In Search of Solutions

December 10, 2012

Hu Shuli and Li Zengxin (Caixin) Caixin

New World Bank president Jim Yong Kim says he wants to see the institution focus on results, and is keen to increase cooperation with China

(Beijing) -- Unlike his eleven predecessors, new World Bank president Jim Yong Kim has little experience as a high-level official in either government or financial institutions.

However, as a doctor and anthropologist, his 20 years of dedication to international development and poverty alleviation qualified him to head the institution.

In late November, Kim paid his first visit to China since taking office in March. One of the key issues during his visit was to launch a joint research project with the government to study urbanization and provide solutions for reducing poverty.

The research on China's urbanization process will be the next major report released by the World Bank, following its China 2030 Report in February, which outlined strategic directions for China's development and offered advice for future reforms.

The cooperation between China and the World Bank has seen many changes during the past three decades. China has evolved from a major aid recipient to a donor, while the bank has switched its offers from technology transfer to reform ideas, management methods and new technologies. Now, the World Bank is sharing China's experiences with other developing countries.

During his visit to Beijing, Kim gave an exclusive interview to Caixin. He spoke about the bank's relationship with China and his expectations for its future involvement in global development. The following is an excerpt from that interview.

Caixin: How would you describe the cooperation between the World Bank and China in the past thirty years?

Jim Yong Kim: I think the cooperation between the World Bank and China has really been a model for how a multilateral institution can work with a particular country. It's been more than 30 years now, and I think both the depth of the collaboration has gotten better and better every year, and also the results have been just stunning. We were just talking about the record in water treatment and transportation, and it's been over US$ 9 billion that we've done over the years. The outcomes are really very impressive. I was just in Sichuan looking at the roads and health clinics, and the results have really been very impressive.

You met Vice Premier Li Keqiang and talked about urbanization. What's your expectation for the new government in this area?

The meeting with the vice premier was very inspiring. He, of course, knew the China 2030 report very well and he challenged us to take the next step and write the next flagship report, which in this case will be focused on urbanization. The vice premier was very clear with us. He expects us to get working right away on this next report, and this next report will not only provide a vision for China, but we hope that by collecting and analyzing the Chinese experience, we'll also be able to provide a strategic document that will be helpful to countries all over the world. The relationship is deepening ever further, the vice premier is asking us to do something very bold and aspirational.

Can you talk a little about the China 2030 report? It is very inspiring but also caused some controversy.

If you look at the six major points, these are very important points and the most impressive part of it was that this was a full collaboration between the World Bank and the Development Research Center of the State Council. I think that China was willing to look at itself in a very critical way and say we've made a lot of progress, but there's further to go, there's more to do in the area of reform. This document was very explicit about the commitment to a green economy future. I think that there was a very strong commitment to inclusion and opening up opportunities for more of the Chinese people. And so I think, overall, the collaboration was really important, but it wasn't just another document that we might call window dressing. It was hard hitting, it was very honest and it was self-critical in a way that I think is extremely encouraging.

The report mentioned six strategic directions facing China. What, in your view, are the major challenges?

Every single country is facing some of these issues. Further structural reforms, these are not just issues for China or even just the developing world. As we know, the question of structural reform is very much alive in Europe, for example, very much alive in the United States. The challenge of actually delivering on truly aspirational goals is an issue for every single country in the world. My own sense is that China was explicit in writing them down and looking at itself in terms of what more it needs to do, and also looking at its great accomplishments.

The new Country Partnership Strategy points out three areas of engagement between the World Bank and China, which are green growth, inclusive development and a beneficial relationship with the world. Why are these three issues priorities?

They are all priorities, but let me talk about one of them. One of the topics that we talked about was China's relationship with the rest of the world, and we're now looking at ways where we can investigate together. We're trying to find the exact mechanism to do it, but we would like to work with China, for example, collaboratively on development projects in Africa. It's one of the topics we discussed and China's making major investments in Africa. We have a tremendous amount of experience in Africa. We have had success working there, and we think the combination of Chinese expertise and resources and World Bank expertise and resources could be much more than the sum of its parts if we brought them together for the sake of development in Africa. So that's one of the areas that we're working on.

You know, the situation for climate change and the environment is difficult and we know that 70 percent of China's electrical output comes from coal. But what I, and this is an issue about the emission of carbon dioxide, I have to say that hearing the aspirations of the Chinese people to get to 15 percent of all the energy produced by renewable resources, there is a very clear commitment to reducing the carbon footprint of China. The goals are really quite aspirational and if China is successful in reaching its targets, I think it will have enormous impact on sustainability in the future.

How will the World Bank share China's experience reducing poverty and some other aspects of its development with other parts of the world?

Well we already do. There are already projects focused on irrigation in Africa that draw from experiences that we've had in China. I think that there are many, many experiences in China that are relevant to the rest of the world. This is what we mean by a solutions bank. This is what we mean by moving towards a science of delivery.

What we want to do with the Chinese people and the Chinese government and Chinese citizens is to really capture the successes and also the failures that China has experienced. Catalogue those successes and failures, curate them, analyze them, try to understand them, look for fundamental principles that emerge from China's experience and then share that with the rest of the world.

Now again, what was very encouraging to me was the Chinese authorities consistently told me that it's not just us sharing our experience with others. We want to understand the experience of other countries as well. One of the great things about being here is I know that if we bring the experiences of other countries to China, China will do something with them. They'll think about them, they'll either try them or reject them. We know that they'll do something with them, and as a hub for the development of what we're calling the science of delivery there's so many resources here and the commitment of Chinese academics and Chinese government to work with us on building this science was very impressive.

You have mentioned changing the World Bank from a knowledge bank to a solutions bank. How will this be achieved? And what role can China play?

What I meant in moving from a knowledge bank to a solutions bank is that there's a misunderstanding, and one of the misunderstandings is all you have to do is produce data or do a study and produce knowledge, and if you send the reports to the country then they'll know what to do with them. What we know is that the production of data, the production of information is just the beginning. The critical piece is helping countries understand the implications of particular data sets or studies, and then making that kind of knowledge work in that particular country's context.

The good news is that the World Bank is filled with people who have been doing that for most of their professional life. People who have not just created knowledge or done research, but taken the knowledge that exists and help countries produce results on the ground.

In China, what I've found is there are also many, many people who have been focused on execution, implementation, delivery and who have accumulated a lot of important experience in making things work on the ground. That's how we want to work together. It's not just the production of knowledge – it's producing knowledge and making sure that that knowledge works in a particular context and produces the kind of results that we want for citizens.

China has adopted various policies to support industrial development. Does this model also fit other developing countries?

Historically, we've seen countries evolve from having very strong industrial policies to focusing more on market-oriented growth. The country that I know best is South Korea. There are different interpretations of the history of South Korean economic growth, but I think the one that is most dominant is that Korea did have an industrial policy, but really for a relatively short period of its economic growth, and it turned to a more market-oriented approach really quite early. The other thing that we understand is that while they had an industrial policy, it really encouraged internal competition, so the big business groups had to fight with each other and the fact that there was this intense internal competition inside Korea actually prepared them for competing with the outside world.

Every story is complicated, and I don't think anyone in development economics is looking simplistically and saying: "Industrial policy is important. No market mechanisms are important."

Every country goes forward with its own mix of those two approaches. Our view of course is that market competition, and market competition early, is a good thing. Industries get better, and competitiveness gets better. And if you look back at some of the success stories, and Korea is the one I know best, they focused on creating internal competition very early, and that helped their industries become competitive globally.

You have a very unique background compared with previous bank heads, who usually had government, financial or legal backgrounds. How will you bring your special experience to the World Bank?

Let me talk about two aspects of my background. First, I'm the first development specialist to lead the World Bank. I'm the first president to have spent his life working on development coming into the most important development institution in the world. The fact that I've been in the field, the fact that I've had experience trying to turn knowledge into results, I think that's helped me a lot. And it's also helped me to understand our professionals, and maybe even more importantly, it's helped our staff to understand me. They know where I'm coming from.

I've been working in global health all of my life, all of my adult life, and my first trip to China was as the director of the AIDS department at the World Health Organization. So that's been part of my work, but throughout my professional career, my organizations have never just worked on health. We've worked on health, education, social protection programs, even housing, so I've been a development practitioner in addition to being a global health practitioner. Health is a small part of the World Bank portfolio, but that's not the important piece of it. I have worked in development and that's the biggest part of the portfolio.

And the anthropological piece of it is also very important. There are 188 member countries, and so understanding the particular social, political and economic context of each of these countries is critical, and that's what we do in anthropology.

But the other part that I think is important is that I've been trained in science. I'm the first World Bank president trained in science and some of the biggest problems today – climate change, health care, even approaches to scientific education for example – require some understanding of science, and so I hope that helps me in tackling really complicated issues like, for example, climate change.

What direction do you think the World Bank should head?

What I'm hearing, both from clients and inside the bank, is we need to reduce the number of bureaucratic procedures that we need to go through just to operate. So we need to streamline our procedures.

We need to focus less on project approval at the board and more on getting results on the ground. Those are some of the reforms we're going to make. But also, I think we have to modify the incentives inside the World Bank so the employees who are rewarded the most, the employees who are appreciated the most, are the best at taking the knowledge that we create at the bank and that's created outside of the bank and making it work for countries to produce results on the ground. That's what we want to do. We want to be known as the institution you go to if you want help in achieving your highest aspirations for economic growth and for the well-being of your people.