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A changing world and a changing World Bank

Marketplace Staff Apr 12, 2011

A changing world and a changing World Bank

Marketplace Staff Apr 12, 2011

Kai Ryssdal: Egypt’s former president Hosni Mubarak was hospitalized today. Reports are he fell ill while being questioned about the misuse of public funds while he was in office.

Whether or not Mubarak will eventually stand trial is still an open question, but those kinds of corruption allegations are among the many issues that the World Bank aims to take on as it tries to adapt to the changing global economy. The bank holds its annual spring meetings this coming weekend in Washington. Robert Zoellick is the president of the World Bank. Welcome to the program.

Robert Zoellick: Glad to be with you.

Ryssdal: You gave a big speech last week in which you — it seemed to me — laid out a new agenda for the World Bank. One that says listen, we have to go in and build civil societies in some of these places where government is not working. We have to do more. We have to, in your words, “lean forward.” Is this an opportunity for the World Bank?

Zoellick: Well I hope so. We have to keep learning the lessons as the governments do themselves. And so part of this was the idea that we can’t just wait for everything to stabilize. This a revolution, we need to try to lean forward. But policy is going to be as important as the financial support. And the point that I was emphasizing was the simple macroeconomic stabilization issues — or even some of the traditional reforms — aren’t enough. And when you see people in the streets and the squares, the question is how can we connect citizen involvement with the development process?

Ryssdal: But if you look at places like Egypt and Tunisia, they were doing what the World Bank said. They were growing their economies, they had GDP growth rates of like 5 percent, which is quite nice, and yet that’s where the real revolutions started. Is it possible that the World Bank is misdiagnosing the problem? That maybe what we need isn’t growth, but something else?

Zoellick: I think you need growth-plus. Across the Middle East and North Africa in general, you have what we refer to as a youth bulge. You have about the need to create some 40 million jobs over the next 10 years just to hold even. Some of these will be in the informal sector, and so I think there are things that I think need to be done with effective safety-net policies, there are things to be done in the private sector. And frankly where you talked about some of the lessons we and others can learn, economists tend to be a little reluctant about short-term job creation because they’re afraid that it’s not lasting. What I’ve been suggesting is in situations like this one — or in Cote d’Ivoire for that matter — I think we need to learn some lessons about creating short-term jobs, but in ways that don’t interfere with the long-term private sector development. And we’ve done that in places.

Ryssdal: Well nail it down for me. What are you going to do in places like Egypt, Tunisia, Cote d’Ivoire? Take your pick.

Zoellick: Well it’s going to vary by country. I think Tunisia is actually more advanced in the political process and development process. We’re working right now on about a $500 million loan that will probably be connected with about $700 million from others. But as part of the loan, they’re going to improve some of their open information, their public accountability process, a whole series of governance changes. And then we’re also going to try to work with them on some of the issues to continue to try to improve the business environment.

Ryssdal: OK, but let me ask you this: Let’s say that as you go about funding civil society organization in I don’t know, Yemen, the government sees that and says, ‘You know what World Bank, you can keep your money. We’re doing just fine ’cause we don’t want you meddling in our stuff.’ What are you going to do?

Zoellick: Well, look, the whole basic premise in the development process — if the government doesn’t own it, it’s not going to work. So one thing ought to be clear: Neither we nor well-intentioned outsiders can do it for people. But what we can do is show what has worked. About half our new projects now involve the beneficiaries or civil society groups. In places like Yemen actually, we had things like community development programs, where you get the community involved in determining what the priorities are, you get much better local ownership, and you actually get better performance of the projects.

Ryssdal: This sort of reminds me — this new step you’re taking, the World Bank — sort of reminds of that line from Rahm Emmanuel, President Obama’s former chief of staff, where he said, “Never let a good crisis go to waste.” You’re taking an opportunity in the Middle East — with all the turmoil — to change the role of the World Bank.

Zoellick: Well I hope so. It’s been part of the process we’ve had of trying to modernize the institution. But at the same time, look, we make mistakes and we have to be open to try to learn how to improve this. But what it comes down ultimately is the people on the ground. What’s happening in the Middle East and in North Africa is a revolution. It’s going to have twists and turns and ups and downs. But if we can help improve the chance for success and drawing people in to economic growth and opportunity, well that’s what we should be about.

Ryssdal: Robert Zoellick. He’s the president of the World Bank. They have their spring meetings coming up this weekend. Mr. Zoellick, thanks for your time.

Zoellick: Glad to be with you.

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