimes backed by honest judiciaries;tax codes and pensions savings that build public trust, not undermine it; and schools and education systems that draw all of society toward opportunity, not protect isolated privilege.

In a global economy, Latin America must keep looking outward to prepare for competition. Trade barriers remain high for many products and sectors. State enterprises have been privatized, but burdensome regulations still make starting and running a business needlessly costly, often impossible.

The financial sector-the critical circulatory system of a capitalist economy-has been virtually untouched by reform in many places.

Look at the performance of the countries that have faced the inevitable trials by deepening reforms:Chile…Costa Rica…Mexico…and Brazil have not escaped the global slowdown, but they are weathering economic cycles within the framework of democracy and continued reforms. And they are succeeding.

Describing the challenge facing Latin America as late as 2002 as the conflict "between statist stagnation and free market dynamism" misses out on a whole lot of things--and most critically the bothersome detail that all successful economies have in fact had a good deal of statism mixed into their recipes of "market dynamism."  And yes, this is so not just with the East Asian tigers and China, but even in Chile, where the most dynamic exports (table grapes, forestry, salmon) have all benefited greatly from state assistance and where the largest exporter (Codelco) still remains state-owned. One needs to go beyond these old-fashioned ideas that pit states against markets if one wants to make progress against global poverty.

When needed, Bob Zoellick can be quite a pragmatist. As head of USTR, he was hardly a purist, as his defense of steel tariffs or bilateral trade agreements reveals--whatever one may think of the correctness of these particular departures. I hope he will be equally pragmatic when it comes to shaping the World Bank. The last thing the Bank needs is a free-market zealot.   

Comments

[terence]

And then there was Zoellick's performance at Cancun. When he found out that the developing nations (G22) were actually going to stand up for themselves he spat the dummy.

This, to me, doesn't sound like someone particularly concerned with the developing world.

[angus]

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[Dirk Nachbar]

I don't think he is president yet. They wait for nominations until 15 June.

[Leonardo]

I work at the WB and am a KSG alumni, and can't help feeling overly frustrated and annoyed by the continuation of this unwritten US-Europe (plus other developed countries, such as Japan) agreement to support an European nomination to the IMF (An Spanish National, Rodrigo Rato is the Fund's current head) and an American nomination for the WB (These colluding countries make up the majority of vote among the 24 members of the Board at the WB, based on their contribution to initial WB capital, thus guaranteeing that US and Europe nominates are to be elected). With so many better qualified people from elsewhere in the World (You name them Prof. Rodrik) having a proved track record on development, this practice can be regarded as atrocious, to say the least.

[Marcos Ancelovici]

A few days ago you mentioned the Center for Global Development survey that proposed several non-US candidates. Considering the governance structure and power balance of the WB, did you really think that a different scenario could have happened? And if so, how could it have been played out? I keep telling my students that globalization is not an iron cage but sometimes I miss concrete alternative scenarios. Thanks.

[Justin]

Well, I wish I could say I called this one, but really I just cynically wished for another Bush stooge like Zoellick (in my comments regarding the Center for Global Development survey). Clearly, Zoellick will not resolve the image problem that the Bank faces, which is absolutely fine by me.

The only cool thing about Bush-Cheney is they really lack the finesse to effectively run an empire. For anti-imperialists like myself, that's not such a bad thing. I mean, if the Bush-Cheney crew had any strategic sense, they would at least give the job to some token lap-dog from the developing world (like, say, Moisés Naim). But they don't have any strategic sense, which means that the IFIs are probably just going to further isolate themselves, forcing the developing world to seek alternatives (such as South America's soon-to-be "Bank of the South'").

From an anti-imperialist perspective, Zoellick may very well be a blessing in disguise.

[Boli-Nica]

Whats the big deal? Everything he says is in line with most of the proposed "second generation reforms" -which feature a distinctively stronger state role- .calling for "schools and education systems that draw all of society toward opportunity, not protect isolated privilege" hardly sounds anti-state, as does reforming tax codes..-which usually means actually collecting taxes from the rich and upper classes.
And whats controversial?
Reforming judiciaries? transparency in government? burdens on small business? or even "statism" per se.. Seems pretty dead on to me in 2007. Particularly watching Chavez gleefully strip state enterprises of whatever autonomy they have left, and centralize them. Even worse, idiots like Morales hold him up like a role-model.

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