If the new World Bank President calls …

International Economy, The, Spring, 2005

Suppose Paul Wolfowitz telephoned you with the following:

"I have only five minutes--in that time, what one bit of advice can you offer about leading the World Bank?"

How would you respond? Remember, Wolfowitz has said he will start his new job by "listening," but he has also stated that his primary goal is "reducing poverty." Any thoughts or words of advice for the Bush Administration's unexpected choice for World Bank chief?.

Over two dozen experts offer their guidance.

SAMUEL BRITTAN

Columnist, Financial Times, and author of Against the Flow

(Atlantic Press, United Kingdom)

Above all avoid the trap of administrative reorganization. The best intentions of some of your predecessors of all political persuasions in this and other bodies became bogged down in these reorganizations. Make the best of the system you have, with the aid of a few key personnel, and concentrate on actual problems.

You are probably rightly suspicious of aid to governments as often wasteful and counterproductive. Give as much of your resources as possible to modest-sized local organizations whose resources cannot easily be diverted into national treasuries.

So far as you have to deal with governments, I agree with much of the advice you are being given about insisting on the rule of law and human and property rights. And do not provide aid to emerging countries that can already borrow for themselves on world capital markets. Concentrate on providing grants for the really poorest.

If I may add my own gloss, it is not only to refuse all aid to unnecessary arms programs and prestige projects of all kinds such as dams, which often attract an unholy alliance of self-interested corporations and Third World lobbyists.

But go further. It will mean not only refusing to finance such projects themselves, but cutting off governments who misuse development funds by diverting money into these projects. This advice will not make you popular with business, but you will only have one chance.

GUILLERMO ORTIZ

Governor of the Bank of Mexico

Paul Wolfowitz's selection as president of the World Bank provides him with a unique opportunity to contribute to developing countries' well-being. While the potential of the Bank to improve welfare is always there, today the institution has the added advantage of strong political support for economic development resulting from the endorsement of the Millennium Development Goals and the Monterrey Consensus by world leaders.

What recommendations can be provided to Mr. Wolfowitz in leading the Bank at this special juncture? I would underline six points.

First, concentrate the Bank's muscle on the institution's core activities and, particularly, on the fight against poverty. There is broad agreement that this is the main development challenge at present.

Second, improve the efficiency of the Bank's operations. It is no secret that a significant number of the institution's programs fail to deliver the expected results, and that a lot needs to be done to improve transparency, accountability, and conditionality in the Bank's activities.

Third, keep in mind that the Bank has an important role to play in middle-income countries. Many of them face serious problems of poverty, among others, for which private financing is not available, and the Bank's advice and technical assistance activities have a strong demand within this group. Furthermore, an adequate engagement in middle-income countries is crucial for the Bank's financial strength.

Fourth, strive for an adequate balance between loans and grants, taking consideration of both the benefits for recipient countries and the institution's financial viability.

Fifth, the fight against poverty is not a job for one institution. It requires simultaneous efforts on many fronts. A particularly close cooperation with the International Monetary Fund is needed to avoid overlaps and harmonize efforts on the basis of comparative strengths.

Sixth, democracy within the Bank must be enhanced. The institution's decisions must respond to the interests of all the Bank's members, and not to those of the major shareholders. Furthermore, developing countries must be given a fair share of voting power at the Bank.

Notwithstanding the many criticisms raised against the Bank, no other institution in the world has such a depth of knowledge and expertise in the economic development field. Mr. Wolfowitz clearly has the capacity to take advantage of the combination of talent and experience available at the Bank to lead the institution successfully. I wish him all the best.

Allan H. Meltzer University Professor of Public Policy at Carnegie Mellon University, and Visiting Scholar at the American Enterprise Institute

Change incentives--internal and external incentives. Aid works best when local officials choose to reform and make reform happen. Give assistance where that exists. Do not lend to countries that do not reform.

Change internal incentives also. Reward programs that work. End the policy of rewarding lending. The objective is to reduce poverty, not just to lend money.