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Let’s Be Pragmatic: My Final Post as World Bank Chief Economist

Justin Yifu Lin's picture

When launching ‘Let’s Talk Development,’ we thought we would create a platform for encouraging open debate and exchanging serious ideas about economic development and poverty reduction.  Looking back at almost two years of open exchanges and vigorous discussion on all sorts of issues, I think we have far surpassed our initial expectations.  ‘Let’s Talk Development’ now has a wide and loyal readership and is among the most popular of the World Bank’s blogs.

This is my last week as Chief Economist at the World Bank, and I thank the readers of ‘Let’s Talk Development’ for helping make it an exciting platform for discussing development issues.  I also thank the many scholars, practitioners, Bank colleagues and development experts who have contributed.

I take this final post in my current capacity to pitch an idea I have pushed throughout my years at the World Bank: being pragmatic.

Tackling poverty remains a big challenge, with billions still trapped in poverty.  But my interactions in the past four years with farmers, workers, business people, civil society and government officials leave me convinced that a world free of poverty is achievable.

We know that the goal of development is to help countries get out of the low-income trap and  for middle-income countries to proceed further to high-income status.

To achieve this goal, we often started in the past by using high-income countries as a reference point, and then observing what developing countries did not have or could not do well.  We told our clients that through our help and their effort, they could improve their lot and achieve high-income status.

The intentions were great, but to this day, the results all too often remain unsatisfactory.

Through numerous debates, studies and interactions, I have pushed for a change in our mindset as development practitioners.  Instead of looking at what our development clients do not have and cannot do well,  we should look at what our developing country clients have now, can do well, and can scale up. 

A dynamic economic process is the integration and accumulation of many small successes, and such successes can be had only when countries do well with what they have now.  To use economic jargon, countries need to exploit their comparative advantage by using their endowments.

One of the most powerful ideas in economics is that no matter how bad a situation a country is in now, it always has a comparative advantage in some sectors or industries.

I propose to my World Bank colleagues and ‘Let’s Talk Development’ readers, following on what President Robert Zoellick has said before, that we need to be pragmatic. Theories and models taught in universities generally assume a ‘first-best world,’ but in the real world - especially in developing countries - there are distortions, bumps, and barriers that leave many countries far removed from the first-best situation.

From economic theory, we know that when countries are facing a second-best or nth-best situation, trying to bring in some first-best changes will not necessarily help reach the first-best result.  To the contrary, the result may often not be welfare improving at all.

So it is important for us to be pragmatic, to understand the opportunities at hand, and make small,  but welfare-improving, changes. Small changes can lead to large changes in the future.

I know that my colleagues at the World Bank are all professionals, and they come to the Bank not only for a job or career, but for a commitment to development.   I know they have the determination to meet the challenges in the years to come.

For my part, I will return to Peking University in China, but I leave citing the motto of the Marine Corps:  “Once a Marine, always a Marine,” and similarly, once a member of the World Bank, always a member of the World Bank. 

The dream of ‘a world free of poverty’ will always be my dream, no matter where I am - Washington, DC or China.

For you, the readers of ‘Let’s Talk Development,’ I hope you continue to engage in discussions and debate about development so we can realize this dream.

Thank you.