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A World Bank for a New World The World Bank - an Extension of US Foreign Policy Reprinted From: Caijing; 2012-02-28; by Jeffrey D. Sachs Original Article.

NEW YORK – The world is at a crossroads. Either the global community will join together to fight poverty, resource depletion, and climate change, or it will face a generation of resource wars, political instability, and environmental ruin.

The World Bank, if properly led, can play a key role in averting these threats and the risks that they imply. The global stakes are thus very high this spring as the Bank’s 187 member countries choose a new president to succeed Robert Zoellick, whose term ends in July. The World Bank was established in 1944 to promote economic development, and virtually every country is now a member. Its central mission is to reduce global poverty and ensure that global development is environmentally sound and socially inclusive.

Achieving these goals would not only improve the lives of billions of people, but would also forestall violent conflicts that are stoked by poverty, famine, and struggles over scarce resources. American officials have traditionally viewed the World Bank as an extension of United States foreign policy and commercial interests. With the Bank just two blocks away from the White House on Pennsylvania Avenue, it has been all too easy for the US to dominate the institution. Now many members, including Brazil, China, India, and several African countries, are raising their voices in support of more collegial leadership and an improved strategy that works for all. From the Bank’s establishment until today, the unwritten rule has been that the US government simply designates each new president: all 11 have been Americans, and not a single one has been an expert in economic development, the Bank’s core responsibility, or had a career in fighting poverty or promoting environmental sustainability. Instead, the US has selected Wall Street bankers and politicians, presumably to ensure that the Bank’s policies are suitably friendly to US commercial and political interests. Yet the policy is backfiring on the US and badly hurting the world. Because of a long-standing lack of strategic expertise at the top, the Bank has lacked a clear direction. Many projects have catered to US corporate interests rather than to sustainable development. The Bank has cut a lot of ribbons on development projects, but has solved far too few global problems. For too long, the Bank’s leadership has imposed US concepts that are often utterly inappropriate for the poorest countries and their poorest people. For example, the Bank completely fumbled the exploding pandemics of AIDS, tuberculosis, and malaria during the 1990’s, failing to get help to where it was needed to curb these outbreaks and save millions of lives. Even worse, the Bank advocated user fees and "cost recovery" for health services, thereby putting life-saving health care beyond the reach of the poorest of the poor – precisely those most in need of it. In 2000, at the Durban AIDS Summit, I recommended a new "Global Fund" to fight these diseases, precisely on the grounds that the World Bank was not doing its job. The Global Fund to Fight AIDS, TB, and Malaria emerged, and has since saved millions of lives, with malaria deaths in Africa alone falling by at least 30%. The Bank similarly missed crucial opportunities to support smallholder subsistence farmers and to promote integrated rural development more generally in impoverished rural communities in Africa, Asia, and Latin America. For around 20 years, roughly from 1985 to 2005, the Bank resisted the well-proven use of targeted support for small landholders to enable impoverished subsistence farmers to improve yields and break out of poverty. More recently, the Bank has increased its support for smallholders, but there is still far more that it can and should do. The Bank’s staff is highly professional, and would accomplish much more if freed from the dominance of narrow US interests and viewpoints. The Bank has the potential to be a catalyst of progress in key areas that will shape the world’s future. Its priorities should include agricultural productivity; mobilization of information technologies for sustainable development; deployment of low-carbon energy systems; and quality education for all, with greater reliance on new forms of communication to reach hundreds of millions of under-served students. The Bank’s activities currently touch on all of these areas, but it fails to lead effectively on any of them. Despite the excellence of its staff, the Bank has not been strategic or agile enough to be an effective agent of change. Getting the Bank’s role right will be hard work, requiring expertise at the top. Most importantly, the Bank’s new president should have first-hand professional experience regarding the range of pressing development challenges. The world should not accept the status quo. A World Bank leader who once again comes from Wall Street or from US politics would be a heavy blow for a planet in need of creative solutions to complex development challenges. The Bank needs an accomplished professional who is ready to tackle the great challenges of sustainable development from day one. Jeffrey D. Sachs is Professor of Economics and Director of the Earth Institute at Columbia University. He is also Special Adviser to United Nations Secretary-General on the Millennium Development Goals. China Needs Strategic Reforms 2030: World Bank Report Reprinted From: Caijing; 2012-02-28 Original Article. A recent World Bank research report calls for a shift of China's development and growth model, in which strategic reforms are needed to avert a hard-landing among other risks. "China should complete its transition to a market economy- through enterprise, land, labor, and financial sector reforms—strengthen its private sector, open its markets to greater competition and innovation, and ensure equality of opportunity to help achieve its goal of a new structure for economic growth," World Bank said in a statement on its website ahead of the launch of the report Monday. The report, titled "China 2030: Building a Modern, Harmonious, and Creative High-Income Society", recommends steps to deal with the risks facing China over the next 20 years, including the risk of a hard landing in the short term, as well as challenges posed by an ageing and shrinking workforce, rising inequality, environmental stresses, and external imbalances. "The case for reform is compelling because China has now reached a turning point in its development path," said World Bank Group President Robert B. Zoellick, "Managing the transition from a middle income to a high-income country will prove challenging; add to this a global environment that will likely remain uncertain and volatile for the foreseeable future and the need for change assumes even greater importance." According to the summary of the report, "growing recognition within China that the current pattern of production and growth is unsustainable is giving rise to new approaches toward realigning government priorities." Meanwhile, the report warned that global and domestic trends are also likely to give rise to many risks that could slow economic growth, citing "a sudden decline in real estate prices and a sharp contraction in construction and investment, or a rapid growth slowdown in the advanced economies leading to sharply lower global trade and growth" as an example. The so-called middle-income trap is also a likely cause of a growth slowdown, the World Bank said. Fortunately, "China has an opportunity to avoid the middle-income trap, promote inclusive growth, without further intruding on the environment," Zoellick said. In approaching this, the World Bank report lays out six strategic directions for China: completing the transition to a market economy; accelerating the pace of open innovation; going "green" to transform environmental stresses into green growth as a driver for development; expanding opportunities and services such as health, education and access to jobs for all people; modernizing and strengthening its domestic fiscal system; and seeking mutually beneficial relations with the world by connecting China's structural reforms to the changing international economy.