In his effort to make the World Bank more effective in creating global projects, president Jim Yong Kim is taking a page from Thomas Piketty.
Piketty, the French economist famous for focusing the debate over income inequality, also speaks of the power of education and technological innovation to right inequities.
- ANALYSIS: Unlike Marx, Thomas Piketty wants to save capitalism: Don Pittis
- Thomas Piketty and the economics of inequality
The World Bank has set a goal of reducing extreme poverty in the world to three per cent of the global population. Kim, a Harvard-trained doctor and former president of Dartmouth College who took over leadership of the bank two years ago, has revamped projects at the organization to focus more sharply on that goal.
“If Thomas Piketty is right in saying that the most important force in convergence, in bringing the world to less inequality, is diffusion of knowledge and improvement of skills, that’s what we do,” Kim said in an interview with CBC’s The Lang & O’Leary Exchange that airs Friday.
Long criticized for interventionist policies that end up making poor countries poorer, the World Bank needed to “reshift and rethink” to be more effective in its global development efforts, Kim said.
Need for rapid growth
“The goal that we set is three per cent. That’s going to require that we grow in the next 15 years faster than we grew before the financial crisis in developing countries. So it’s actually a very difficult goal,” he said.
Kim has taken to heart Piketty’s message that the world needs to be more inclusive to grow economically.
'I take from Piketty’s book a sense of even greater mission for us because we now can be part of those forces that bring the world to convergence' - Jim Yong Kim
“What he’s saying and it’s certainly in my conversations. What he’s saying is that we have choices now to make and for us, given the way his book has taken off, we want to make clear we are part of the process in leading the world to that convergence,” he said.
That means bringing the top innovations from any where in the world to poor countries so they can jump ahead in economic growth. Kim says his revamp was intended to light a fire under the bank's 1,000 plus economists to stay on top of best practices around the world.
“I think there are real world solutions here – we’re now looking at our portfolio and asking ourselves the question – is there a way to build a road that includes local contractors to improve convergence? Is there a way to make sure that the roads go to the places that will help farmers bring their crops to market without having 50-60 per cent loss as we do now,” he says.
Private sector role
While aid is still necessary, there is greater focus on the role of the private sector in developing countries now at the World Bank, Kim said. And he believes goals in the education and health care sector can dovetail with the need for economic growth.
“We know from a study from Larry Summers that improving health outcomes was responsible for 24 per cent of economic growth in developing countries from 2000 to 2011,” Kim said.
“By converging on education we can give everyone an opportunity to prepare themselves to participate in the global economy of today,” he added.
Kim points to the rapid growth of communications technology that allows the poorest people in the world to be connected, relating the story of going to Uttar Pradesh, a poor state of India, and seeing otherwise impoverished people watching Korean soap operas on their smartphones.
When the poor see how others live, they make demands.
“People are going to make their voices heard more and more so political leaders, no matter what their own views are, are going to have to think about this question of inequality,” Kim said.
“I take from Piketty’s book a sense of even greater mission for us because we now can be part of those forces that bring the world to convergence,” he said.