As prepared for delivery
The Governance Imperative
Address by Jim Yong Kim, World Bank Group President
Manila, Tuesday, July 15, 2014
Mr. President, distinguished members of the Cabinet and other officials, partners from the development community, members of civil society, members of the business community, friends, ladies and gentlemen.
I am very happy to be back in Manila – it’s been almost 30 years since my last visit when I was working on my PhD dissertation that was focused on access to pharmaceuticals. The city and the country have changed so much over that time – especially during President Aquino’s four-plus years in office. Thirty years ago, it seemed as if I was the only Korean in town. Today, as you say in Tagalog:
“ang daming nagbago!
Ang dami nang koreano!” (So much has changed, there are so many Koreans now!”)
Today, I’m here to talk about a critical issue facing the Philippines and governments around the world: the imperative of effective governance for ending poverty. President Aquino, this is an issue that you have placed at the heart of your political agenda. It’s a theme that inspires the practitioners, scholars, business leaders and citizens gathered here today. And it’s a crucial topic for the organization I lead, the World Bank Group.
Your government’s powerful platform -- “Kung Walang Kurap, Walang Mahirap” or “No Corruption, No Poverty” – affirms the inextricable link between poor governance and persistent poverty. While this seems obvious today, this link has not always been clearly acknowledged in development work. It was less than 20 years ago that then-World Bank President James Wolfensohn helped ignite a global movement for transparency in governance when he spoke out against the “cancer of corruption” that cheats poor people of their fair share in the benefits of economic growth
Since President Wolfensohn’s wake-up call, many countries have made progress in strengthening governance and curbing corruption. The Philippines has achieved notable gains, to which many of you in this hall have contributed.
But you also know that good governance is not easy. No country is immune from governance abuses, no matter how great that nation’s wealth or deep its democratic traditions. Recent scandals in the United States, Italy, France and other high-income democracies have brought us stern reminders of this fact.
That’s why it’s so important that we set clear goals for governance, collect evidence as we experiment and implement reforms, and share experiences with one another. We have to refine and improve our work continually, as economies, technology and public expectations evolve. And this is why I’m so glad to be with you this morning: because this conference is a space for exactly that kind of exchange.
My remarks will focus on three themes: first, I’ll make the case that good governance is critical for development and ending poverty; second, I’ll present some practices that represent the cutting edge of governance reform today; and third, I’ll tell you how the World Bank is changing so that we can help our clients be even more effective in building good governance.
Why Governance Matters
Like the Philippines, the World Bank Group explicitly recognizes that governance is critical for fighting poverty.
Good governance means delivering public services effectively and efficiently. It means protecting citizens from violence and ensuring the rule of law. It means choosing wise policies and investments; maintaining public assets; and ensuring that civil servants are skilled, motivated and have the tools to work effectively. It means directly confronting corruption, so that citizens have faith in their leaders and systems. Today, good governance also requires fostering a transparent regulatory environment that will allow the private sector to create good jobs.
In sum, good governance makes it possible for us to execute and deliver around our most cherished social goals: those that define how we want to live together, as nations and as a global community.
President Aquino, your 2010 Philippine Development Plan set forth two such goals: to attain inclusive growth, which you defined as the reduction of poverty; and to create jobs. In 2013 the World Bank Group also set two goals: to end extreme poverty worldwide by 2030; and to boost shared prosperity for the poorest 40 percent of the population in developing nations.
The convergence between the Philippines’ goals and those set out by the World Bank’s Board of Governors is striking, and no accident. Countries like the Philippines and institutions like the World Bank are allies in the great struggle of our generation: a global fight to end poverty and build inclusive prosperity while safeguarding the Earth for those who will come after us. At its heart, this is a fight for wiser, more capable governance.
It is now well established within the academic literature on institutions and growth that there is a strong and positive correlation between the principles of good governance and a country’s GDP per capita. As you, President Aquino, have so eloquently noted, “good governance is good economics.” The precise causal relationships are less well understood, but some recent studies have begun to confirm what many of us have long suspected—that effective institutions (or their absence) have an important impact on economic growth. There is plenty of evidence that corruption can deter private investment. And studies at the sectoral level have documented the perverse effect that corruption and weak administration can exert on education and health outcomes, or on the quality and selection of infrastructure projects. Some recent studies from the United States underscore that high levels of corruption are associated with increased inequality, as well.
We still have much to learn about the role of institutions in fostering development and reducing poverty. Knowledge about which reforms are most likely to succeed under specific circumstances remains fragmented, and the underlying conceptual and methodological challenges are significant. The World Bank Group is committed to supporting rigorous empirical efforts to address these critical questions.
We also believe the post-2015 Development Agenda should encourage countries to tackle governance challenges head-on, measure results, and share their data to build a stronger global knowledge base from which all will benefit.
The Cutting Edge of Governance Reform
Let’s take a moment now to look more closely at what’s happening in some countries on the cutting edge of governance reform.
Broadly, a transformational age of governance progress is dawning for countries with the courage to act. Around the world, the spread of information technology is converging with grassroots movements for transparency, accountability and citizen empowerment.
Under your leadership, President Aquino, the Philippines is in the forefront of this transformation. You’ve doubled government budgets for social services and made performance-informed budgeting the norm. Citizens increasingly see your conditional cash transfer program, Pantawid Pamilya, as an instrument to realize their rights to education or health care.
Your administration has also streamlined business regulations, bringing down the cost of doing business and reducing opportunities for corruption. Your Open Data initiative has reinforced accountability at all levels of government. For instance, the Philippines is now using electronic procurement technology to encourage citizens to be observers in all stages of the bidding process and, just recently, started the use of geo-tagging. Similar .tools are now being used to monitor assistance for people affected by Typhoon Yolanda. Your commitment to transparency is a beacon for the nations of East Asia, and beyond.
Other countries are also moving forward with innovative reforms. Here are a few examples:
In Colombia and other Latin American states, Rapid Assessment & Action Plans, or RAAPs, are being used to improve public services at the sub-national level. The RAAP methodology diagnoses bureaucratic bottlenecks and provides public sector managers with a short and medium-term action plan for unblocking constraints to effective service delivery.
In Pakistan, government departments in Punjab are using smart phones to collect real-time data, including photos and geo-tags, on the activities of government field staff, helping to reduce absenteeism and lax performance.
These examples highlight characteristics we see emerging in many successful governance initiatives around the world. I’ll point out four such traits:
First, the mobilization of teams that consist of experts in multiple disciplines to tackle complex problems;
Second, the opening of space for citizen participation in administrative decision-making and the delivery of public services;
Third, the harnessing of information technology—sometimes including inexpensive consumer devices—in innovative ways;
And finally, the fostering of practitioner-led networks supported by global institutions.
For the moment, these ideas are in their infancy and have not yet been brought to scale. But I hope they may help guide your discussions in the course of this conference.
Bank Restructuring and the Governance Agenda
At the World Bank Group, we have been privileged to contribute to several of the country initiatives I’ve just described. And today, we’re reconfiguring our governance practice to serve countries better.
Historically, the Bank’s governance work began in the early 1990s by focusing on core state functions such as public finance and civil service management. With the rise of the anticorruption movement in the mid-1990s, we expanded to support new accountability institutions, the rule of law, and legal and judicial reform. We began working on “demand side” governance issues, deepening our engagement with civil society. This evolution continues today, spurred by events like the Arab Spring that again have shown what happens when people’s demands for accountability and participation go unheard. We also have stepped up our efforts to address corruption in programs we support, by encouraging corruption reporting in our projects, investigating and sanctioning entities that resort to fraud and corruption, and working with sanctioned firms to improve their integrity compliance standards.
In the near future, important drivers for change are likely to be the use of mobile technologies for monitoring service delivery; cloud computing and the use of “big data”; improved domestic revenue mobilization; and greater transparency around extractive industries.
To align ourselves with the demands of our clients and rapidly evolving technological breakthroughs, the Bank’s approach has evolved. The days of static “Best Practice” recipes are long gone. Increasingly, we are tapping into our multidisciplinary expertise, and our capacity to nurture collaborative partnerships within and across regions. We support a growing number of peer-to-peer learning networks, such as the Public Expenditure Management Network for Asia and the Global Initiative for Fiscal Transparency. We continue to generate robust empirical data, and we are working to capture lessons from the experience of our frontline implementers, so that previously undocumented, tacit knowledge can be widely shared.
These approaches have helped many of our clients make impressive gains in governance. But we can do more. Over the past six months, the Bank’s internal structural reform has created the conditions for a qualitative leap in our capacity to support countries’ governance progress.
Previously, our knowledge was not moving fast enough or reaching the right people at the right time. For example, our staff in East Asia didn’t talk enough to their counterparts in South Asia.
Our new organizational structure in 14 global practices is breaking down old geographical and disciplinary silos. The result will be greater fluidity in knowledge-sharing and collaboration. Our governance global practice exemplifies the model. It will be the largest of the new global practices, with around 800 staff. It will pull together experts from backgrounds including public sector reform, financial management, legal reform, social accountability, information management, tax and revenue mobilization, and regulatory policy, among many others. Its structure will allow us to rapidly mobilize the Bank’s global expertise across disciplines.
To put it simply, President Aquino, the Bank’s governance global practice is here to learn from your achievements and help you accomplish even more. We will work with you to identify and implement practical solutions to your toughest governance challenges. And we will support the measurement and global dissemination of your results, to speed progress in other countries.
The Jose Edgardo Campos Award
Before concluding, I would like to turn my remarks briefly to the Filipino community within the World Bank family. We are privileged to employ nearly 400 Filipinos and Filipinas, who constitute the sixth largest nationality represented at the World Bank Group. Recently, all of us lost a dear friend, colleague and lifelong crusader for the cause of good governance. Jose Edgardo Campos—or Ed as he was known by his many friends—was a pillar in the governance and public sector community within the Bank. He held a number of high profile positions, most recently as Manager for the World Bank Institute’s Leadership program. Always striving to make a difference, Ed took several years away from his Bank career to return and work for the Government of the Philippines, where he played an instrumental role in helping to secure passage of the 2003 Government Procurement Reform Act. In his memory, I am pleased to announce that the new governance global practice will create the Jose Edgardo Campos Award, which will honor Bank staff who follow in Ed’s footsteps by returning to their countries of origin to advance the cause of governance reform.
In closing, I want to come back to the theme of partnership, and to a related idea that may seem more old-fashioned: that of service.
The partnership between the Philippines and the World Bank Group is strong. It is founded on common goals and values: above all, on our commitment to a model of shared prosperity powered by ordinary people’s capacity for entrepreneurship, creativity and resilience.
I saw the impact of these qualities yesterday, when I visited the Leyte region. Eight months ago, the region bore the assault of Typhoon Yolanda. Today, there is still much to be done in the reconstruction efforts, but I believe recovery is gaining the upper hand on the storm’s destruction.
The physical scars remain visible, and nothing can replace the storm’s cost in human lives. But when I met people in Leyte, I encountered not bitterness, but resilience, a spirit of solidarity, and a determination to look forward rather than back.
Their attitude reinforced my conviction that when ordinary people unite, we can overcome any obstacle. The only limits to our achievement are the limits of our solidarity: the limits of our willingness to invest ourselves without reserve in action toward a common goal.
Let’s honor the Leyte survivors by emulating their courage in our own work.
Let’s build a world where people’s vulnerability to disasters is no longer determined primarily by their income level.
Let’s build institutions that respond to the slow emergency of poverty with the same intensity as the sudden shock of a typhoon.
Let’s redefine the limits of the possible, together.
In the beginning of this speech, I spoke of the many Koreans who now are here in the Philippines. Well, this Korean believes in you and believes in this country’s very promising future.
Mula sa isang ka-puso
at isang ka-pamilya.
(From my heart to yours, we are family)
Maraming salamat po! (Thank you very much)