Analysis: Developing nations need more say in naming World Bank head

In Kim, a public-health professor who is now president of Dartmouth University and previously led the World Health Organization’s HIV/Aids department, the United States has put forward a good candidate. But the candidate’s nationality, and the nominating country – whether small and poor or large and rich – should play no role in determining who gets the job.

The World Bank’s 11 executive directors from emerging and developing countries have put forward two excellent candidates, Ngozi Okonjo-Iweala of Nigeria and Jose Antonio Ocampo of Colombia. I have worked closely with both of them. Both are first-rate, have served as ministers with multiple portfolios, have performed admirably in top positions in multilateral organizations, and have the diplomatic skills and professional competence to do an outstanding job. They understand finance and economics, the bread and butter of the World Bank, and have a network of connections to leverage the Bank’s effectiveness.

Mr Okonjo-Iweala brings an insider’s knowledge of the institution. Mr Ocampo, a distinguished professor at Columbia University, is thoroughly acquainted with the World Bank. He previously served not only as minister of economics and finance, but also of agriculture – a critically important qualification, given that the vast majority of the developing countries’ poor depend on farming. He also brings impressive environmental credentials, addressing another of the Bank’s central concerns.

Both Mr Okonjo-Iweala and Mr Ocampo understand the role of international financial institutions in providing global public goods. Throughout their careers, their hearts and minds have been devoted to development, and to fulfilling the World Bank’s mission of eliminating poverty. They have set a high bar for any American candidate.

Much is at stake. Almost two billion people remain in poverty in the developing world, and, while the World Bank cannot solve the problem on its own, it plays a leading role. Despite its name, the Bank is primarily an international development institution.

Rumours suggest that the US is likely to insist on maintaining the perverse selection process in which it gets to pick the World Bank’s president, simply because, in this election year, Mr Obama’s opponents would trumpet loss of control over the choice as a sign of weakness. And it is more important for the US to retain that control than it is for emerging and developing countries to obtain it.

Indeed, the more powerful of the emerging markets know how to live within the current system, and they may use it to their advantage. They will, in effect, obtain an IOU, to be cashed in for something that is more important. But at what cost?

Should America continue to insist on controlling the selection process, it is the Bank itself that would suffer. For years, the Bank’s effectiveness was compromised because it was seen, in part, as a tool of Western governments and their countries’ financial and corporate sectors. Ironically, even America’s long-term interests would be best served by a commitment to a merit-based system and good governance.

One supposed achievement of the G-20 was an agreement to reform the governance of the international financial institutions – most importantly, how their leaders are selected. Since expertise on development by and large lies within the emerging and developing countries it seems natural that the World Bank’s head would come from one of those countries. To maintain a cabal among developed countries seems particularly anachronistic and perplexing today, when the Bank and the Fund are turning to emerging-market countries as a source of funds.

• Joseph E Stiglitz is University Professor at Columbia University, a Nobel laureate in economics, and the author of Freefall: Free Markets and the Sinking of the Global Economy.