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Here’s the place to suggest and organize events and get-togethers based on shared professional interests in development topics. The 1818 Society is happy to facilitate networking and events – please let us know your suggestions.
If the World Bank is to Reform, Then What Reforms?
Previously, I offered thoughts on drivers of reform for the Bank. External pressure has compelled the Bank to review what reforms it should implement. In the last few years, many development think tanks and NGOs have focused their attention on: Open and transparent selection of future Bank presidents; increasing the voting weight of developing countries on the Bank’s operating boards; realigning the representation, composition and responsibilities of its Board of Directors; and, increasing access to Board proceedings and materials and Bank project documents. All have merit. They will make the Bank’s decision making more representative of its membership.
In recent years, a number of academics have analyzed how the Bank reacts to reform efforts. Research on the implementation of the Strategic Compact of 1997 (a series of reforms launched by former president James Wolfensohn) was conducted. The academics came to a universal conclusion: The bureaucracy of the Bank internalized the new reforms to converge with its existing norms. Translation: The Bank adapted the reforms to fit into its existing status quo. This is important research. Indeed, the Bank’s history has been to use commissions, panels and reports to mute or escape criticism of its internal governance. When compelled to change, reforms enacted mirror existing practices or contain loopholes that allow internal players to bypass full accountability.
As noted above, these types of reforms are important steps in changing the way the Bank does business. They seek to restructure the high-level relationship between the Bank and its stakeholders and shareholders. I also believe they are not enough. Perhaps because of my own experiences within the organization, I think a different series of reforms designed to alter the institution’s cultural norms are in order. Changing how people internalize incentives will change how they behave and ultimately how the Bank performs. To address internal structural inefficiencies that impede the institution’s ability to implement its poverty reduction mission, Bank stakeholders and shareholders should consider the following:
1.Accountability mechanisms within the Bank are flawed because there is an inherent conflict of interest when the Bank is both judge and jury. Therefore, establish an evaluation unit of its lending activities that is completely independent and unconnected with the Bank. Evaluations should also place more emphasis on the project sustainability phase as opposed to the project approval phase. This will dilute the “approval culture” of the institution and increase managerial accountability.
2.Moreover, reform the Bank’s Conflict Resolution System so that decisions are in the hands of independent arbitrators. These decisions would be binding and arbitrators would have the latitude to impose sufficient monetary penalties for successful plaintiffs. Currently, the Bank’s management has jurisdiction over CRS decisions which undermines the confidence staff have with its objectivity. Making CRS independent of the Bank’s management would weaken the institution’s culture of fiefdoms, increase managerial accountability and give staff tangible protections from managerial abuses.
3.Revise the managerial selection process to emphasize leadership and entrepreneurial skills rather than relying primarily on academic or technocratic excellence. The Bank recruits and promotes technocrats and academics with few proven managerial skills. Internal and external Bank surveys have found its managerial cadre well educated but overly technical, excessively arrogant and highly bureaucratic. The institution needs a more holistic approach to finding managers or promoting staff to managerial positions that places greater emphasis on leadership and entrepreneurial skills. This would revitalize the institution’s personnel that more than two decades of staff surveys indicates is mired in fear and complacency.
4.Create a seat on the Board for a civil society representative. This would increase civil society’s inclusion and participation in the Bank’s lending activities and development policies, reduce and de-politicize NGO criticisms of the Bank and increase civil society accountability for Bank decisions.
5.Reconfigure the World Bank Institute (WRI), the pedagogical arm of the institution, so it moves away from its current model that imposes institutional viewpoints of development theory and practice upon borrowing country officials and toward a model of open-learning that not only tolerates but fosters contradictory views. Former Bank economist David Ellerman’s research notes development agencies such as the Bank have traditionally served as library storehouses dispensing knowledge nuggets. Instead, he suggests the Bank should serve as a knowledge broker offering a variety of experiences and allowing recipients to decide which nuggets of knowledge fit. Ellerman believes that in the current information revolution the library storehouse model, the one on which WBI is based, will lose influence over time. So do I.
6.Reestablish a transparent and uncensored broadcasting medium that provides access to all development practitioners and creates a platform of debate and discussion on development ideas, theories and practices. The previous initiative called B-SPAN was essentially de-funded by powerful opponents because it ran counter to the institution’s culture of hoarding information and releasing perfect information. B-SPAN used the Internet to broadcast uncensored (and therefore imperfect information) of Bank policy dialogues to global audiences.
By: David Shaman on June 7, 2011
at 12:46 pm
Dear 1818 Society Members:
Over the last few months, I have been publishing a blog about my experiences working at the World Bank as well as perspectives on how to increase the institution’s transparency, accountability and effectiveness. The blog has been noticed by many in the development community including members of the society. Recently, one member suggested I offer some thoughts via the Members Connection page. I am pleased to do so and am interested in hearing your thoughts at any point.
David Shaman
author, The World Bank Unveiled: Inside the Revolutionary Struggle for Transparency
The Structural Inefficiencies of the World Bank (Part 2)
In previous blog posts, I have examined key structural defects in the World Bank’s bureaucracy that reduce effectiveness and ultimately create hurdles for its poverty reduction activities. In this vein, I continue with several more observations that suggest effectiveness is undermined.
1.Maintaining the status quo compels Bank managers to be risk-averse. This tendency exists in tandem with another characteristic known in the institution as its “approval culture.” Managerial success is measured by the volume of outputs: The amount of projects approved and lending dispersed. Personnel who are successful in getting projects accepted by the board climb through the hierarchy. Banks like to make money. So, lending projects that are approved are ones considered safe or of less risk, but significant evidence suggests it does not translate into insightful lending or successful projects.
2.The Bank is not a normal business. It seeks to make a profit, but success is not measured by profits. Managers may be considered successful if their projects receive board approval, administer units and tasks within annual budget allocations and appear loyal to superiors. In such an environment of strict funding allocations, short-term considerations often take precedence over long-term and strategic interests. Moreover, there is little reward for the texture of their administration – for their leadership qualities or how they administer their staffs. Successful technical service and subservience lead to promotions. Managers are rarely held accountable for poor leadership or abuses of staff. Since there is little accountability for managerial abuses of Bank personnel, staff productivity has declined and staff cynicism has grown.
3.Former Bank economist David Ellerman has researched the concept of the institution’s adherence to “Official Views.” “Power,” he wrote, “corrupts the ecology of knowledge—the conditions under which knowledge grows and flourishes. Those in power in an organization tend to enshrine their views as the Official Views … Experimentation, debate and the exercise of critical reasons are curtailed to stay within the safe boundaries of Official Wisdom. To those in power, others who argue within the organization against Official Views only reveal their unreliability and lack of fitness for positions of authority. Those who argue against Official Views outside the organization – particularly with any public notice—are seen as traitors being disloyal to the organization itself.” Ellerman questioned whether the Bank as a knowledge institution should even have Official Views when the issues, causes and questions surrounding development and poverty reduction are vast, complex and changing.
4.Some structural inefficiency is unavoidable and inevitable. The multi-cultural Bank has a plethora of personalities, each with different perceptions of what is important and how the institution should act. Senior management, economists, financiers, engineers, environmental auditors, transport specialists, urban planners, external affairs, unit managers, administrative staff and country-based staff all have their own opinions. Personnel come from almost every country in the world. Even some from the same country have grown up in sub-cultures that are entirely different. Individuals can view the same issue and draw diametrically different conclusions. The result is an institution that often acts in conflicting ways and thereby creates institutional hypocrisy on a daily basis.
By: David Shaman on April 20, 2011
at 4:06 pm
Dear 1818 Society Members:
Over the last few months, I have been publishing a blog about my experiences working at the World Bank as well as perspectives on how to increase the institution’s transparency, accountability and effectiveness. The blog has been noticed by many in the development community including members of the society. Recently, one member suggested I offer some thoughts via the Members Connection page. I am pleased to do so and am interested in hearing your thoughts at any point.
David Shaman
author, The World Bank Unveiled: Inside the Revolutionary Struggle for Transparency
The World Bank and Transparency: A Perspective
As the author of a new book, The World Bank Unveiled: Inside the Revolutionary Struggle for Transparency, I recount my dozen years inside the institution. I examine a number of aspects of the organization that range from its culture and bureaucracy to its day-to-day activities. Among the key questions the book analyzes is the meaning of transparency inside the Bank. In fact, my experiences suggest it means different things to different internal stakeholders and that these sensibilities are often conflicting and reflect a vast array of backgrounds. For example, in recent years the Bank merged a knowledge sharing mantra into a culture that horded information and it implemented greater disclosure measures that were often viewed by external observers as rhetorical flourishes.
When he left the Bank in 2005, former President James Wolfensohn said transparency reduces corruption, reduced corruption leads to better governance and better governance increases development. Transparency, he believes, is the key. But history suggests the Bank’s management believes transparency is something that should apply to its clients and other external stakeholders. Its enthusiasm regarding the internal application of transparency seems less than robust. Consider the following:
•It has a long history of reluctance toward releasing documents external observers believe are central to helping foster development.
•When its staff has gone public with views that counter the Bank’s traditional orthodoxy, they have been dismissed. Nobel Prize winning economist Joseph Stiglitz and William Easterly are two prominent examples.
•In 1997, as part of its Strategic Compact reorganization, the Bank began to recast itself as a “knowledge bank.” It has not been a success because the cultural instincts of the institution favor information hoarding rather than knowledge sharing. The World Bank Institute, the branch of the institution charged with implementing knowledge sharing, is a pedagogical unit that promotes fostered learning. Former Bank economist David Ellerman’s insightful paper, Helping People Help Themselves: Toward a Theory of Autonomy-Compatible Help documents how fostered learning creates client dependency which diametrically counters knowledge sharing.
The World Bank Unveiled offers numerous other examples. But much more importantly are the perspectives of others who have worked inside or outside the Bank. This blog post wants to encourage others to share their own experiences and stories …
http://theworldbankunveiled.wordpress.com/
By: David Shaman on October 13, 2010
at 2:56 pm