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World Bank at a crossroads

Published: 04 Jul. 2012, 17:58

Jim Yong Kim, a Korean-American physician and former president of Dartmouth College in New Hampshire, said that a top priority in his new job as president of the World Bank is to intensify the global lender’s efforts to help support the growth of the world economy. Upon taking up his new post at what he called a “pivotal moment for the global economy,” he said the bank, together with the International Monetary Fund, is prepared to cope with economic crises around the world, and that it will provide technical assistance to troubled countries like Greece.

Kim’s commitment to battling global poverty is laudable. “The primary mission, I think, of the World Bank in [times of] crisis is to make sure that low- and middle-income countries are protected,” he said. Also highly creditable is Kim’s move to steer the World Bank toward the goal of supporting the world economy’s mid- and long-term growth, as opposed to the IMF’s role of providing bailouts to insolvent economies.

The role of the World Bank has increasingly come into question as the focus on poor countries has shifted to the United States and Europe, both of which are blighted by economic hardships. Developing and poor nations fear reduced assistance due to these problems in advanced countries, and tighter fiscal policies in the latter would clearly curtail aid and capital investment in developing and impoverished nations. The World Bank, which was originally called the International Bank for Reconstruction and Development, is aimed at scaling back global poverty. It habitually guarantees or offers loans of around $50 billion to cash-strapped countries to help them grow.

Korea has transformed itself from a recipient of such funds to a donor country supporting the World Bank, but more than 70 percent of the global population still lives in extreme poverty with an average annual income of less than $3,000. Some 1.5 billion, or just under one in four people, still live without electricity.

The international lender is better off thanks to increased investment by Group of 20 economies, with emerging economies like Brazil, China and India upping their contributions two years ago. The bank, which has been criticized for serving economically powerful countries that provide most of its funds, must recover its fundamental role of serving and assisting in the development of poor countries.