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10 February 2007

How the World Bank Maintains its Research Paradigm & Dominance

By Robin Broad

Robin Broad is professor, international development program, School of International
Service, American University in Washington, DC and author of several books on
development and the international financial institutions. This article is adapted and
condensed, with permission, from: Robin Broad, “Research, Knowledge, and the Art of
‘Paradigm Maintenance’: The World Bank’s Development Economics Vice-Presidency (DEC)” published in the Review of International Political Economy, Vol. 13, No. 3, August 2006, pp 387-419. The adapted article was published by the Bretton Woods Project, London.

The World Bank is not only the main lender of public money in the world. It is also the
world’s largest development research body, centred in the Development Economics
Vice-Presidency (DEC).

DEC is important because it serves as a research department for other bilateral aid
agencies and other multilateral development banks, which often follow the course laid
out by the Bank. So too with the World Trade Organization which, according to an
internal Bank document, “looks to the Bank to provide analysis on trade integration

And Bank research is consulted by policy-makers across the globe. In academia, as well, relevant courses often rely heavily on Bank research papers. In short, DEC is the
research powerhouse of the development world.

The Bank likes to claim that DEC conducts the creme-de-la-creme of development research and that governments and researchers should view it as an impartial ‘knowledge bank’ on development, conducting rigorous and independent research.

After a careful look inside DEC (including a couple dozen interviews with former and
current Bank staff), I have reached a different conclusion: through its research, the
World Bank has played a critical role in the legitimisation of the neo-liberal
free-market paradigm over the past quarter century and its research department has been vital to this role.

When discussing reforms to the World Bank, a closer look should be taken at its research department as well as its external affairs department which disseminates broadly this less-than-objective research.

The work of perhaps the best-known World Bank researcher, David Dollar, exemplifies the “paradigm-maintenance” role (a term taken from Robert Wade). For many in the media, academia, and policy-making circles, Dollar’s work on trade and economic growth has been transformed into a widely-cited, empirically-proven ‘fact’ that ‘globalisers’ - countries wedded to the Washington Consensus, especially to liberalised trade - experience higher economic growth rates than ‘non-globalisers’.

As Dollar and a co-author phrased it in a 2002 article in Foreign Affairs: “Openness to
foreign trade and investment, coupled with complementary reforms, typically leads to
faster growth.”

How did Dollar’s work become so prominent? Why does the work of Bank DEC researchers who support the neo-liberal policy agenda get widespread attention?

I discovered a set of six inter-related processes and mechanisms through which DEC, at times collaborating with other parts of the World Bank, performs its paradigm-maintenance role by privileging individuals and work “resonating” with this

These mutually-reinforcing structures include a series of incentives - increasing an
individual’s chances to be hired, to advance one’s career, to be published, to be
promoted by the Bank’s external affairs department, and, in general, to be assessed

And they also include selective enforcement of rules, discouragement of dissonant
discourse, and even the manipulation of data to fit the paradigm. This incentive or
reward system is typically unstated, may even negate the formal or stated procedures
and, as such, functions as “soft” law. This is done in a way that undermines debate and
nuanced research conclusions, instead encouraging the confirmation of a priori
neo-liberal hypotheses.

Here is a brief overview of the six sets of mechanisms (unless otherwise indicated,
quotations are from my interviews):

The structures through which these incentives play out are multiple and they
begin with hiring biases. While countries of birth and nationality may lead to a
superficial assessment that the staff is international and diverse, the Bank is far from

Bank staff are overwhelmingly PhD economists. Boundaries of disciplines in and of
themselves set intellectual boundaries, defining acceptable questions and methods. DEC houses fewer than a handful of non-economist social scientists. Further concentrating thought, the US and the UK university economics departments supply most of the PhD economists working within DEC.

So too are the Bank’s generous pay scale and benefits part of this incentive structure.
This is what a former Bank economist terms “the golden handcuffs”. While the Bank claims these are necessary to attract the best staff, what they actually do is limit dissent by increasing the “opportunity costs” of any dissidence.

There are a number of ways in which promotion incentives help shape the
work toward “paradigm maintenance”. The overarching goal of any researcher who wants to make a career of the Bank is to achieve, after five years, “regularisation”, the Bank equivalent of academic tenure. Along the way, there are annual reviews.

As noted by C. Gilbert and D. Vines, “most Bank employees are on short-term contracts.

There is substantial anecdotal evidence that this is distorting incentives away from
creative thinking and towards career-path management.”

To get good reviews, DEC professionals need to publish, ideally in both internal Bank
publications and externally especially in academic journals. Reviews also look at a DEC researcher’s influence on Bank operations and policy.

The Bank has set up formal structures to try to ensure the transfer of research
‘knowledge’ to operations. Most notable is that one-third of a researcher’s time must be
spent doing what is called operational “cross-support”. In devising a work programme,
the researcher is aware that he/she will “need marketability for 1/3 time” when she/he
is a de facto “free agent”.

In terms of the characteristics of a “marketable” DEC researcher, as one senior
economist in DEC explains, operations looks for high-profile folks with “resonance.” To
paraphrase, if you are in operations and you are looking to buy the time of a
researcher, you look to add someone who is likely to improve the chances of your project getting through.

“You want a Dollar”, one interviewee states bluntly without provocation. Conversely,
asks one non-neoliberal-economist researcher rhetorically: why would operations want me?

DEC’s paradigmatic bias is also reflected in the process of reviewing ongoing research for publication. The Bank likes to claim that there is uniform, objective, external review, but that is not the perception of individual researchers themselves.

While there may be written rules with specific requirements (which this author has yet
to see, despite repeated attempts), evidence suggests and interviews confirm that
reviews of proposed research, manuscripts, and individuals are done “selectively”.

Most of those interviewed for this article offered that research critical of the neo-liberal model or opening the door to alternatives (i. e. without that necessary “resonance”) is likely to undergo stricter external review and/or be rejected.

The review process, says a former Bank professional, “depends on what the paper is
[about] and who the author is. If you are a respected neoclassical economist, then
[approval] only needs one sign-off, that of your boss. If it’s critical, then you go
through endless reviews, until the author gives up.”

In 1996, then-Bank president James Wolfensohn launched the initiative to magnify the research and dissemination role of the World Bank by transforming the institution from what was called a ‘lending bank’ into a ‘knowledge bank’. The implication was that the World Bank was a place where all views, all ideas, all empirical data on development would be available to the world.

DEC demonstrates how badly the Bank fails in this regard. Dissent is allowed on more
marginal issues, but seldom on the core tenets of the neo-liberal model. How does this
discouragement of dissent occur?

Discourse is part of the answer. On numerous occasions when the present author asked Bank staff about someone whose work has raised dissent, the response was invariably that that person was “idiosyncratic” or “iconoclastic” or “disaffected”.

In other words, people who do not project the Bank’s paradigm are diminished or
ostracized or deemed a “misfit”. Former DEC official David Ellerman has described the
Bank as “an organisation where open debate is not a big part of the culture”.

This lack of openness to dissent is all the more troubling in the context of the rapidly
evolving post-Seattle and post-Asian-crisis debate on development. Since the late 1990s, with the rise of a global backlash against the neo-liberal model, there has been - outside the Bank - a vibrant theoretical and policy debate about neo-liberal economic
globalisation as evidence grows of its negative impacts on economic, environmental, and social development.

During this period, Bank projects and policy-based lending have come under heavy attack for contributing to these negative impacts. Yet, the Bank has been able to continue to operate relatively unchecked in its research work.

Take Dollar’s work. There has been widespread external criticism of Dollar’s methodology by non-doctrinaire economists outside of the Bank - from Harvard economist Dani Rodrik, Center for Economic and Policy Research director/economist Mark Weisbrot, London School of Economics’ Robert Wade, Cornell professor (and former Bank professional) Ravi Kanbur, and others (including the present author).

Rodrik, for example, reaches a conclusion opposite of Dollar’s: “The evidence from the
1990s indicated a positive (but statistically insignificant) relationship between
tariffs and economic growth.”

Yet the Bank continues to project Dollar’s work as if it is undisputed fact. “The point,” explains a DEC economist, “is that one type of research is encouraged, people know what type it is and they produce it, while another type is given short-shrift.”

What does the Bank do if data/research does not support a neo-liberal hypothesis? There is disturbing evidence that the Bank crafts, and even manipulates, the executive summaries and press releases of reports so that they reinforce the neo-liberal paradigm.

A case in point of an executive summary that is so well crafted that it no longer meshes
with the text of the report is a 350-plus-page 2003 Bank document on Lessons from NAFTA for Latin American and Caribbean Countries.

The summary states that “real wages [in Mexico] have recovered rapidly from the 1995
collapse”. However, the text itself does not support this conclusion, as researcher
Sarah Anderson noticed as she read the text carefully: “Table 1 of the summary shows
that real wages in both local currency and in dollars have dropped since 1994... Figure
4 in the main body of the report shows that real Mexican wages relative to those in the
US are also below their 1994 levels.”

Anderson wrote to report co-author Daniel Lederman to ask how the table’s drop in real wages in the 1994-2001 period could have been summarised as a return to a level “roughly equal” to 1994. Lederman responded that the wage trends were complicated and therefore the summary was meant to “be vague”. As Anderson replied: “To say that wages have returned to their 1994 levels when they have not is not merely ‘vague’ but is inaccurate”.

Yet Anderson seems to have been one of the few to read the report carefully enough to
note this key discrepancy or “falsehood” (as she more accurately phrases it). Indeed, in
2004, the Washington Post ran a long, lead editorial on the success of NAFTA, based in part on the World Bank report.

Incredibly enough, the editorial chastised NAFTA critics who say that wage growth has
“been negligible” and instead noted that “wage levels that match those existing before
the peso crisis represent an achievement.”

In other words, the Bank seems to understand and play to the fact that most people,
including most journalists, will read only the press release and summary. In this case,
on a significant arena for potential policy debate and reform, the Bank fooled a major
newspaper whose editorials are read and used by key policy-makers.

My research also concluded that the Bank’s external affairs department functions as a projector of DEC’s “paradigm-maintenance” role. Dollar, for instance, did not have the backing only of DEC. The Bank’s external affairs department stepped in to publicise his work; it is external affairs that has the “money, media contacts, and incredible clout” to fly an author around the world.

External affairs’ rise in stature dates from the early Wolfensohn years under the
leadership of Mark Malloch Brown (1994-99). In Wolfensohn’s second term, external
affairs’ budget soared. By 2004-5, its budget was comparable to the full annual budget
of the right-wing US think tank the Heritage Foundation.

These six sets of incentives raise significant questions about the World Bank’s own argument that it produces work of the utmost quality and integrity. My research should certainly raise alarm about further concentrating and aggrandising this role of knowledge production and marketing in the World Bank.

In fact, my research suggests just the opposite. At this moment of identity crisis within the Bank, this is an opportune moment to question “paradigm maintenance” and to
rethink fundamentally research - knowledge production and dissemination - at the World Bank.

My inquiry into a part of the Bank that has been shockingly unexplored by outsiders also opens the door to thinking about new arenas for advocacy work on the Bank. Does the Bank really need a biased research department? Does the Bank really need an external affairs department to tout research that reinforces the highly discredited neo-liberal model?

Governments and private foundations that support World Bank research and publicity would do far better to support independent research institutions that are stimulating a more diverse development debate.


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