Is the World Bank’s New Chief Economist a Heretic?

December 4, 2008

     By Duncan Green     

It’s not every day that you meet a man who swam across the Taiwan Strait to defect to China. Legend (or at least the World Bank’s press department) has it that Justin Lin was in his 20s when he did so in 1979 – he must have been a fit young man as it’s about 180km (115 miles) wide!

Justin was passing through London at the end of his first month in the job, and spent an hour charming and exciting a bunch of NGOs and academics. He’s not only the first person in his position to come from a developing country, but probably the most eminent economist since Joseph Stiglitz held the post in the late 1990s (and spent a large part of it bashing the IMF).

This first conversation was a breath of fresh air – gone were the rigid (but flawed) certainties of the Washington Consensus and its reliance on the arcania of CGE models and cross country regressions. Justin talked about bringing a ‘new perspective’ to the Bank based on his 20 years in China, both in academia and policy, where he saw the Chinese reforms and economic lift-off from up close.

He wants to shake up the Bank’s way of working, saying ‘I will encourage my colleagues to look into real world situations and team up with colleagues in developing countries, so that we can build up both our policy recommendations and build capacity there.’ He took this as one of the main messages from the highly critical 2006 Deaton report on World Bank research.

Justin talked about the importance of investing in small scale agriculture, but got more heretical when he started talking about his initial field trip to Rwanda and Ethiopia: ‘governments in Ethiopia and Rwanda are fascinated by export promotion, they want to be like East Asia in the 1980s, but first they should be East Asia in the 1950s – there are lots of opportunities for import substitution to build up local industry’.

If he succeeds in introducing these kinds of views, the Bank’s research could become a lot less doctrinaire and a lot more useful to developing countries. But that’s a big if. In the past, the Bank has often proved resistant to such changes – when Ravi Kanbur another eminent developing country economist, tried to introduce non-orthodox messages into the Bank’s flagship World Development Report, he ended up resigning as editor and writing a great paper about what he had learned about the deep divisions over globalization. Justin is likely to make fewer waves in public than Joe Stiglitz (the sign of a an expert swimmer?), but let’s wish him success in changing the Bank.