Jim Yong Kim: World Bank chief seeks to slash extreme poverty

"The Koreans have a saying that you bury your spouse in the ground but you bury your children in your heart," said Dr Jim Yong Kim.

The Korean-born health expert is speaking to The Irish Times at his offices in Washington DC ahead of his first official visit to the Republic of Ireland as president of the World Bank on Friday.

It is a past job, however, that Kim recalls when quoting that Korean saying as he considers the tragic deaths of six Irish students in Berkeley, California last week.

“When you bury something in your heart, it is just something that doesn’t get better over time,” he said.

Before he took the job at the World Bank, Kim was president of Dartmouth College in New Hampshire from 2009 to 2012.

He was the first Asian-American president of an Ivy League institution. It used to keep him up at night, having to a make that type of call to the parents of a student.

“There is just nothing more painful,” he said. “It is just the worst tragedy and my understanding is that these were some of the most promising, most brilliant young people.

“There are a lot of tragedies in the world but from someone who has lived that, I can’t imagine a greater tragedy.”

Kim is in Dublin to deliver a lecture as part of the Iveagh House series hosted by the Department of Foreign Affairs and Trade.

He will meet President Michael D Higgins, Minister for Foreign Affairs Charlie Flanagan and Minister for Finance Michael Noonan on his visit.

Shared prosperity

The Korean-American physician and anthropologist will speak on the subject of Building the New Global Agenda for Shared Prosperity, one of the World Bank’s twin goals.

The organisation wants to end extreme poverty by 2030 - specifically, to reduce the percentage of the world population living on less than $1.25 (€1.11) a day to no more than 3 per cent in 15 years - and to promote shared prosperity by fostering income growth among the bottom 40 per cent of each country’s population.

At a time when the income inequality gap is widening in many developed countries and people have felt left behind by economic recovery, the issue of shared prosperity could not be more relevant.

For Kim, growing an economy is not just about watching the top-line GDP figure, but monitoring whether growth benefits the bottom 40 per cent.

Helping to build a road from a mine to a port might be good for the mining industry, but it is unlikely to have much impact on the poorest people given that the industry is not rich in jobs, he says.

On the other hand, building roads into agricultural areas and opening access to markets for the poorest people will have a much bigger impact.

“Every single country we look at, we ask ourselves the question: is this particular choice of investments that we are making - is it going to reduce inequality and lift people out of poverty or is it going to make inequality worse?

“That is not the lens through which we have always looked at projects,” he says.

The 3 per cent goal is especially challenging, given the estimate that half of all people in poverty will be in war zones or fragile countries by 2020.

“It is going to be really hard,” he said, “because it is going to be intimately linked to fragility and conflict.”

In the Middle East, the World Bank is “asking questions that we didn’t necessarily ask before, like what are the drivers for radicalisation,” he said. “Is it ideology? Is it poverty? Is it joblessness?

“People who are highly educated and then go out into the workforce and then they find there is no market for the skills that they have learned, for example.”

If the downward curve on poverty reduction continues as it has over the last 20 years, the percentage of people in extreme poverty should fall to 7 or 8 per cent - but Kim wants a steeper bend in the curve.

Seemingly intractable problems

“I have every intention of pushing this organisation to get there, but it will require that we take more seriously the most difficult and most seemingly intractable problems in development,” he said.

This is a big year for development. A new set of global goals for sustainable development are expected to be unveiled at the United Nations in September.

The Sustainable Development Goals are essentially a to-do list for the planet. Right now the list stands at 17 goals and 169 targets, eclipsing the eight objectives in the Millennium Development Goals, the existing programme that expires at the end of the year.

While the boldness of vision to tackle global poverty, inequality and climate change over the next 15 years might be right on message, the ambitious number of goals and targets has raised concerns about whether they can all be viably achieved.

Kim is looking forward to seeing how the UN’s statistical group will come up with measures in March to track progress towards the new 15-year goals.

“There are ones with an almost infinite cost because you want to change everyone’s way of thinking - that takes time,” he said.

“A lot of them are eminently fundable and we need to come up now with a vision of how these different sources of financing for development might be used to solve a problem.”

He understands why UN secretary general Ban Ki-moon wanted a “bottom-up” process to develop the new goals, given how the previous goals were criticised by some countries for being given from above.

He pushes the discussion toward how to finance the goals.

The World Bank published a report in April called From Billions to Trillions to urge the global community to move the discussion from generating billions in development aid to trillions in investments of all kinds: public and private, national and global, in both capital and capacity.

“It is good to have a really ambitious agenda,” said Kim. “Having so many targets and tackling so many different issues forces us to think big about financing.”

One source of finance drawing interest from both developed and developing countries is on improving tax collection or, as the World Bank puts it, domestic resource mobilisation (DRM). (World Bank officials joke that the organisation is the WCA: the World Capital of Acronyms.)

Illicit financial flows

Another is tackling illicit financial flows and non-payment of taxes. Kim points to the OECD’s base erosion and profit shifting project, looking at how companies are using different tax systems to hide profits.

“This is something that everyone in Ireland knows very, very well,” he said. “I think it is a great programme. I think that the bigger conversation could lead to much more domestic resources through stopping these illicit financial flows out of some of the poorest countries.”

At a time when capital is sitting on the sidelines earning paltry rates of interest, Kim sees opportunities in financing big-ticket development projects by marrying private sector investors with governments to build infrastructure projects that generate better returns.

This would be done with the help of the World Bank and political risk insurance that might take some of the risk off private investment, encouraging participation.

Finding effective and inexpensive ways of allowing migrants abroad to send remittances home is another area that the World Bank is looking at to fund development in the countries that most need it.

“Because of concern about what the new prudential rules are going to look like, banks are getting much more conservative, so we are having trouble finding companies that will be in the business of remittances - so you are seeing the cost of remittances going up,” he said.

This week a major human rights group, Human Rights Watch, criticised the World Bank for inaction when protesters objecting to projects it finances are attacked and persecuted. The group named projects in countries including India, Cambodia and Uganda.

“If there are incidents that I don’t know about... maybe others in the organisation that we don’t know about and we need to fix, then that is what we are going to do, we will fix it,” he said.

“We are a big organisation that is trying to end extreme poverty and we are involved in big infrastructure projects, all of which can be fraught with complexity and difficulty.”

Kim praised Ireland for maintaining its commitment to overseas development aid despite the economic crisis. The World Bank works closely with the Irish Government’s overseas aid division, Irish Aid.

He is keen to tap Irish expertise in peace-building to see whether there could be lessons learned in Northern Ireland that could be applied to fragile and conflict-affected regions of the world.

“As someone who was born in Korea, whose parents were born in the northern part of the 38th parallel, I want to know what happened in the peace process, I want to know how it works,” he said.

Ireland’s edge in “climate-smart agriculture” has also piqued Kim’s interest and he sees great potential for advanced Irish studies on carbon emissions on farms for guiding investment in developing countries.

The country’s economic recovery and step back from the brink of financial ruin – something the World Bank’s sister organisation, the IMF, knows plenty about – is another area where Kim sees a “knowledge and intellectual partnership” with Ireland over the next few years.

“Ireland’s population seemed to have been ready to do what they needed to do in order to get back on track, and they have done it really remarkably,” he said. “I want to know how that happened and why it is so difficult in some other parts of the world.”