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Zen and the art of poverty reduction

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The World Bank may need a period of quiet reflection, but this was ridiculous.

In mid-September, 300 bankers joined Thich Nhat Hanh, an 87-year-old Vietnamese monk and founder of the Order of Interbeing, for a day of "mindful meditation" with Jim Kim, the bank’s president, who is an admirer of Hanh.

"It was all very Zen," one staff member told The Washington Post.

Afterward Hanh and 20 brown-robed brethren led a "walking meditation" through Washington — though, since the traffic police did not show up, the quiet contemplation was marred by the not-so-Zen honking of angry drivers.

Hanh says that he believes in "the power of aimlessness" and thinks that civilization is threatened by "voracious" economic growth. Kim, one hopes, does not. He is trying to give the bank a sharper focus. In the unlovely words of a new strategy, endorsed by the bank’s governors on Oct. 12, the group’s ‘’value proposition’’ is to end extreme poverty by 2030 and to foster income growth among the poorest 40 percent in every country, not merely in poor ones. The aim is to shake up the world’s leading development body.

The World Bank has 12,000 projects in 172 countries. However, voracious economic growth in the past 25 years has meant that the bank’s lending has fallen to less than 1 per cent of the combined economic output of the borrowers. As more nations graduate to middle-income status and win access to capital markets for big development projects, fewer of them need the money and expertise the bank has to offer.

Having a target of eradicating poverty aims to finesse this. Extreme poverty is a global problem and would justify a global institution devoted to ending it. One billion people live on less than $1.25 a day, the bank’s definition of penury, and most of them are in what the bank calls middle-income countries such as Brazil and India. The bottom 40 percent includes a further 1.5 billion people. Carving out a role in poverty eradication would make the bank relevant to middle-income countries, even though their governments might not need its money anymore and might think that the bank has little to offer their growing middle classes.

How much difference the new strategy will make from day to day, though, is open to question. The bank already is supposed to be helping the poorest. The new goal marks only a shift in emphasis and, on the face of it, will not stop it from doing most of what it is doing now. The aim of eradicating extreme poverty by 2030 is not overly ambitious: Recent data suggest that the income of the bottom 40 per cent has been growing as fast as, or faster than, the national average in most developing countries for the past 25 years.

So does the new approach matter? The rhetorical change probably does not, but the reorganization which accompanies it might. For years the World Bank has been organized along geographic lines, with units for southern Asia, Africa and so on. The regions control the budgets, hire the staff and dominate the bank. They also are responsible for its reputation for being divided into silos: Experts from different regions rarely talk to each other.

In an attempt to break this pattern, the bank is setting up 14 "global practices," with focuses such as finance and infrastructure, which will cut across the regions.

The bank long has been accused of doing too much. It runs a tiger-conservation project, for instance. To provide clearer priorities, the plan proposes a new method for deciding what countries need. The idea is to diagnose the worst constraints on poverty reduction and focus mainly on those. When the bank ran a pilot ‘’country diagnostic’’ for India, it found that it needed to concentrate more of its efforts in the six poorest states.

The bank has a history of grandiose reorganizations, however. One comes along every decade. They rarely achieve much. There are several reasons why this shake-up might be no different.

Diagnosing constraints sounds like an excellent idea, but it turns out that, no sooner have you identified one supposedly crucial obstacle, than another appears behind it. The model might not always give the clear guidance that it did for India.

Neither is it certain whether the "global practices" are intended to be more important than the regional units, or whether the two are supposed to be evenly balanced and, if so, how. Setting up global practices also risks turning the bank into a glorified McKinsey in which experts jet in to advise on a big project and then jet out – a tendency for which development agencies already are rightly criticized.

Then there are doubts about Kim himself. He has had a wobbly start since being foisted on the bank by the American government last year. After winning over many at first, he found himself under attack this summer when senior people began leaving in a huff, or were fired, as the reorganization took shape. The grumbling has died down, but confidence among employees looks shaky.

And what if the plan succeeds? Then the institution would face a different problem. If it is all about reducing poverty and if extreme poverty is eradicated by 2030, what role would be left to the World Bank then?

No doubt it will think of something.


— The Economist

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