At the end of this month, James Wolfensohn’s ten-year tenure as President of the World Bank comes to an end. Though much remains to be accomplished and consolidated, his achievements as leader of the international development community are noteworthy and provide a strong foundation upon which to build.
Perhaps Wolfensohn’s most important contribution was to clarify the Bank’s mission – to promote growth and eradicate poverty in the developing world – while recognizing the massive scale of that task and the inadequacy of previous approaches.
At one time, it was thought that since developing countries had less capital than more developed countries, merely supplying more capital would solve their problems. Indeed, this view provided part of the rationale for the World Bank: if a shortage of funds was the problem, clearly a Bank would have to be a key part of the solution.
In the 1980’s, there was a switch from projects to policies – structural adjustments, involving trade liberalization, privatization, and macroeconomic stabilization (typically focusing on prices rather than employment or output.) But these policies proved neither necessary nor sufficient for growth; the countries of East Asia, which followed different policies, achieved faster growth and were far more successful in poverty reduction.