How the World Bank shed its spots
EHSAN MASOOD talks to LAURITZ HOLM-NIELSEN and MICHAEL CRAWFORD about recent changes in thinking at the bank about science and development
The World Bank has come to Budapest determined to spread the message that it is a changed institution from the organization that compelled developing countries to cut down spending on research and education under the structural adjustment policies of the 1980s.
The bank listens more and is keener than ever to invest in projects that help people acquire knowledge - particularly research and higher education. And it is committed to transparency; the bank now promises full public access to all of its project assessments from the past two years.
These, at least, are some of the messages that Lauritz Holm-Nielsen and Michael Crawford, two of the bank's senior officials present here in Budapest, would like delegates to take home. Holm-Nielsen acknowledges that the bank's economists in the past "were much more negative towards higher education [in particular] and science." But he adds that "the pendulum has swung back".
The concept of knowledge-based development, says Holm-Nielsen, has penetrated all sectors of the bank. And he adds that openness is a key part of being a knowledge organization. "We want to share knowledge, not just with our clients, but with everyone."
Holm-Nielsen says that much of this change to the bank's approach to development has been demand-led, for example with countries in Latin America pushing the bank to invest in centres of research excellence. Another reason, he says, is the belated realization among the bank's economists of the importance of education and research to economic growth.
Crawford adds that the bank's own experiences in development assistance are another reason for the emphasis on knowledge for development. The bank, he says, has found over the years that people "with more formal training" tend to benefit more from bank-funded projects in agriculture and healthcare.
Meanwhile, the mushrooming of private sector capital to the richer developing countries has helped the bank to sharpen its focus on the very poor, and particularly in projects poverty alleviation.
Developing countries, however may have good reasons to be sceptical about the bank's change of approach. After all, the bank, in common with other lending agencies, compelled them to reduce spending on research and education as part of cuts to public expenditure - required as conditions to loans. Can the bank be trusted to get it right this time? And is there any reason to suggest that this new policy will not change?
Holm-Nielsen stresses that "the bank is less ideological than it used to be". But he emphasizes that the World Bank is, nonetheless, primarily a lending institution, and not an aid agency.
But both Holm-Nielsen and Crawford - almost in unison - stress that they have excellent working relationships with all the countries they deal with. "I have not felt any distrust in any country," says Holm-Nielsen. "That's not to say it doesn't exist. But I've not experienced any."
Holm-Nielsen acknowledges that one desired reform of the bank's operations is unlikely to materialize - a reduction in the scale of fees charged by the bank's consultants. A recent survey of countries in receipt of funding for biodiversity projects from the $2 billion Global Environment Facility discovered that the bank's consultancy fees were often more than half of project costs.
"This is a problem," Holm-Nielsen concedes. Crawford adds that the bank needs to pay the going rate for the best people for a particular task.
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