Tag Archives: world bank

Why Jim Kim is Right for the World Bank

As faithful readers of this blog know, I am a big fan of the Barack Obama’s foreign policy positions and decisions.  Specifically, I like his deference to nuanced conditions and his emphasis on achieving the objective over claiming credit.  In my neck of the woods – specifically, Libya, Somalia, and Uganda – he understands and appreciates the nuances that made previous incursions into the region unsuccessful.  I think he understands that multilateralism and mutual respect can achieve more than the cavalier dependence on American exceptionalism.

That is why when I read that he endorsed Jim Kim, co-founder of Partners in Health with Paul Farmer and a giant in the field of public health, for the World Bank presidency, I tipped my hat.  Since its establishment, the executive positions of the World Bank and the International Monetary Fund (IMF) have been held by an American and a European, respectively.  Former French finance minister Christine LaGarde recently replaced Frenchman Dominique Strauss-Kahn after – in one of the great ironies in the history of the institution – he was arrested for allegedly assaulting a Guinean woman.  So when Robert Zoellick announced he would not re-run for the top spot at the World Bank, people debated whether Obama would be the first to break the streak and allow a non-American to run the Bank.

There is good reason for the Americans to run the bank.  For one thing, it was created by the U.S. and the Allies in 1944 at the tail end of World War II.  Though it started as a lender to post-war European economies, by 1968, the World Bank had shifted its focus to developing countries, funding infrastructure projects and enacting various poverty alleviation strategies. With some policy shifts here and there – most notably during the Reagan years, where neoliberalism was the approach du jour and the Bank’s sister institution, the IMF, created controversial structural adjustment programs that saddled many developing countries with tremendous amounts of debt in exchange for opening their economies – the Bank has focus on eradicating poverty and improving the lot of the four billion people living below the poverty line.

Kim, the MD/PhD

Unlike many previous World Bank presidents, Jim Kim is not a bureaucrat, politician, or World Bank insider.  He is a proven innovator and a man whose commitment to the cause cannot be questioned.  He has an MD/PhD from Harvard and has worked with some of the pre-eminent public health institutions in the world.  In founding Partners in Health, he built an organization that now employs 13,000 people in 12 countries, serving the poorest populations in the world.  Most recently, he served as the first Asian-American president of Dartmouth College.  In a letter to The Guardian, Professor Martin McKee explains why Kim is a smart choice:

Some commentators will no doubt be offended by the idea that someone who is neither a banker nor an economist could occupy this post. Others may think that, in these difficult times, we need someone like Jim Kim, who combines academic rigour with practical first-hand experience of the reality facing the world’s poor.

Jim Kim is a perfect candidate for the World Bank presidency.  He is a first-generation Korean immigrant with a proven record of success.  He is clearly innovative and committed to the work that the Bank is mandated to carry out.  Having spent his life outside of government, he is apolitical and carries no baggage.  Unlike one of his top competitors, Jeffrey Sachs, his positions on development are much more nuanced and his views less explicit.   Recently, Sachs withdrew from the race and endorsed Kim himself.  I find myself in agreement with his assessment:

Obama has shown real leadership with this appointment. He has put development at the forefront, saying explicitly, “It’s time for a development professional to lead the world’s largest development agency.”

Kim’s appointment is a breakthrough for the World Bank, which I hope will extend to other global institutions as well. Until now, the United States had been given a kind of carte blanche to nominate anyone it wanted to the World Bank presidency. That is how the Bank ended up with several inappropriate leaders, including several bankers and political insiders who lacked the knowledge and interest to lead the fight against poverty.

The Bank can be where the world convenes to address the dire, yet solvable, problems of sustainable development, bringing together governments, scientists, scholars, civil-society organizations, and the public to advance that great cause. This is a global imperative, and we can all contribute to fulfilling it by ensuring that the World Bank is an institution truly for the world, led with expertise and integrity. Kim’s nomination is a tremendous step toward that goal.

Over the past few years, I have talked about Jim Kim a lot after my father – a physician and Dartmouth graduate – recommended the book Mountains Beyond Mountains about the work of Kim and Paul Farmer.  My dad often compared people to either Farmer or Kim.  The former loved working in the field directly with patients, while the latter preferred tackling the problem at a high level, prioritizing policy over practice as a way of maximizing his impact.  Clearly, Barack Obama’s endorsement is both recognition of Kim’s record and another example of the strategic underpinning of Obama’s approach to foreign policy.  After all, if Obama plans to pivot away from the Middle East toward Asia, endorsing Kim, an Asian-American born in Korea, sends the right signal.  Plus, Kim’s impeccable record exists in spite of his American citizenship, yet the presidency of the World Bank would still remain in the hands of an American.

As someone who works in the field and appreciates the nuances of foreign policy, I applaud the decision to elect Kim.  I look forward to seeing what innovations he will bring to the institution.

The founders of Partners in Health - Kim, Ophelia Dahl, and Paul Farmer

Develop Economies’ Music Recommendation

The Development Matrix: Wake Up

Two World Bank economists scientifically prove that first-world countries pay more than third-world countries:

Ask most people to name the most effective means of raising incomes of people in poor countries, and what would they say?

Microfinance? Perhaps not after the recent experimental assessments.

Deworming? It increased primary school participation and improved health, but in the short-term at least seems unlikely to raise household income.

Conditional cash transfers? This might be a popular answer, with evidence from a number of countries that they have increased household expenditure , schooling, and health outcomes. But even though Governments devote significant resources to such programs, the absolute annual increases in household income and expenditure are still at most US$20-40 per capita for participating households.

I bet that facilitating international migration is not very high up the list of interventions people think of. But it should be. In a new working paper, John Gibson and I evaluate the development impacts of New Zealand’s new seasonal worker program, the RSE. The figure below compares the per-capita income gain we estimate to those from microfinance, CCTs, and from my previous research giving grants of $100-200 to microenterprises. It is simply no contest!

Really?  The finding here is that seasonal migrant workers who move to developed countries make much more money than they could were they to participate in economic development projects?  The fact that this is even worth the ink it is printed on seems crazy to me.   Continue reading

The Structure of an Agriculture Industry

I have been in Ghana now for one week, and think that it is time to give an update on what I am doing here.   I will be working on the ADVANCE project, which has the lofty goal of establishing an effective value chain in the agriculture industry.  It is a four-year, USD $30 million project with about 100 staff, including a mix of agronomists, business development people, rural finance specialists, and a handful of outside consultants providing support.  To describe the project requires providing an overview three dynamics:

  1. The structure of an agriculture industry
  2. The state of the current agriculture sector in Ghana
  3. The specific challenges in the West African context.

I will address each of these topics in three posts, beginning with an overview of how the agriculture sector works.

The term “value chain” refers to the pathway that crops take in their journey from the ground to your plate, or your wardrobe, or the tires of your car.  The farmer plants the crops and tends to them sporadically throughout the growing season.  With sugar in the Philippines, the growing season is nine months.  During the first two months, the farmer spreads fertilizer, sprays the crop with pesticides and fungicide, and weeds the plot.  He then lets it sit for six months before harvest time, which lasts one month.   The amount of inputs (fertilizer, pesticides, etc.) and mechanization used by the producers depends on the location.  Most farmers in sub-Saharan Africa (SSA) are smallholders, managing less than two hectares, on average.  In contrast, the average farm size in the U.S., which is dominated by corporate giants like Archer Daniels Midland and Cargill, is 431 hectares.  These economies of scale give American agribusiness a big advantage on the global market.

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Where's My Money, Fool: Conditional Cash Transfers

In this journal, I have discussed the different structural problems that a country faces in improving things like education, healthcare, and the economy overall.  A strong education system requires an adequate number of schools and teachers.  Likewise, good public health programs need to provide reasonable access to doctors and medical facilities.  Also, for healthcare in particular, people need to be educated about nutrition and preventive measures to avoid costly hospitalizations down the road.  But even with all of the components in place, not everyone will avail of these services.  Some people will choose to be the proverbial non-drinking horse, though usually out of necessity rather than willful ignorance.  That is because there is an opportunity cost to sending kids to school – if the child is working or watching his siblings while the parents work, going to school means lost income for the family.

Playin' with my my money is like playin' with my emotions.

So even if you have all the tools in place, it still might not be enough to effect the desired change.  One solution to this problem is conditional cash transfers (CCT).  In exchange for doing something, a person receives money.  In other words, you pay them to do the things you want, which happen to be the things that are ultimately in the best interest of them, their family, and country as a whole.  In this case, something means sending your child to school, immunizing your family, or any other behavior that will result in an improvement in “human capital.” Continue reading