Recently, Washington DC’s Center for Global Development, one of the world’s premier think tanks focused on development, hosted a panel discussion with the World Bank’s outgoing Chief Economist, Justin Lin. The topic, "Time to Revisit Industrial Policy,” was addressed by a stellar panel in a hugely interesting discussion of the main causes of successful development.
What I found most interesting was that Lin and all the panelists, even though they differed radically on many points, all agreed that capacity, including management capacity, was one of the three "legs” on which successful development rested, whatever the reliance on planning and market happens to be. Sadly, development assistance organizations such as USAID and the World Bank have all but abandoned capacity-building either because they don’t believe it can be done well, or because growing local educational institutions doesn’t lend itself to quick easily measurable outcomes. To make things worse, the term "capacity-building” is being applied not only to institutions, which can have lasting impact, but also to training individuals, which is far more transient.
To dispel the confusion, I propose that we give this thing we all know is so important a name. My suggestion is to launch it as "ICB,” to stand for Institutional Capacity-Building. With an established moniker, this important concept can begin to come into its own as a concrete approach to international development.
Some revival of capacity-building may indeed already be underway. Economists are focusing increasingly on "firm capabilities” as a crucial factor in development. It shouldn’t take much to extend the concept of "firm” to other crucial entities such as government agencies and nonprofit organizations. For the sake of future economic and social development, I welcome this new trend and ardently wish that it may get traction.
Many thanks to the panel – Anne Krueger, the former deputy Managing Director of the IMF and Chief Economist of the World Bank; John Page, the World Bank’s former Chief Economist for Africa and EMENA and author of the Bank’s East Asian Miracle book; and Steve Radelet, Chief Economist, USAID; as well as moderator Alan Gelb, the World Bank’s former Director of Development Policy and a member of GBSN’s Board of Directors, for their insight and candor.
Guy Pfeffermann is the founder and CEO of the Global Business School Network.