World Bank to Name Lin
New Chief Economist
The World Bank is poised to name a scholar from China as its chief economist, a move by bank president Robert Zoellick to address criticism that the institution needs more senior management from developing nations and should be better attuned to emerging markets.
Justin Yifu Lin is expected to fill the vacancy left by François Bourguignon, who retired as chief economist in October, according to bank officials. The 55-year-old Mr. Lin is the founder and director of the China Center for Economic Research at Peking University, and has frequently served as an adviser to the Chinese government. He would be the first Chinese citizen to be the Bank's chief economist, a job that has traditionally gone to eminent academics from the U.S. or Europe.
The choice of Mr. Lin would continue a shift in the World Bank's relationship with China, which for years was a major recipient of the bank's aid. With strong government finances and $1.5 trillion in foreign-exchange reserves, China today has little need for outside financial assistance. Although the bank continues to run projects in China in areas like environmental protection, its loans to the country now carry more commercial terms. Last year, for the first time, China agreed to contribute to the World Bank's fund for aid to the poorest countries.
The chief economist can play a powerful role at the World Bank, by setting its research agenda and helping establish its intellectual direction. Under the tenures of Stanley Fischer and Lawrence Summers, in the late 1980s and early 1990s, the bank forcefully advocated that poor countries liberalize their economies by repealing trade restrictions and opening their markets to foreign investment.
Under Joseph Stiglitz in the late 1990s, the bank became a critic of the International Monetary Fund's handling of financial crises, arguing that the IMF prescriptions were too fiscally restrictive and could worsen downturns.
The world's largest poverty-fighting institution since World War II, the World Bank has long been plagued by disagreements among poor countries that receive its aid and the wealthy countries that provide most of its funding. Mr. Zoellick has made efforts to bridge those gaps since he became Bank president in July.
Mr. Lin's own career over the last three decades has been founded on analyzing China's approach to economic development. He was born in Taiwan and earned a master's in business administration from National Chengchi University in Taipei in 1978, the year that mainland China began its market-opening reforms.
The next year, Mr. Lin, then serving as an officer in the Taiwanese army, left for rival China. Numerous published accounts over the years have said that Mr. Lin defected by swimming to China from the Taiwanese-controlled island of Quemoy, also called Kinmen. Mr. Lin went on to study at Peking University, China's top university. He earned a doctorate in economics from the University of Chicago in 1986, becoming one of the first students from China to complete such a degree in the U.S. during the reform era.
Mr. Lin gave a hint of how he might apply lessons from China to other developing nations in lectures at Cambridge University last year. China and Vietnam, he noted, have achieved long periods of fast economic growth while flouting some conventional free-market policies. Many countries in Eastern Europe and Latin America, by contrast, have been quicker to liberalize but have worse records of sustaining growth and reducing poverty.
Yet Mr. Lin didn't argue that China's specific policies would necessarily work elsewhere. He argued more for experimentation and gradualism than adopting a formula. "Principles or experiences of other countries should not be applied in a dogmatic way," Mr. Lin said then, according to a copy of his lecture notes. "A gradual, piecemeal approach to reform and transition could enable the country to achieve stability and dynamic growth simultaneously and allow the country to complete its transition to a market economy."
Mr. Lin couldn't be reached for comment in Beijing over the weekend. The Bank's governing board hasn't yet approved his appointment, but final approval is expected by the end of the month.
China’s Yifu Lin Named Chief Economist of World Bank
This is the first time an economist from developing countries assuming the post. It came as a little surprise for me. Lin's choice may provide a good test ground for China's gradualist non-dogmatic approach toward economic reform to other developing nations.