by Clare Williams*
If you subscribe to World Bank publications, the 2017 World Development Report will be landing on your doormat soon. This annual report is met with fanfare not only because it charts the work of the World Bank over the previous 12 months, but because it serves as a good indicator of the Bank’s current thinking. The forthcoming report offers an opportunity for the Bank to reassess its reliance on orthodox economics, and introduce policy frameworks that reflect the complexity of real life. How far will the Bank go? Personally, I won’t be holding my breath for a dramatic departure in policy, and here’s why.
Traditionally, World Development Reports have been underpinned by the same (neo-)classical economic principles which are in line with most other World Bank programmes. For years the Bank’s official line was the following: put the right incentives in place and citizens will modify their behaviour accordingly. Needless to say, these are imaginary citizens with perfect information who are actively practicing rational utility maximization! Real people living in the real world with their real interests, ideas and goals simply didn’t fit these models, and development outcomes duly suffered.
Much World Bank advice has also relied on assumptions derived from correlated data. For example, there was a core belief that if countries with a high rule of law score enjoyed high levels of economic development, the rule of law must be crucial for development to occur. It is only in the wake of several financial crashes and countless development failures that the Bank’s reliance on the power of orthodox economics to achieve development has come in for sustained questioning. This is why the merest hint of a change in doctrine from the Bank is exciting, and why the 2017 Report presents both a challenge and an opportunity to the World Bank. On its publication, the 2017 Report will complete a trilogy of reports in which the Bank has engaged in unparalleled self-critique, starting with the 2015 Report.
Published in December 2014 and entitled “Mind, Society and Behaviour”, the 2015 World Development Report was the first to break the mould. In an unprecedented turn, the Bank acknowledged that abstract economic models did not capture the messy complexity of real life. In response, the Bank turned to behavioural economics and the impact of ‘nudge’ units which were newly in vogue at the time. The following year’s Report, “Digital Dividends”, examined the impact of technology on economic development, and while the report was upbeat, some of the outcomes were bleak, leading the Bank to call for reliance on the ‘analogue’ components of development (the human aspects) to guard against the worst excesses of technology.
Given such a newfound willingness to engage in self-critique, there should be high hopes for the forthcoming Report. Entitled “Governance and the Law”, the 2017 Report sets out to answer large (and largely unanswerable) questions around the linkages between law, social norms and social change, and what happens when these fail to mirror each other. The parameters of the report state (in a ridiculously convoluted sentence that is worth quoting), “[t]he report team will engage closely with the World Bank’s new Governance Global Practice and other Global Practices/Cross Cutting Solutions Areas to advance the analytical framework for governance and institutional reform and draw out operational implications to enhance the capacity of the state to deliver growth, inclusiveness and social progress”. Stripping back the jargon, this seems to say that the analytical framework within which governance and institutional reform are placed is ripe for improvement.
The Bank appears to be finally grappling with the Uganda problem; a country near the top of the rankings for ease of doing business, but a long way down the list for development indicators. Uganda has all the right institutions on paper, but little evidence of actual development. For the Bank to take a keener interest in marrying theory and reality is encouraging, and there are a couple of steps worth mentioning here that could help the Bank to reach this goal.
The first is for the Bank to take a step back from the mathematical certainty of neoclassical economics and explore some alternative approaches to understanding social reality, of which there are numerous in active service throughout the social sciences. The second step is to experiment with different methodologies, frames and lenses throughout the social sciences. For example, an economic sociology of law-based approach uses sociological frames to examine relationships between legal and economic phenomena. At the same time, this approach also addresses certain criticisms of World Bank doctrine. Firstly, by stepping back from orthodox economics and attempting to quantify everything, the Bank could engage in widespread qualitative empirical work that could start tackling real questions of causation between governance systems and economic development. At the same time, by examining actors’ interests through a different lens, equal weight can be given to, amongst others, economic, family, customary or religious motivations. This could result in many more voices being heard, and could avoid the inherent silencing of minority or “non-economic” interests that happens with cookie-cutter economic frames of reference.
So why am I not holding my breath for significant changes? Given that the previous two Reports saw the Bank questioning its methods before continuing with slightly altered versions of the same, the Bank’s track record for taking a radically different approach is essentially non-existent. What’s more, we can make some assumptions about the contents of the Report from a glance at the mission statement of the Governance Global Practice (GGP) which is a party to the Report. “Good governance is at the heart of the development agenda”, it states, before adding the pithy, meaningless aphorism that “good governance is good economics”. Despite the modest progress made recently in broadening its outlook, the World Bank still seems wedded to the convenience of neoclassical economics. The frameworks that have been (slightly) expanded over previous Reports to include references to behavioural economics, technology and institutions, are, in the end, merely economic models with “add ons”, rather than signifiers of a shift in paradigm. If implemented, such a shift could improve development outcomes by more accurately understanding the lived realities of citizens around the world. This is a perfect opportunity for the World Bank to reconsider the foundations of its doctrine, although one that I suspect will be missed. I hope to be proven wrong!
*Clare writes, tweets and generally bangs the drum for econo-socio-legal approaches, using as many media as possible. She is currently working on her PhD at SOAS, exploring ESL-based approaches to empirical research.