New World Bank Chief Faces Struggle to Stay Relevant

Some countries now turning to China for aid instead

President Obama’s nominee for the top slot of the World Bank was named to that post on Monday, but the challenges Jim Yong Kim faces will not just be those of running the institution but of keeping it relevant.

Bloomberg reported Tuesday that Kim’s accession to the World Bank presidency maintains the U.S. hold on the position. However, it will also present the Korean-born former Dartmouth president with the question of how to deal with China and other emerging-market countries at a time when impatience with the institution’s rules can cause them to look elsewhere.

Other countries, such as China, are becoming lenders in their own right to nations that once relied on the World Bank. Not only that, but their contribution to the global economy is rising even as that of developed nations falls. Brazil, Russia, India and China—the BRIC countries—will see their share of the world economy increase to 23% by 2016, up from 19% in 2011, according to a report by Grant Thornton International Ltd. During that time, G7 countries will see their own contribution fall  to 44% from 48%.

“It’s no longer a question of the bank doing things for those countries,” said Nancy Birdsall, president of the Washington-based Center for Global Development and a former director of policy research at the World Bank.

In the report she said, “It’s a question of how those countries will engage with the bank, not only as possible borrowers but as participants for strengthening the capital base of the bank, as participants in pushing for policy changes.” She also pointed to the plans of Brazil, Russia, India, China and South Africa to create their own development bank as an indication of BRICS countries’ impatience with the World Bank’s way of doing business.

Whitney Debevoise, a former U.S. executive director at the World Bank, said that the BRICs and the G7 can have different priorities in areas such as environmental issues. In the report, he said, “There’s a different perspective, for example, on coal-power projects.”

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