We are about to witness a changing of the guard at the Asian Development Bank (ADB) with the impending departure of president Tadao Chino, as well as at the World Bank where the era of James Wolfensohn as its head may well end less than a year from now, Anthony Rowley comments in the Business Times of Singapore.
These may not seem like earth-shattering events and yet the prospect of a more “professional” approach in future at both the ADB and the World Bank is certainly of great importance to the business and financial communities, as well as to all of those whose lives are impacted by economic development, Rowley writes according to the World Bank press review Thursday.
Multilateral development banks or MDBs have strayed far from their original mission of being what their name implies: that is, “banks” that borrow money where there are capital surpluses and lend it where there are capital deficits.
If the MDBs did not already exist they would need to be invented, because there obviously is a crying need for institutions able to intermediate long-term credits to projects that are critical to economic progress.
And yet, the MDBs have become burdened with such a multiplicity of other tasks and “missions” that they are no longer recognizable for what they were originally supposed to be.
They have become weighed down by an ever-growing remit of poverty alleviation, reform of governance and legal systems, environmental reforms, dealing with infectious diseases, drug abuse and money-laundering, financial system reform, and so forth.
Their erstwhile disciplined ranks of economists, project engineers and other specialists have been diluted by hordes of other professionals and do-gooders (including legions of NGOs) to the extent where a clear-cut mission and consensus is clearly impossible.
The MDBs have become largely ineffective instruments of a massive socio-economic agenda, while their original function of providing much-needed basic infrastructure is largely neglected.
Numerous official commissions and committees of inquiry have made suggestions for reforming the MDBs, but like most bureaucracies they have proved to be remarkably resistant to reform.
So, why should anyone be optimistic that a change of guard at the top of the ADB and the World Bank could be successful in introducing reform when so many other well-intended efforts have failed?
One answer to this is that “top down” reform is often more effective than “bottom up”. Another is that the next heads of both institutions are likely to be more “business-like” and less idealistic than their predecessors.
This is not the same as saying that the ADB and the World Bank are about to become simply instruments for promoting the interests of the private sector against the public sector. That is far too simplistic a formula to be effective, as a decade or more of experience with infrastructure has shown.
The real point is that a common fault of Messrs Chino and Wolfensohn has been their obsession with forging these institutions into instruments for demonstrating their own sense of compassion towards the poor and underprivileged.
Noble enough as an ideal but not a good principle on which to run a development bank. It has resulted in a “soft” and largely unworkable agenda instead of a hard-edged approach to development.
As for the World Bank, the chances are that either US Secretary of State Colin Powell (or even Trade Representative Robert Zoellick) could succeed Wolfensohn, if President George Bush is still in office next year.
Powell may seem an unlikely choice but one of the World Banks most effective leaders was former defense secretary Robert MacNamara. Powell at least would have a strong sense of the need for a focused “strategy” at the Bank.
On the Democrat side, Lawrence Summers or Stanley Fischer are probables. Both have previous experience at the World Bank – and strong intellectual reputations to boot.
Under new leaders, the ADB and the World Bank are likely to be pushed back into the business of infrastructure, either directly or by finding workable partnerships between the public and the private sector. Japan is pushing hard behind the scenes to make this happen, and the sooner the better, Rowley writes.
Asia for one badly needs to spend multi-billions of dollars on infrastructure if its economic and business upgrading is not to stall (and poverty reduction to continue). What better use for the regions savings, instead of investing them in US Treasury bonds?
But, first, new thinking is needed at the top to unlock the door to progress concludes the commentary.
Kilde: www.worldbank.org
