Posted on October 31, 2017
This is the question Professor Ravi Kanbur poses in a talk this week.
The World Bank alumuni and economist spoke about how all has actually not been well at the WB for a while now. There has been both mission creep and internal criticism of a lack of mission.
WB shareholders have failed to provide capital increases as other funds such as IMF have achieved.
This is clear recognition of cross border problems eg. climate change, financial contagion, infectious diseases and migration etc. But no agreement on how to address these. Although the public good case is strong, the specific incentives are not obvious enough for individual nations to invest.
A further problem is that the actual WB loans for development model has been so successful and it has spawned many regional and sub regional development banks. These are now competing with the parent for funds.
The original structural problem has been that WB model was country specific. Cross border problem solving was not part of is remit.
Fixing this is challenging as the cross border problems although not country specific are often not entirely global and are typically focussed in specific regional areas.
For the WB to deal with issues perhaps these have to now be truly global or should new issue specific groups should be created (Global Climate Change Commission) or existing groups expanded (World Health Organisation)?
A further problem is that the original WB sovereign loan instrument is not well suited to today’s global public good problems. It’s tricky raising a loan for climate change.
A new global public good mandate could rescue the WB. But with the United States currently not investing into it while holding a veto preventing others from doing so because it would weaken its influence, confirming what exactly the WB continues to be good for will need a circuit breaker.