Will the World Bank Still Be Center Stage When It Turns 75?

What does it mean when a majority of the World Bank’s shareholders (measured by voting shares) decides to put capital in a new multilateral development bank (MDB) and not the World Bank itself? The flood of countries joining the Asian Infrastructure Investment Bank (AIIB) is unavoidably a soul-searching moment for the Washington-based institution long known simply as “the bank” in the development community. As the World Bank governors meet this weekend for the annual spring meetings, these questions are sure to be undercurrents—or the outright focus—in many panels and conversations.

It might seem odd to think that a new regional institution could trigger an existential crisis for the one global MDB that has been at the center of the international development universe. But the move of such a large number of the World Bank’s very own shareholders to capitalize a new MDB should cause some fundamental thinking about the bank’s role going forward.

Madeleine Gleave and I have attempted to stimulate just that kind of discussion in our new CGD policy paper, “The World Bank at 75.” We focus on the declining salience of the World Bank’s core “loans to countries” model, which has been with the institution since its founding at Bretton Woods over 70 years ago and continues to characterize most of the bank’s financing activities. Yet by the institution’s own standards, lending to sovereigns could very quickly meet with a collapse in demand as a large number of countries are poised to “graduate” from IDA and IBRD assistance.

But how can we reconcile this picture with all of the stated ambition of the post-2015 agenda, where the World Bank aims to play a central financing role, not to mention the clear endorsement of more MDB financing implicit in the AIIB’s founding?

There is much about the World Bank-created model that remains compelling, but just as much about the World Bank itself that needs to change — from the need for a clear mandate to support R&D investments, to a more realistic approach to country engagement, one that recognizes that development needs are not captured in simplistic country income categories.

We don’t pretend to have all of the answers for the World Bank. But we do hope to provoke the bank’s shareholders into thinking more fundamentally about the way the institution operates — starting with this weekend’s meetings. With the attention of so many of those shareholders now captured elsewhere, it’s going to take more than business as usual to keep “the bank” at center stage.