World Bank President Calls For New, More Open Approach To Economic Development
“World Bank President Robert Zoellick on Wednesday called on economists to rethink the way they look at issues affecting developing nations and said he was overhauling the way his institution approached research,” Reuters reports (Wroughton, 9/29).
At aÂ speech atÂ Georgetown University ahead of next week’s World Bank and IMF meetings, “Zoellick said development economics was in need of ‘rethinking’ as the experiences of nations such as China and India become more relevant to other nations seeking economic and social progress,” the Financial Times reports.
“A new multipolar economy requires multipolar knowledge,” he said. “We need to democratise and demystify development economics, recognising that we do not have a monopoly on the answers,” Zoellick said, adding that economists in developed nations should not focus on one model for development and should be more open to “differentiated policy approaches.”
“‘The right policies may differ across phases of development,’ he said, highlighting the debate over promoting export-led growth versus domestic demand, the approach to innovation and financial regulation. ‘What may safeguard in one context may strangle in another,’ he said,” according to the Financial Times (Politi, 9/29). Though the global economic downturn played a role in Zoellick’s call for a new approach to development economics, he said the problem pre-dates the poor economy, Reuters writes. “Even before the crisis there was a questioning of prevailing paradigms and a sense that development economics needed rethinking,” he said. “The crisis has only made that more compelling” (9/29).
“The flow of knowledge is no longer North to South, West to East, rich to poor. Rising economies bring new approaches and solutions,” Zoellick said.Â He “noted that emerging economies are now key variables in the global growth equation, and the developing world is becoming a driver of the global economy,” Xinhua writes (9/29).
In the speech, Zoellick “said the World Bank would apply its economic know-how to studying issues from food security to what drives growth to be more relevant to the developing countries it assists,” Reuters reports.
“He identified four areas that needed more research. These included a better understanding of how economic transformations occur and why some countries are able to grow and others remain trapped in dire poverty. … Zoellick said research should look closer at risk to do with natural disasters to health pandemics, and climate changes that are affecting food production. Lastly, more study was needed to gather evidence and data to evaluate and assess the effectiveness of development efforts, including aid, he added,” the news service reportsÂ (9/29).Â The knowledgeÂ gaps, identified in the speech,Â were outlined in a World Bank paper published on Wednesday, according to a World Bank press releaseÂ (9/29).
“Zoellick also focused on increasing the transparency of the Bank and making its data more available to outside scholars and policymakers,” Inter Press Service reports.
“He said the Bank is working to make its research and models more available and user-friendly and regretted that in years past some data was only available by purchase. This would allow ‘researchers civil society and local communities to come up with their own findings and double-check ours,’ he said” (Berger, 9/29).Â “No longer can the model solely be to research a specific issue and write a paper hoping someone will read it,” said Zoellick, the Wall Street Journal writes.Â “The new model must be ‘wholesale’ and networked,” Zoellick said.
Some economists reacted favorably to Zoellick’s remarks. The comments are “generally not only in the right direction, but very useful,” Nobel Prize-winning economist Michael Spence said of the speech. “The speech hits all the right notes: the need for economists to demonstrate humility, eschew blueprints … and focus on evaluation but not at the expense of the big questions,” said Harvard economist Dani Rodrik, “who favors a stronger government hand in development,” the newspaper writes.
“But the reaction wasn’t unanimous,” the Wall Street Journal notes, quotingÂ New York University’s William Easterly, “a former World Bank economist who is skeptical about the value of foreign aid.”Â Easterly described the speech as “amazingly presumptuous”Â and said the current approach toÂ economic research, where economists critique each other’s ideas, works well. Easterly said World Bank economists are often pressured by their bossesÂ “to reach the ‘right’ conclusions,” which isÂ that foreign aid works and that World Bank loans are helpful.
However, Martin Ravallion, the bank’s head of research,Â responded, “I have never been told what conclusions I should reach, and I doubt very much that anyone told Bill Easterly what conclusions he should reach in his many years working for the Bank’s research department” (Davis, 9/30).