In 2005, the World Bank spent $600 million dollars on "Analytical and Advisory Activities" expenditures. That adds up to a fair number of economists kept busy crunching numbers and pumping out policy recommendations. And, given that the mandate of the World Bank, theoretically, is the alleviation of world poverty, it raises a natural question: is this the best use of that money?
Devesh Kapur, director of the Center for the Advanced Study of India at the University of Pennsylvania, asks this and a number of other provocative questions in an elegant essay, "The Knowledge Bank," that is part of a collection of critiques contained in the recently published volume "Rescuing the World Bank." (Thanks to the New Economist for the tip.) Ultimately, he concludes "that the World Bank should give greater emphasis to financing rather than producing research, in particular, financing developing country research institutions."
The problem, as Kapur sees it, is that the World Bank's consolidation of elite researchers, mostly drawn from the developed world, does not necessarily serve the interests of the developing countries for which they are prescribing fix-it plans. For one thing, "The background of Bank researchers creates strong incentives to give pride of place to propositional knowledge -- the search for 'universal' laws of development from the frontiers of academia -- and using that to generate prescriptive knowledge."
Kapur is fair, and offers several reasons why this might not necessarily be a bad thing. But then he delivers a critique that deserves to be heard in full.
"However, there are reasons for unease as well. Intellectual networks can be double-edged. While they reduce selection costs and serve as reputational mechanisms, they can also be prone to a form of 'crony intellectualism.' This inherent tendency to inbreeding has negative consequences for intellectual advancement. Researchers, like other societal groups, also have interests. And research involvement with the World Bank has substantial payoffs, from research funding to access to data and visibility. Moreover, the very nature of academia means that academic researchers (in the social sciences) are not accountable for the consequence in the sense that their work responds to professional incentives, not to its development payoffs. These professional incentives place a large positive premium in academic papers on the novelty of ideas, methodological innovation, generalizability and parsimonious explanations. Detailed country and sector knowledge, an acknowledgement that the ideas may be sensible but not especially novel, that uncertainty and complexity rather than parsimony are perhaps the ground reality, are all poor country-cousins of research that purports to find universal truths."
One of the clearest fault-lines in economic debates over development and globalization is between those who believe they know one answer that fits all questions, and those who believe every question deserves a different answer -- that what works for Singapore may not work for Somalia, that the circumstances of Bangladesh require a different approach than the conditions of Brazil. It's a fault-line that transcends ideological differences between right and left, free trader and protectionist. On one side, a willingness to accept complexity and uncertainty also concdeds that one may not know what the answer to a given question is; on the other, the rightness of the answer is taken as a given, and it's the implementation that must be at fault; it's never "I don't know" and always "how did you screw it up?"
Kapur is arguing that the world might be better off if the World Bank focused on funding institutions of higher education and policy analysis in developing countries, rather than pouring millions of dollars into its own production of knowledge. The implementation of such a shift would be complex and its prospects uncertain. No one knows whether it work. All the more reason to try it!