Barack Obama's administration announced Jim Yong Kim, president of Dartmouth College, as its nominee for the next president of the World Bank on Friday, March 23. With that nomination, the White House has stuck to the archaic principle that the leadership of the World Bank should be reserved for a U.S. citizen -- Kim was born in South Korea, but he has been in the United States since he was five. On the plus side, however, the White House's selection suggests an interest in moving the World Bank further toward a new operating model, something that is sorely needed in a rapidly changing world.
If common sense prevailed, Kim's nomination would be judged equally against the candidate nominated by Nigeria and South Africa -- the corruption-fighting, fuel-subsidy-slashing Nigerian Finance Minister Ngozi Okonjo-Iweala. Beyond her experience in government, she previously held a No. 2 role at the World Bank as managing director, and before that, as a teenager during Nigeria's civil war, she carried her sister on her back for 6 miles to get her lifesaving treatment against malaria. But thanks to the traditional carve-up that gives the International Monetary Fund's leadership to Europe and the World Bank's to the United States (recently cemented by the appointment of Christine Lagarde as managing director of the IMF), Kim is almost certain to get the job in the end.
Still, Friday's announcement did at least (mostly) turn around a conventional wisdom in the United States that the White House was completely bungling the nomination process, stuck between candidates who didn't want the job and candidates likely to stir up controversy. Immediate plaudits were forthcoming even from a competitor for the post -- Jeffrey Sachs.
Perhaps most interesting is what the pick suggests about changing Washington perceptions regarding what the World Bank is actually for these days. Look at the list of former World Bank presidents: a couple of politicians, a CEO turned defense secretary, and the rest bankers. That reflects the traditional role of the World Bank -- borrowing money on international markets to finance investment projects.
Kim, by contrast, is a medical doctor and holds a Ph.D. in anthropology. With Paul Farmer, he founded Partners in Health -- an NGO committed to grassroots health care and the force behind advances in treating drug-resistant tuberculosis. Before running Dartmouth, he was director of the HIV/AIDS department at the World Health Organization. Doubtless Kim has walked down Wall Street, but he has never had a corner office in one of the buildings there. Instead, he has spent his life thinking about global challenges like AIDS and innovative responses like new TB treatment regimes. Given the changing nature of the world's development challenges, the White House is right that understanding innovation and issues like global disease is of far more use to a World Bank president than an intimate knowledge of the Eurobond market.
It used to be that the primary role for development organizations was seen as providing hard currency (dollars, pounds, euros) to support country investment programs central to economic growth. That's the model that World Bank assistance is based on, but beyond being distinctly out of favor with economists, it's a model that's growing irrelevant to an increasing number of the world's developing countries.
Consider this: The average aid-recipient country gets donor funding worth less than 1 percent of its income. Additionally, data from the World Development Indicators for 2008 suggest that only 31 percent of total aid flows went to countries where aid accounted for a third or more of investment (excluding Afghanistan, this number drops to 23 percent). This suggests that for most recipient countries, as well as most aid flows, aid accounts for a very small proportion of investment. In part that's because of the phenomenal economic performance of the developing world over the past decade. As a result, there are a declining number of low-income countries where aid is still a significant source of financing. The number of countries where average incomes are below $1,005 per person per year dropped from 63 to 35 over the last 10 years.