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The contribution of the World Bank
to global growth and stability
By Robert Zoellick, president, World Bank Group
The World Bank Group is adapting to represent the diversity of global financial institutions
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The global economic crisis has underscored the need to modernise and strengthen multilateral institutions both to help address today’s challenges and to reflect a different world. Today’s is a new, rapidly evolving, multipolar world economy. Developing country growth is not only fundamental to overcoming poverty and hunger. It is also now an engine of global growth.
This new world — embodied in the emergence of the G20 as the premier forum for discussing international economic issues — places more emphasis on identifying mutual interests, negotiating common actions and managing differences across a much wider spectrum of countries than ever before. It requires the support of institutions that are fast, flexible and accountable and can give voice to the voiceless with resources at the ready. It requires institutions that reach out to partners, with humility and respect, ready to learn from others, institutions that can act as global connectors pioneering a new world of South-South and South-North learning and exchange. It requires institutions that can demonstrate real results and can be held accountable when they falter.
Public institutions tend to be slower to change than private organisations facing competition. The World Bank Group recognises this risk. To address it, it has launched the most comprehensive reforms in its history.
A modernised World Bank Group must represent the international economic realities of the 21st century, recognising the role and responsibility of stakeholders, but also their diversity and special needs, and provide a larger voice for Africa. Reflecting these needs, and with the support of the G20, bank shareholders decided in April to move to more than 47 per cent ownership by developing and transition countries.
But it is not stopping there. In a model unique among international financial institutions, shareholdings will be reviewed every five years to allow for changes based on the continuing economic growth and evolution of shareholders, with the goal of achieving equity over time. For the first time, shareholdings are based on a formula specifically developed to reflect the needs and mandates of the World Bank Group: they reflect not only economic power but also contributions to bank resources for the world’s poorest countries.
Senior management now includes a record number of executives from developing countries as well as women. And even more needs to be done.
The World Bank Group needs to work with developing countries as clients, not as development models from textbooks. It needs to help them solve problems, not test theories.
Yet problems need resources to fix them.
In the two years since the full force of the crisis hit in mid-2008, the World Bank Group committed $132 billion to support developing countries.
This broke all records. The World Bank Group got money where it was needed — fast. When it stepped up to confront dangers, it depended on the effective and efficient use of resources on hand.
World Bank shareholders — with the critical support of the G20 — successfully agreed in April 2010 to the first major capital increase in more than 20 years. Recognising its strength as a vehicle for achieving global development objectives, shareholders chose to strengthen the bank to enable it to meet future challenges and crises.
The capital increase demonstrated just how modernised multilateralism can work. The World Bank Group built cooperation among the 187 countries that are its members. More than half the resources raised came from developing countries. Agreement on this package of measures represented a multilateral success story that contrasted with recent stumbles in climate change and trade.
More resources are needed for the 79 poorest countries in the world, half of which are African. These countries rely heavily on the the International Development Association (IDA), World Bank’s fund for the poorest, to pay for clinics, schools and vital infrastructure. At the Toronto Summit in June 2010 the G20 called for an “ambitious” replenishment of IDA. The World Bank Group is working with IDA’s partners to raise the necessary money and to ensure that it is used in the most effective way to achieve results on the ground for poor people. In addition, this year’s replenishment will address how to give even greater prominence to gender, climate change, fragile states and crisis response in IDA’s work.
Representation and resources alone are not enough. The World Bank must also be more effective, responsive, innovative, flexible and accountable.
It is sharpening its strategic focus to areas where it can add most value — focusing on the poor and vulnerable, especially in sub-Saharan Africa; on creating opportunities for growth; on promoting global collective action — such as in climate change, agriculture, water and health; strengthening governance; and preparing for crises.
The World Bank Group is reforming to modernise its products and services, fostering opportunities for innovation and considering a new decentralisation model that will enable it to apply cutting-edge skills closer to clients while gathering, customising and sharing knowledge and experience globally. It needs a global reach, but also a local touch.
It is reforming to focus on results, strengthening its governance and anti-corruption efforts, including strong prevention, and leading other international institutions in becoming more transparent and accountable. Its New Access to Information policy, based on the Indian and US freedom of information laws, is the first — but hopefully not the last — of its kind among international institutions. The World Bank Group has launched a new open access policy for economic data. It has concluded an agreement with other multilateral development banks on the cross-debarment of corrupt individuals and companies.
And the World Bank Group is launching a corporate scorecard so it can itself be held more accountable. Everyone makes mistakes. But if overcoming poverty were easy, it would have been done long ago. By opening the shades for others to see what and how the World Bank Group is doing, and with what results, errors can be caught more quickly and improvement can happen faster.
Taken together, these reforms are transformational. This transformation will enable the World Bank to more effectively serve its members and support the international economy in a time of rapid change.
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