Wednesday, November 10, 2010

Zoellick admits World Bank doesn't have a clue

OK, the World Bank president didn't exactly say that. But at a recent presentation at Georgetown University, he did exhibit a welcome - a truly welcome - dose of humility.

Let's start with this stunning quote, which we will be adding to our quotations page.
"Too often research economists seem not to start with the key knowledge gaps facing development practitioners, but rather search for questions they can answer with the industry’s currently favorite tools."
Here, in a nutshell, is one of the biggest reasons why tax havens have been all but ignored in the development debate. Here is the knowledge gap to end them all. Now how about this peach:
"The Nobel Prize for Economic Sciences has been bestowed on many worthy honorees. But it has also been given to those whose love of mathematical models was based on heroic and unrealistic assumptions about humankind."
Now take a look at some other things Zoellick said:
The record of development has shown that one size won’t fit all
Very true: this has been most powerfully pushed by Dani Rodrik, who also gets a hat tip for today's blog. Also, from Zoellick:
  • We have also been criticized for the way research has sometimes been used to proselytize on behalf of Bank policy, without always taking a balanced view of the evidence or without expressing appropriate skepticism.
  • We need more and better data on public finance, especially at subnational levels, which is critical for better governance.

  • Over the last 10 years, as the belief has grown that there is no simple recipe for development, there has been a shift towards more empirically-based development research. This is welcome -- and very positive. Thirty years ago, Deng Xiaoping, another practioner of development economics, recommended "emancipating the mind so as to seek truth from facts."

  • We need to democratize and demystify development economics, recognizing that we do not have a monopoly on the answers.

  • This is no longer about the Washington Consensus. One cannot have a consensus about political economy from one city applying to all. This is about experience regarding what is working -- in New Delhi, in Sao Paolo, in Beijing, in Cairo, and Accra. Out of experience may come consensus. But only if it is firmly grounded -- and broadly owned.

  • Above all, we must look beyond an “elite retail" model of research.
And there is plenty more in there, along these lines.

So on this reading, there is now everything to play for. The field has changed.

And, as regards knowledge gaps, there is one big gap in Zoellick's long speech. He only mentioned the word tax once, and only as an aside, and he didn't mention tax havens at all.

The World Bank is ready to be influenced. The time is ripe for these two huge inter-related knowledge gaps are there, ready for a full-throated re-evaluation.

He might start off by reading this.


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