The World Bank as a Cash-Transfer Algorithm
Following its underwhelming response to the COVID-19 pandemic and the damaging “Doing Business” scandal, the World Bank should focus on getting money to poor countries. Here, the Bank can distinguish itself by providing governments with both concessional loans and untied aid.
PROVIDENCE, RHODE ISLAND – Since its founding, the World Bank has evolved to perform three main functions: provide global public goods, generate valuable data and independent analysis, and transfer mostly concessional resources to poorer countries. Having recently undermined its credibility with regard to the first two objectives, the Bank should now focus on the third.
Start with global public goods. The COVID-19 pandemic presented the World Bank with an ideal opportunity to burnish its credentials. But the Bank’s performance – standing on the sidelines as the COVID-19 Vaccine Global Access (COVAX) facility unraveled and failing to release money it had pledged for vaccine procurement – fell short on both health and economic grounds. For now, at least, we must therefore temper our expectations of the Bank’s willingness to provide global public goods, particularly in the face of more difficult challenges such as climate change.
Now consider data and analysis. Over the years, the data collected and compiled by the Bank – including the World Development Indicators, estimates of global poverty and purchasing power parity, and various surveys – have been some of its major contributions. But revelations that the Bank’s senior management had manipulated data in multiple editions of the flagship Doing Business report (in order to improve the rankings of China and Saudi Arabia in particular) risk undermining confidence among policymakers and researchers.