Previously, I offered thoughts on drivers of reform for the Bank. External pressure has compelled the Bank to review what reforms it should implement. In the last few years, many development think tanks and NGOs have focused their attention on: Open and transparent selection of future Bank presidents; increasing the voting weight of developing countries on the Bank’s operating boards; realigning the representation, composition and responsibilities of its Board of Directors; and, increasing access to Board proceedings and materials and Bank project documents. All have merit. They will make the Bank’s decision making more representative of its membership.
In recent years, a number of academics have analyzed how the Bank reacts to reform efforts. Research on the implementation of the Strategic Compact of 1997 (a series of reforms launched by former president James Wolfensohn) was conducted. The academics came to a universal conclusion: The bureaucracy of the Bank internalized the new reforms to converge with its existing norms. Translation: The Bank adapted the reforms to fit into its existing status quo. This is important research. Indeed, the Bank’s history has been to use commissions, panels and reports to mute or escape criticism of its internal governance. When compelled to change, reforms enacted mirror existing practices or contain loopholes that allow internal players to bypass full accountability.
As noted above, these types of reforms are important steps in changing the way the Bank does business. They seek to restructure the high-level relationship between the Bank and its stakeholders and shareholders. I also believe they are not enough. Perhaps because of my own experiences within the organization, I think a different series of reforms designed to alter the institution’s cultural norms are in order. Changing how people internalize incentives will change how they behave and ultimately how the Bank performs. To address internal structural inefficiencies that impede the institution’s ability to implement its poverty reduction mission, Bank stakeholders and shareholders should consider the following:
- Accountability mechanisms within the Bank are flawed because there is an inherent conflict of interest when the Bank is both judge and jury. Therefore, establish an evaluation unit of its lending activities that is completely independent and unconnected with the Bank. Evaluations should also place more emphasis on the project sustainability phase as opposed to the project approval phase. This will dilute the “approval culture” of the institution and increase managerial accountability.
- Moreover, reform the Bank’s Conflict Resolution System so that decisions are in the hands of independent arbitrators. These decisions would be binding and arbitrators would have the latitude to impose sufficient monetary penalties for successful plaintiffs. Currently, the Bank’s management has jurisdiction over CRS decisions which undermines the confidence staff have with its objectivity. Making CRS independent of the Bank’s management would weaken the institution’s culture of fiefdoms, increase managerial accountability and give staff tangible protections from managerial abuses.
- Revise the managerial selection process to emphasize leadership and entrepreneurial skills rather than relying primarily on academic or technocratic excellence. The Bank recruits and promotes technocrats and academics with few proven managerial skills. Internal and external Bank surveys have found its managerial cadre well educated but overly technical, excessively arrogant and highly bureaucratic. The institution needs a more holistic approach to finding managers or promoting staff to managerial positions that places greater emphasis on leadership and entrepreneurial skills. This would revitalize the institution’s personnel that more than two decades of staff surveys indicates is mired in fear and complacency.
- Create a seat on the Board for a civil society representative. This would increase civil society’s inclusion and participation in the Bank’s lending activities and development policies, reduce and de-politicize NGO criticisms of the Bank and increase civil society accountability for Bank decisions.
- Reconfigure the World Bank Institute (WRI), the pedagogical arm of the institution, so it moves away from its current model that imposes institutional viewpoints of development theory and practice upon borrowing country officials and toward a model of open-learning that not only tolerates but fosters contradictory views. Former Bank economist David Ellerman’s research notes development agencies such as the Bank have traditionally served as library storehouses dispensing knowledge nuggets. Instead, he suggests the Bank should serve as a knowledge broker offering a variety of experiences and allowing recipients to decide which nuggets of knowledge fit. Ellerman believes that in the current information revolution the library storehouse model, the one on which WBI is based, will lose influence over time. So do I.
- Reestablish a transparent and uncensored broadcasting medium that provides access to all development practitioners and creates a platform of debate and discussion on development ideas, theories and practices. The previous initiative called B-SPAN was essentially de-funded by powerful opponents because it ran counter to the institution’s culture of hoarding information and releasing perfect information. B-SPAN used the Internet to broadcast uncensored (and therefore imperfect information) of Bank policy dialogues to global audiences.