Reforming the World Bank Group

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Jessica Einhorn, the former World Bank Managing Director, comments on the future of the World Bank Group. She concentrates on our relationship with middle-income countries arguing that the International Bank for Reconstruction and Development (IBRD) part of us should be transitioned to a close within 25 years and replaced with something else that better addresses middle-income country conditions:

Once there is an orderly path toward winding down the IBRD, much becomes possible in terms of establishing a new institution for the benefit of middle-income countries. A new set of articles of agreement would be required to govern its use of resources. The new institution would be free to join its operations with the IFC and the Multilateral Investment Guarantee Agency to promote private-sector involvement in novel ways. No sovereign guarantee would be required, and lending, investment, or guarantees could occur at the local, regional, or even global level -- to support initiatives for the global commons, for example.

The World Bank is a great institution with major contributions to make in alleviating poverty in middle-income countries, in creating and disseminating knowledge about development, in supporting the evolution of a fair and open trading system, in backstopping private capital flows to emerging markets under conditions that minimize moral hazard, and in promoting international initiatives in the global commons. But the world has changed dramatically since the bank's founding over 60 years ago; the bank must change, too, if it is to flourish for another 60 years.

A discussion that is sure to continue. See this 2001 WB report, paper and recent Brookings paper for more on WBG lending to middle-income countries. Nouriel Roubini also sounds in, specifically reacting to World Bank lending to China - with more coverage via Bloomberg.

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