Leadership of the World Bank is a critical job — the Bank not only lends money to developing nations, its research and reports help define the way forward in development assistance.

 

Unfortunately, President Obama may have taken a step back in nominating Jim Yong Kim, currently President of Dartmouth University, to be the Bank’s next leader.

 

The biggest change at the Bank in recent years has been to move away from the traditional model of development assistance — simply loaning money to governments to fund health, infrastructure, and education projects — to putting more emphasis on how that money is disbursed, and how projects are administered.  That is, the bank has shifted from simply providing aid to providing more expertise on institutions:  how to set up financing to be transparent and accountable, how to improve governance and the rule of law, and how to use Bank funds to promote private-sector partnerships and investment.  The latter is especially crucial since private sector investment funds are potentially far larger than World Bank loans as a source of finance, and because a thriving private sector is one of the best ways to ensure a vigorous civil society that will oversee government spending and limit government abuses.

 

Given this shift, what the Bank really needs is a leader who understands government administration and the opportunities and operations of the private sector.  Kim is a distinguished academic researcher and public health expert, who has great accomplishments at the World Health Organization to his credit.  He would be a great choice to lead the WHO; but his lack of experience in international finance, trade, business, and administration make him an odd choice for leadership of the World Bank.

 

But — is there perhaps a stealth reason for nominating Kim?  Historically, the job of President of the Bank has always gone to an American, to the point where the US nominee was considered to be an automatic choice.  Against this pattern, a hue and cry has risen that the Bank’s head should be someone from a developing nation — and for the first time, credible candidates have been nominated.  The strongest is Ngozi Okonjo-Iweala, a woman, former director of the World Bank and currently finance minister of Nigeria.   If, as is typical, Obaman had nominated an economic or political heavyweight for leadership of the bank, say Lawrence Summers or Hilary Clinton, it would have been hard for the Bank’s leadership (and humiliating for either such nominee) to be turned down.  However, a political lightweight like Kim could be passed over in favor of a highly experienced and prominent finance person like Ngozi without undue pain for either the U.S. or the candidate.  Could Obama secretly be hoping that the U.S. candidate would lose, and thus be quietly assisting the long-overdue transition to a developing-country economist/financial leader as President of the World Bank?   I actually hope so; it makes more sense of this odd choice, and would allow the Bank to take a great step forward toward overcoming the now obsolete post-WWII configuration of power in the major world governance organizations.