Research, knowledge, and the art of ‘paradigm maintenance’: the World Bank's Development Economics Vice-Presidency (DEC)

ABSTRACT

Despite widespread analysis of the World Bank's lending operations by both supporters and critics, there has been little external or systematic analysis of the Bank's research department. This is remarkable, given that the Bank has become the hub of development research worldwide. This article begins to fill in that gap by exploring the political economy of the research conducted within the World Bank's Development Economics Vice-Presidency (DEC). Despite the Bank's public presentation of its research arm as conducting ‘rigorous and independent’ work, the Bank's research has historically become skewed toward reinforcing the dominant neoliberal policy agenda. The article includes a detailed examination of the mechanisms by which the Bank's research department is able to play a central role in what Robert Wade has elsewhere termed ‘paradigm maintenance’, including incentives in hiring, promotion, and publishing, as well as selective enforcement of rules, discouragement of dissonant data, and actual manipulation of data. The author's analysis is based on in-depth interviews with current and former World Bank professionals, as well as examination of internal and external World Bank documents. The article includes analysis of the Bank's treatment of the work of two of its researchers who write on economic globalization and development: David Dollar and Branko Milanovic.

Keywords:

• World Bank
• globalization
• neoliberalism
• development research
• Knowledge Bank.

ACKNOWLEDGMENTS

I thank three anonymous reviewers and the many individuals who were willing to be interviewed and/or comment on drafts of this article. For financial support, I am grateful to the School of International Service at American University. Needless to say, the usual disclaimers apply.

Notes

1 Let me quickly add that I include myself—and my Bank-related research and writing dating back to 1977—in this observation.

2 This term is taken—with gratitude—from Robert Wade's insightful 1996 article: ‘Japan, the World Bank, and the Art of Paradigm Maintenance: The East Asian Miracle in Political Perspective’.

3 See Fox (2003) for a discussion of processes versus mechanisms of accountability. See also Clark, Fox, and Treakle (2003).

4 My agreement with Bank employees interviewed is that I would give them the option of being cited by name or as anonymous. Given that most selected the latter, I have chosen to cite them all anonymously.

5 These interviews were the basis for Broad (1988) and Broad in Bello (1982).

6 It is worth commenting that I found a surprising willingness of current Bank staff to be interviewed without official approval. This willingness to talk to an outside researcher came even, I am told, as External Affairs Vice-President Goldin tightened the rules about talking to outsiders (Interview, 2004 July 13).

7 For the most part, these are descriptions of Bank research geared to arguing the importance of Bank research. Stern, co-authoring an article before he became Chief Economist, presents a surprisingly candid assessment of the Bank as an ‘intellectual actor’. Stern's co-author was Francisco Ferreira, co-head of the team working on the 2006 World Development Report.

8 Prebisch's seminal Economic Development of Latin America and Its Principal Problems

9 For more detailed history of Bank thinking on development prior to McNamara, see Mason and Asher (1973), Chapter 14.

10 The rise and the shift of paradigms—i.e. how prevailing paradigms are created, hardened, challenged, and transformed—is a topic for another article. See Blyth and Spruyt (2003); Helleiner (2003); and Ruggie (1982). For insights into external forces that affect the Bank with regard to paradigm creation and maintenance, see Ellerman (2005); George and Sabelli (1994); (Goldman 2005, especially Chapter 4); Wade (2002); Ngaire Woods (Chapter 5 in Gilbert and Vines, 2000); and Broad (2004). Foucault (1997) provides a crucial, broader discussion of the relationship between power and knowledge; see also Shaw (2004).

11 ‘Neoliberalism … is an ideology that resurrects the key principles of nineteenth-century classical economic liberalism; that is, a belief in free trade and limited role for the state in the domestic economy’ (Helleiner, 2003: 686). See also Ruggie (1982). For how the Bank got into structural adjustment lending, see Broad (1988) and Stern (1997).

12 In fact, by the time it was signed, it was the Bank's second SAL. But it was the first in terms of when the negotiations began.

13 The official IMF history uses this term to describe itself in the 1960s (quoted in Broad, 1988: 30). For the Bank, the term seems more applicable to the post-1982 period. See Kapur, Leuris, and Webb (1997); and Rich (1994).

14 ‘The vice presidential unit is the main organization unit of the World Bank Group … With few exceptions that report directly to the president, each of these units reports to a managing director’ (World Bank, 2003a: 23).

15 The categories themselves provide fodder for analysis which I will forego here due to space limitations.

16 Data is from: the ‘Development Economics’ line item in tables 3.6: ‘Program Cost Summary FY01–05’ of World Bank (2004), The World Bank's Programs and Budgets: Trends and Recommendations for FY05, 27 May: 32; the same line item from table 3.8: ‘Program Cost Summary FY00–04’, in World Bank (2003), World Bank Programs and Budgets for FY04: 37; the same line item from table 3.9 ‘Program Cost Summary FY00–03’: 35; and again from table 3.12 ‘Program Cost Summary—FY97–02’ in the Bank's 2001 report: 37. Note that the data before 2005 is actual while 2005 is listed as ‘planned’. (Detailed, disaggregated World Bank budgets were, interestingly enough, not easily available online and the ones I was given, by and large, seem to be treated as confidential or ‘official use only’ by the Bank.) Bank Budget (BB) ‘finances … research from its net income, earned at least in part from charges related to the size of loans’ (Squire, 2000: 129). In addition to Bank Budget money, some Trust Fund money goes to research (World Bank, 2003a: 44).

17 See Squire (126) for statistics from 2000 and Stern (590) for figures from the 1980s.

18 Note that Wade's analytical point is somewhat different as he focuses on supremacy of economists from the US versus even the UK.

19 The debate over social capital ‘discourse and practice’ is nicely captured in Babbington et al. who detail ‘“a battlefield of knowledge” whose form and outcomes are structured but not determined by the political economy of the Bank’ (2004: 33). In the end, however, the article leaves the impression that Fine (2001: 172) was correct in his analysis of how the social capital contest would play itself out at the Bank: ‘with co-optation rather than criticism the most likely result’. See also Harris (2002).

20 ‘Trust funds are financial arrangements between a Bank Group institution and a donor under which the donor entrusts the Bank Group with funds for a specific development-related activity’ (World Bank, 2003a: 44).

21 World Bank Policy Research Bulletin (Nov–Dec 1990), Vol. 1, No. 2, accessed at www.worldbank.org/html/dec/Publications/Bulletins./PRBvol

22 The unit's name was changed to ‘trade’ by 2003.

23 Details of the Beijing job are from the author's conversation with David Dollar, at an event sponsored by the Center for Economic Policy Research, at the Carnegie Endowment for International Peace, Washington, DC, 11 February 2004.

24 For more on this, see Wolfensohn (1996) and the work of Stone (2000, 2003); King (2002); (Ellerman 2002, 2005); Gilbert and Vines; Standing; and the Bretton Woods Project publications (including authors Wilks and Powell).

25 Stiglitz's former speechwriter, David Ellerman (2005: xvi), shares a fascinating front-row perspective on the Stiglitz years at the Bank and his departure: ‘… Wolfensohn wanted an economist of Stiglitz's stature at his side … Joe took on one shibboleth after another in speeches given around the world … The most barbed attacks were directed against the IMF and the US Treasury, where the chief antagonists were, respectively, Stanley Fischer and Larry Summers, both former chief economists of the Bank. None of this was what Wolfensohn bargained for. Instead of being at Wolfensohn's side in the perpetual “management meetings” in the Bank, Joe seemed to be always on the road. He had little real interest in the “inside game” in the Bank, and he clearly relished the bully pulpit side of the chief economist's job as well as talking directly to the leaders in the developing countries. But all this created considerable consternation in the Fund, in the Treasury, and even in the Bank itself’. The result was Stiglitz's resignation even before his term expired: ‘There were unconfirmed rumors that Stiglitz's nonrenewal “was the price demanded by the US Treasury for its support for an extra term for Mr. Wolfensohn as President of the World Bank”’ (Ellerman: xvii, quoting Chang 2001: 3; see Wade, 2002). For another view of Stiglitz and fascinating details of his interactions in South Africa, see Bond (2000, 2005).

26 Moreover, table 1 is not even accurately labeled in the report (Anderson, 2003a letter). This letter follows an exchange that Anderson had with report co-author Daniel Lederman (Anderson and Lederman exchange, 2003 18–19 December). See Bakvis (2003).

27 See the ‘External Affairs’ line item in table 3.6, ‘Program Cost Summary FY01–05 in World Bank, (2004) World Bank Programs and Budgets: Trends and Recommendations for FY05, May 27: 32. Note that the data before 2005 is actual while 2005 is listed as ‘planned’.

28 (Wade 2002: 214, 219) includes an account of External Affairs' attempt to shape coverage of the resignation of Ravi Kanbur.