Congress Talks MDBs

It was a beautiful, barely-fall Friday in Washington, which made it all the more impressive that twelve members dropped in on a morning House Financial Services Subcommittee hearing on the multilateral development banks (MDBs). Perhaps it was the pull of a stellar panel of expert witnesses that included CGD senior fellow Scott Morris, along with CGD non-resident fellows Dean Karlan and Martin Ravallion, and Patrick Chovanec. In any case, the dialogue struck a surprisingly positive tone, as members inquired about how the role of the MDBs has evolved over time and the ways in which these institutions might improve and meet current challenges.

Dean Karlan focused his remarks on the role of the MDBs in producing and sharing knowledge that could translate into better policy, while Martin Ravallion emphasized the need for research to help guide the World Bank’s decision-making, and highlighted the Bank’s provision of global public goods. Patrick Chovanec discussed China’s potential motivations behind the creation of the Asian Infrastructure Investment Bank. And Scott Morris argued for stronger US leadership in the MDBs and called attention to Congress’ all-too-frequent practice of attaching MDB-related policy riders to appropriations bills without open deliberation or debate.

Members’ questions ran the gamut. Here’s a bit of what I gleaned from the exchanges.

The MDBs can play an important, complementary role to the private sector by sharing knowledge, providing public goods, investing in infrastructure in places where needs aren’t being met, and supporting small and medium enterprises. (But most could do a bit more to facilitate these kinds of investments.)

China likely has a range of motivations for establishing the Asian Infrastructure Investment Bank.

Rather than worry about the influence of the AIIB, the United States would be well served by stepping up its leadership in the MDBs (like the World Bank and Asian Development Bank) where it is among the largest shareholders. (For more on how the United States can rise to the challenge, read Scott’s proposal in The White House and The World.)

While attribution is challenging, the MDBs have had an important role in the progress the world has made in reducing poverty. They could do more by sharing the knowledge of what works and what doesn’t in development programs garnered from evaluations and research.

My colleague Beth Schwanke noted in advance of the hearing that we hoped renewed congressional interest would initiate a broader conversation about US leadership in the MDBs. This hearing was certainly a good start.

Sorry you missed it? Watch the full hearing here or check out one of Scott’s key arguments in the clip below.