Who matters at the World Bank?
Dr Kim Moloney (@Global_Academic) of Hamad Bin Khalifa University shares a preview of her new book Who Matters at the World Bank: Bureaucrats, Policy Change, and Public Sector Governance, which tells the story of civil servant influence and the rise of public sector reform at the World Bank (read a sample chapter here).
The World Bank is an international (governmental) organization with 189 member-states, founded in late 1945. Australia joined in 1947. Throughout its nearly eighty-year history, World Bank loan and grants have assisted many of its member-states, including Australia, in their development progress. Few will recall this in Australia, but between 1950 and 1962, Australia received seven loans from the World Bank, the last of which was for the Snowy Mountains Hydroelectric Authority. Consistent with a 1950s and 1960s understanding of “how to develop”, the World Bank’s Australia-focused projects concentrated upon the hydroelectric, transport, and agricultural sectors.
Since the early 1960s, nearly all the World Bank’s efforts target the member-states without high incomes. In the decades since Australia’s last borrowing arrangement, the Bank’s sectors of focus have evolved. While hydroelectric, transport, and agriculture remain as components of its portfolio, today’s World Bank is also involved in gender, education, environment, health, and public sector governance, among others.
Rise of public sector reform
While public sector management projects were just 2.3% of Bank projects in 1980, by 2012 this sector encompassed more than three-quarters of Bank projects. My new book, Who Matters at the World Bank: Bureaucrats, Policy Change, and Public Sector Governance, tells the story of how public sector reform became a key focus of the World Bank. Set to be published by Oxford University Press in July 2022 (United Kingdom) and September 2022 (rest of world), it explains policy change within this sector of Bank work from 1980 to 2012, with a short postscript update to 2020.
Photo by Markus Krisetya on Unsplash
This dramatic growth – from a sector barely on the World Bank map to a sector which dominates Bank lending – raises important questions, including how and why this sector rose to prominence, and “who mattered” within the World Bank (and externally) to encourage sector prominence. As with any “who matters” question, I also ask the opposite: who did not matter, who worked against sector expansion, and why.
To understand 32 years of sector policy change, I depart from the typical outcome-focused analyses of international organizations like the World Bank. Outcome-focused analysis asks whether a project was successful or how a member-state was impacted. Instead, my book is focused on the policy outputs. This is an important distinction, because if we want to understand or alter outcomes, we must understand how policy outputs are created.
To understand policy outputs, we must dig into the bureaucratic politics at the World Bank and the interaction of such insider politics with external stakeholders. By using the discipline of public administration, its understanding of bureaucratic politics, economic history, and measuring the exchange of influence between internal and external actors, we can begin to understand how policy outputs are created, “who matters” (and who does not), how influence is articulated, and the policy implications for member-states of the World Bank.
Civil servants matter
Typical analysis of the World Bank suggests a simple answer to the “who matters” question. That is, if we look at which member-states have the most budgetary and/or voting power, we can find our answer. Or, if we can define the organization’s culture, then we might also find an answer. But I argue that both approaches tend to underestimate the policy power of the Bank’s international civil servants. This is problematic. Civil servants are not automatons. They are thinking and feeling human beings. At the Bank, they are often highly educated and they can be rather passionate about its development objectives. Sector policy influence involves more than member-state numerical power or a hard-to-define “culture”.
The answer to “who matters” varied across the 32 years under analysis. I contend that the United States (and to a lesser extent, the United Kingdom) dominated what became public sector management projects between 1980 and August 1991. In contrast, from August 1991 through to late 2020, it was the international civil servant employees of the World Bank who led major sector policy changes. Throughout the timeline, Bank staff moved from being reactive implementers of powerful member-state wishes, to being savvy actors who used their expertise, power, and influence to alter what our global community understands as public sector management and public sector governance today.
This includes a Bank-led expansion of which sector topics mattered. In the 1980s, the Bank’s sector work expanded from a simple neoclassical economics (aka “neoliberal” or “cut the state, let the market run”) understanding of public sector management (e.g., interest rate and exchange rate liberalization) to an addition of privatization in the mid-1980s, and by the late 1980s, first-generation civil service reform along with public expenditure management and public financial management. The 1990s added “good governance” with anti-corruption, participatory objectives, service delivery, rule of law, and pension reform. After 2000, there were fewer topic additions but instead, a growing debate between “supply side” public sector management and “demand side” public sector governance. The former had “won” this debate in the early 2000s but by the end of the decade, the latter was dominant.
Incentives matter
One case that illustrates how incentives matter in the World Bank concerns a psychologically disastrous 1987 internal reform. Pressured by the United States, the United Kingdom, and Japan to reform its internal structure, nearly all staff lost their jobs, and if they wished to stay, had to reapply. The desired outcome was to cut the Bank’s budget but instead, the outcomes were a loss in morale as well as long-term expertise. But there was another outcome which arguably, at the time, had not been predicted.
Prior to the 1987 reform, Edward V.K. “Kim” Jaycox had served as the Bank’s Vice President for East Asia. During his time as Vice President, he had tried and failed to create a Public Sector Management Unit for the region. Such a first-of-its-kind regional Unit would have focused less on the then-prevailing neoliberal trends and instead, focused on several less-harsh reforms: institutional development, civil service reform, and expenditure management reform.
Soon, however, Jaycox was appointed as the lead manager of this Bank-wide 1987 reform. In that role, he ensured that one internal reform output was to allow the Bank’s regional vice presidencies to create a Public Sector Management Unit. This unit-creation success was fortuitously timed. Within the year, economists within the Bank would start learning that many of their prior neoliberal reforms were not always successful. As such, the Bank needed to look at public sector reform with new eyes. The new Units gave organizational space for such reconsiderations. The Units also led to new budget lines, new hires, and a broadening expansion of what good public sector reform might entail. This expansion influenced the next few decades of public sector management and public sector governance projects for World Bank member-states.
If you’re interested to read more, I have shared a sample chapter of Who Matters at the World Bank: Bureaucrats, Policy Change, and Public Sector Governance (Oxford University Press) on ResearchGate.
Posted by @DrSophieYates