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Cameron Pollack / Sun Photography Editor

September 26, 2017

World Bank Official Returns to Cornell to Examine Implications of Report

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World Bank Leader Luís-Felipe López-Calva has served Latin America and the Caribbean, Europe and Central Asia. On Monday, he once again stepped foot in Ithaca

López-Calva, who got both his master’s and his Ph.D. in economics from Cornell, was the co-director of the The World Development Report 2017. On Monday, he returned to the Cornell campus to host a roundtable discussion and a keynote address about the implications of The World Bank’s yearly report.

The World Development Report 2017: Governance and the Law discusses the importance of effective governance in achieving economic growth, as well as reductions in violence and inequality in societies.

The World Bank is a global lending institution aimed at financing development, especially in developing countries. Its main goals include reducing poverty, increasing access to education and improving quality of life for people around the world.

López-Calva talked about the motivation behind researching governance and law in a roundtable discussion facilitated by Heike Michelsen, associate director for academic programming at the Mario Einaudi Center for International Studies.

“The reason why we looked into the issue of governance and law is because of the main question we have at the bank: how to be more effective in terms of policies,” López-Calva said.

López-Calva discussed the history of previous investigations of governance, and made a clear distinction between “good” governance and effective governance.

The good governance movement was based on the idea that struggling countries should adopt certain types of laws and institutions from other countries that were successful. Effective governance aims at making governance more impactful by empowering local actors to make targeted changes in institutions which would lead to better outcomes.

“Every society cares about eliminating violence, promoting growth and making the growth more inclusive,” López-Calva said. “How you address those questions is a result of effective governance as opposed to good governance.”

López-Calva discussed the organization’s approach to analyzing governance.

“We have to understand institutions and laws, including policies, as the result of agreements among different actors in society,” he said.

López-Calva argued that legitimacy ultimately drives stability in society.

“Sustaining agreements over time and the willingness of people to actually respect the rules are driven by legitimacy,” he said.

Quoting the Nobel Prize winning economist Amartya Sen, López-Calva talked about the role democracy plays in society.

“Amartya Sen told us ‘You should not be judging democracy for how it delivers growth because the objective of democracy is not to deliver growth; the objective of democracy is to make people be part of the policy process.’ The important thing is that democracy builds legitimacy within society,” López-Calva said.

López-Calva discussed global inequality and the role of technology.

“Inequality has always been a race between technology and skills,” he said. “If you look throughout history, while technological innovations initially produce inequality, people end up developing new skills, which reduce inequality.”

López-Calva cited proper education as a tool which should be used by societies to mitigate inequality.

“The most important skill is being able to learn,” he said.

Later that day in Klarman Hall, López-Calva gave a keynote address which focused on the findings from the WDR 2017. The findings concentrated on strategies which could improve economic and social development of countries.

Given that many countries appear to have plateaued at a certain stage of development, his team looked at historical examples and tried to identify factors which contributed to positive change.

López-Calva introduced the problem known as the “middle income trap,” which occurs in many Latin American countries.

“If a country wants to transition from one type of growth model to a different type of growth model … this requires that the country adapt certain rules so that the new model is successful,” he said. “If there is no adaptation of these rules, the country gets trapped in that transition.”

López-Calva discussed the common characteristics of countries which have avoided this problem in their stages of development.

“The countries which have successfully adapted tend to have stronger constraints on the executive branch, less censorship of media and more entry of civil society rules,” he said.

López-Calva talked about a variety of coalitions which have been historically successful in implementing positive change.

“We have many historical examples where change was brought about because elites actually agreed on a change in rules,” he said.

He also cited Spain’s transition to from Franco-era dictatorship to democracy as a result of this type of cooperation. Speaking about the role of the international community in implementing change in a country, López-Calva highlighted the importance of domestic actors.

“Lasting change cannot be imported from abroad,” López-Calva said “Change can only come about from a new agreement among domestic actors. However, we as an international community can influence change by affecting the relative bargaining power of domestic actors.”.

López-Calva called for a greater need for taking into account a country’s cultural and political history when setting goals and measuring progress.

“We should emphasize less benchmarking, and we need to invest more in understanding a country’s particular historical trajectory and try to understand from there how you can influence change,” he said.