The success of economic development programs hinges on public support, which requires connecting economic and political issues and engaging middle-income countries, World Bank President Robert Zoellick said in a lecture in Raether Hall on Wednesday. Speaking to a room overflowing primarily with Tuck School of Business students, Zoellick discussed several dimensions of economic policy-making and the importance of "modernizing multilateralism" in developing emerging markets.
The economic and political aspects of lending money from the World Bank are interconnected and hard to distinguish, Zoellick said. Since "engaging the public in economic development programs" is essential to survival and success, the solution must be approached through "connecting political-economy issues," he said.
The World Bank's primary role is to compile knowledge from the public's countries around the world to establish more effective methods for implementing their policies, to build financial support in the private sector and to maximize the effects of the investments and loans in building markets, according to Zoellick. Since the beginning of the financial crisis in July 2008, the World Bank has made loan commitments totaling $170 billion, he said.
The increasing connections between economies on an international level and the "striking" influence of emerging markets such as China and India on the global economy create the opportunity for these middle-income countries to support economic growth in developing nations, Zoellick said.
"You've benefited from this international system and now you have some responsibilities because you have a say in this system," Zoellick said, referring to how countries with emerging markets must become more "responsible stakeholders."
One of the World Bank's most important current economic development goals is to enact and oversee cooperative problem-solving among nations with different economic interests, Zoellick said. This process incorporates countries in the "middle" of the developmental scale that can draw from their own information systems when assisting developing countries. The process also helps these markets avoid the "middle-income trap," which occurs when countries that rise from low to middle income later cannot elevate themselves to high-income status, he said.
In developing countries, the connection between rapidly increasing food and fuel prices has grown due to the introduction of energy sources to agricultural production and fertilizing, Zoellick said. While financial institutions usually approach this problem in terms of reducing the "volatility" of the market, he said.
Zoellick emphasized that when there are people who spend 50 to 60 percent of their income on food, policymakers and government officials must focus on policies that are geared toward "those who need it most," Zoellick said.
Some countries primarily in the Middle East and in North Africa seem to have "missed globalization," Zoellick said. To demonstrate the severity of the situation in such nations, Zoellick explained that economic statistics for South Korea in 1960 are equal, if not superior, to current Egyptian statistics. Action by European countries attempting to generate economic activity such as direct investment to start a large solar project across North Africa will hopefully encourage long-term progress, Zoellick said.
The event, "Global Economic Perspectives: A Conversation with Robert Zoellick," was part of the International Arena Speaker Series hosted by the Center for International Business at Tuck.
