Originally published on the CGS blog on April 8, 2014.
With the joint World Bank and International Monetary Fund meetings coming up April 11th through April 15th, it’s worth reviewing the contribution these institutions make to global justice. We’ve already covered the IMF a bit recently, so let’s review the World Bank, particularly in light of a recent announcement that it will be substantially increasing its lending to developing countries.
Like the IMF, the World Bank was created after World War II to help stabilize the new economic order. The World Bank was originally designed to help rebuild war-torn countries following years of conflict. As those states regained stability, the Bank’s mission changed: help the worst off around the world build their societies into more stable economies that can participate on the world stage. But like the IMF, the World Bank has been criticized for forcing countries to take certain policy advice that has often stifled rather than encouraged development.
In recent years, the World Bank has made impressive efforts to reform, especially in streamlining its bureaucracy. It has also strengthened its role as a repository and developer of knowledge– it has developed a strong understanding each state’s economy, and can therefore partner with those states and investors to examine problems and leverage its economic expertise to find solutions. Most of all, the Bank’s global presence and relative independence give it the opportunity to address genuinely global needs, ranging from extreme poverty to famine to global health and climate change.
That’s why last week’s announcement from World Bank President Jim Yong Kim that the World Bank would be increasing its lending to the nations containing over 1.5 billion of the world’s poorest people is encouraging – it shows that the Bank is recognizing its role not only as a funder of smaller projects and help for developing states, but also as an institution with the ability to make widespread change with large-scale projects that affect billions.
Couple this announcement with Kim’s comment that “fights over water and food are going to be the most significant direct impacts of climate change.” As we know from the IPCC report released last week, climate change will be affecting humans directly in many ways, and that impact will fall most heavily on the global poor. A World Bank that is focused on large-scale poverty projects with an eye toward how climate change is going to affect those impoverished is one of the most critically important institutions in the world right now. Indeed, that may be the World Bank’s competitive advantage – it can focus on global problems in a way that private lenders cannot.
But is the World Bank prepared to take on this challenge, even with open eyes and in an era of reform? In addition to its record of bad advice, Kim started the reform process because the World Bank’s bureaucracy has been siloed against itself, with different divisions, regions, and projects rarely communicating. Furthermore, while Mr. Kim speaks well about poverty and climate change, reports have shown that the Bank itself has done a poor job of accounting for climate risk in many of its recent projects. This institutional baggage must be overcome for the Bank to accomplish its much-needed work.
With the risks of climate change putting even more pressure on inequality in the world, we need a World Bank focused on mitigating the risks and human impact of climate change. As its reform process goes forward, it needs to take serious account of how every project affects the long-term ability for humans to prosper in a warming world. The stakes are too high for it to fail.
