Is It Time to Give Up on the World Bank?
Its outgoing president thinks he can do more to build infrastructure in the developing world by working in the private sector. He’s right.
Kim voted with his feet.
Photographer: Drew Angerer/Bloomberg
For the head of the World Bank Group to quit unexpectedly would have been big news under any circumstances. But, the reason outgoing president Jim Yong Kim gave for his resignation on Monday is even more revealing. Kim said he was leaving the world’s most influential development and infrastructure-building agency to join a private-sector infrastructure investment fund because he believed “this is the path through which I will be able to make the largest impact on major global issues like climate change and the infrastructure deficit in emerging markets.” One can hardly imagine a more potent indictment of the World Bank’s role in the developing world than having its head vote with his feet.
The truth is that Kim isn’t wrong. The World Bank has simply not been effective enough at what is supposed to be its core task: mobilizing funds for infrastructure investment in poorer countries. The financial gap that emerging markets have to bridge is huge; between $1 trillion and 1.5 trillion annually is needed for investment in infrastructure. And how much can multilateral development banks raise in total? All of them put together — not just the World Bank but also regional MDBs such as the Asian Development Bank — can spend about $116 billion a year, according to the Center for Global Development’s Nancy Lee. Worse, only about $45 billion of that goes into infrastructure investment.