Why Ocampo–Not Kim–Should be Next World Bank President
Kevin P. Gallagher
Emerging countries have gone on the offensive to put an end to the “wink-wink” succession rule whereby Europeans get to choose who heads the International Monetary Fund and the US picks the president of the World Bank.
On Friday, developing countries are expected to nominate at least two candidates – Ngozi Okonjo-Iweala, the Nigerian finance minister, and José Antonio Ocampo, former finance minister of Colombia. If the decision is finally based on merit, as it should be, Ocampo will win: he is far and away better than any on the list of credible names, including President Barack Obama’s nominee, Jim Yong Kim.
Ocampo has the utmost credibility as a policy-maker and diplomat; he works well with the US and developing countries alike; and he is one of the leading academic economists in the field of development.
He is known as a former finance minister but he also served Colombia as minister of agriculture and minister of planning. He has intimate knowledge and experience working with both small and large farmers and on infrastructure and investment projects needed for sustainable growth. This experience will be essential given the current global food crisis.
As finance minister of Colombia he helped the country weather the effects of financial crises in Asia and Latin America. Indeed, he crafted unique and effective measures such as unremunerated reserve requirements whereby foreign investors had to park a certain amount of their capital at the Central Bank. He is now a member of a high-level task force that aims to help nations prevent and mitigate future crises.
Ocampo won points from the US for these efforts and for collaborating with it on a clamp-down on drug-related money-laundering. Colombia is arguably the US’s closest partner in South America and Ocampo has earned the trust of Americans at the highest level. The significance of this should not be overlooked given that it is the US that would have to “give up” the World Bank seat.
His success landed him the presidency of the UN’s Economic Commission for Latin America and the Caribbean – which he turned into Latin America’s premier development institution by refocusing it on open trade, export competitiveness, innovation and policy alleviation. He was then tapped to be UN Under-Secretary General for Economic and Social Affairs, an organization that he also significantly reformed. He improved implementation, created a global development cooperation forum, and held the first ever global conference on international migration and development, earning a truly world-wide reputation as a top notch policy-maker.
Not only would Ocampo have global legitimacy twinned with a special relationship with the US; he would also get more respect from World Bank staff. He has a PhD in economics from Yale and is seen as one of the foremost development economists in academia. He has published widely on labour markets, inequality, public debt, education, macro-economics, industrial innovation, climate change and green development. He has recently been awarded prestigious annual lectureships and prizes at the UN, the World Institute for Development Research and Tufts University.
Okonjo-Iweala also has a PhD in economics and a long history at the World Bank and was a much-heralded finance minister in Nigeria, helping the country to gain its first ever credit rating. That said, she was also Robert Zoellick’s second in command. The World Bank has to move on.
Kim, as president of Dartmouth College and a former director of the World Health Organization’s HIV/Aids department, is a rising star and public health is increasingly recognized as a core development issue. However, he lacks recognition among the world’s development community. More importantly, he lacks the experience and knowledge of finance and broad-based development that will be essential as the world continues to recover from the global financial crisis and works to prevent its recurrence.
Beyond public health, a new bank president will face challenges in re-tooling global and national finances for development, food price volatility, filling the massive infrastructure gap, global climate change and competition with Chinese development banks. Kim is not versed on these issues and lacks experience in managing the delicate global, national, and local interests in play.
Rather than listening to the Washington Consensus, many developing countries took matters into their own hands at the turn of the century. Since then the developing world has grown faster than the rich, reduced poverty significantly and avoided the worst of the financial crisis that originated in the US. It would be ironic for the US to dictate the appointment at the World Bank in such an environment.
This piece was originally published at the Financial Times.