Economy: No surprise as World Bank picks US candidate as new president

Updated On: Apr 17, 2012

Despite challenges from two developing-world candidates, the World Bank has selected US candidate Dr. Jim Yong Kim as its new president. Since its creation in 1944, the World Bank has by custom been lead by an American. But unlike previous heads of the World Bank, Dr. Kim is not a politician, banker or diplomat. He is a health expert that has worked to help the poor in developing countries.

Dr. Kim's chief rival for the post was Nigerian Finance Minister Ngozi Okonjo-Iweala. The third candidate, Colombia's José Antonio Ocampo, withdrew last Friday and threw his support behind Okonjo-Iweala's candidacy.

This was the first time in the World Bank's history that the United States' hold on the job was challenged. The decision to choose Dr. Kim by the World Bank's 25-member board was not unanimous. Washington's allies in Western Europe, Japan and Canada supported Dr. Kim, but emerging economies split their support. Brazil and South Africa backed Dr. Okonjo-Iweala. Some sources say China and India supported Dr. Kim.

"The World Bank's selection of the US nominee should not come as a surprise, said Dr. Chia Siow Yue, Senior Research Fellow at the Singapore Institute of International Affairs and and former Director and CEO of the Institute of Southeast Asian Studies (ISEAS).

"The US Congress will not continue its major funding of the World Bank otherwise."

"Obama is trying to appease Asians by nominating an American citizen with an Asian face," Dr. Chiaadded, noting that developing countries are increasingly beginning to form their own arrangements rather than relying on the Western-dominated World Bank.

Dr. Kim, 52, who is currently president of Dartmouth College, will assume his new post on July 1 after incumbent Robert Zoellick steps down as head of the World Bank.

"I will seek a new alignment of the World Bank Group with a rapidly changing world," Dr. Kim said in a statement.

He said he would work to ensure that the World Bank "delivers more powerful results to support sustained growth; prioritizes evidence-based solutions over ideology; amplifies the voices of developing countries; and draws on the expertise and experience of the people we serve."

Dr. Okonjo-Iweala congratulated Dr. Kim and said the competition had led to "important victories" for developing nations, which have increasingly pushed for more say at both institutions. But she said more effort was still needed to end the "unfair tradition" that ensured Washington's dominance of the global development lender.

Report: World Bank picks health expert Kim as president [Reuters, 16 April 2012]

Analysis: American Jim Yong Kim is chosen to lead World Bank [Bloomberg Businessweek (AP), 16 April 2012]

"This leadership change comes at an interesting time for the bank," noted Mr. Ho Seng Chee, Council Member at the SIIA and Group Chief at Corporate Services Mapletree Investments Pte Ltd.

"Over the next three to five years, economic growth is expected to be strong among emerging and developing countries, the traditional beneficiaries of bank programmes. This growth, coupled with the increasing availability of financing from private capital markets and bilateral donors like China, will continue to reduce the bank’s role in development financing."

"Consequently, commentators and World Bank observers have long argued that the bank needs to revise its mission and focus more on acting as an advisor to governments on how to achieve balanced and sustained growth. In other words, the World Bank needs to become less of a bank, and more of a consultant."

"Such a shift will represent a fundamental change in the bank’s operating model.  The first question that arises is:  If the bank does not lend, from where will it get income to run its operations? With the US, Europe and other industrialised countries still in economic recovery mode, these economies – the established donors to bank programmes – are unlikely to provide more resources to the bank."

"To stay relevant, Dr. Kim will have to engage emerging and developing countries to support the bank. Above all, the new bank president will need to quickly  demonstrate that the institution can indeed bring value to these economies," Mr. Ho concluded.

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