March 28 (Bloomberg) -- Jim Yong Kim, the U.S. candidate to head the World Bank, started a global tour to garner support among developing nations as Nigeria’s finance minister mounted a challenge for the leadership of the poverty-fighting lender.
Kim, 52, left Washington yesterday for a two-week trip to cities including Addis Ababa, New Delhi and Brasilia to seek advice about priorities for the bank, which lent $57 billion last fiscal year. Nigeria’s Ngozi Okonjo-Iweala said she is “reaching out” to build support outside Africa.
“I’ll bring unique advantages of knowing the strengths and the weaknesses of the institution as well as being somebody who’s actually managed a complex economy in a developing country,” Okonjo-Iweala, 57, a former managing director at the bank, told reporters in Abuja, the Nigerian capital.
The comments by Okonjo-Iweala highlight the differences between her resume and Kim’s. Kim, the president of Dartmouth College and an expert in HIV/AIDS, hasn’t worked in areas such as economic policy and financial markets.
Kim’s “main strength is that he’s passionate about development,” said Arvind Subramanian, a senior fellow at the Peterson Institute for International Economics in Washington and a former assistant director of research at the International Monetary Fund. Still, “his qualifications are a bit narrow for the job,” he said. “Someone who comes to the bank has to be much more than a health economist or a health person.”
Okonjo-Iweala’s bid challenges the American monopoly of the job under an informal agreement that also gives the leadership of the IMF to a European. The U.S. is the largest single shareholder in both institutions, founded at the end of World War II.
Kim, who was born in Seoul and grew up in Iowa, would be the first Asian-American to head the bank. A doctor by training, he would represent a break from the financiers and bureaucrats who have run the lender, and his Korean heritage offers a bridge to developing nations. He was nominated last week by President Barack Obama to replace Robert Zoellick, whose five-year term ends in June.
The third candidate is former Colombian Finance Minister Jose Antonio Ocampo. In a phone interview today, Ocampo said that he and Okonjo-Iweala have a chance to win if the selection “respects the rules of being an open, transparent process based on merit.”
“Maybe it will not change this time,” he said. “But in that case we’re putting up the fight so that that system will be changed forever.”
U.S. Treasury Secretary Timothy F. Geithner said yesterday he expected Kim’s candidacy would “command broad support around the world.” He said Kim has “has consistently advocated for sustainable growth with the benefits more broadly shared across society.”
Kim was head of the Department of Global Health and Social Medicine at Harvard Medical School and also served as director of the World Health Organization’s HIV/AIDS department. In 1987, he co-founded Partners in Health, a nonprofit organization that has opened clinics in countries including Haiti and Peru.
Kim’s global tour will also take him to Seoul, Tokyo, Beijing and Mexico City, the U.S. Treasury said in a statement. He will meet heads of state and finance ministers to get their views on priorities for the bank and assess how it can best “promote growth, combat poverty, and create jobs in developing nations.”
“I want to hear from developing countries, as well as those that provide a big share of the resources to development, about how we can together build a more inclusive, responsive and open World Bank,” Kim wrote in a newspaper op-ed piece released by the Treasury today.
He said he would continue giving emerging markets more voting power at the bank if he is elected.
While his credentials may help the bank improve its health programs, Kim lacks experience in promoting economic growth, a key to reducing poverty, according to Uri Dadush, director of international economics at the Carnegie Endowment for International Peace in Washington and a former World Bank director of economic policy.
“There are two big avenues of work in the World Bank,” Dadush said. “One is health and education, which is the social side. The second is growth. The World Bank has to be primarily, in my view, about growth because without growth you cannot develop health and education.”
Health and social projects accounted for almost 16 percent of total loans to governments last year, up from 9 percent in 2006. That compares with 14 percent for energy and mining loans and 20 percent for transportation.
The bank’s expertise ranges from infrastructure to climate change as it seeks to attract clients that get an easier access to private capital.
The bank’s private-sector unit, the International Finance Corporation, offers advice on the business climate and takes stakes in companies and financial institutions. Last month it invested $5 million in a Pakistani rice exporter to help it increase its production capacity.
While Kim hasn’t given detailed plans for the bank, a book he co-edited in 2000 suggests that not everyone benefits from economic growth.
“The idea that robust economic growth will automatically lead to a better life for everybody is comforting,” he and fellow authors wrote in the introduction to “Dying for Growth,” which focuses on the health of the poor. “Unfortunately, it is also wrong.”
The books says it presents “evidence that the quest for growth” in gross domestic product “and corporate profits has in fact worsened the lives of millions of women and men.”
Nigeria’s Okonjo-Iweala led efforts to replenish a fund that lends to poor countries while she was at the World Bank as a managing director from 2007 to 2011.
At yesterday’s news conference, she said she would deal with “problems of both human and physical infrastructure that is confronting many countries today,” including climate change.
She said she sees the bank as “an institution that is swifter and nimbler, in terms of tackling what I consider the key singular most difficult problem confronting both developing and emerging market countries, which is job creation, particularly for youth.”
Okonjo-Iweala left her position at the bank in mid-August to work for Nigerian President Goodluck Jonathan as finance minister of sub-Saharan Africa’s second-largest economy. She supported Jonathan’s move to partially remove a subsidy on gasoline, which the president said fueled corruption.
While Nigeria’s economy grew estimated at 7.3 percent on average between 2004 and 2010, according to IMF estimates, its unemployment rate rose to 23.9 percent in 2011 from 19.7 percent in 2009, according to the National Bureau of Statistics.
To contact the editor responsible for this story Christopher Wellisz at firstname.lastname@example.org.