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Making the Best Choices for Infrastructure

June 1, 2006—The biggest-ever Annual World Bank Conference on Development Economics (ABCDE) concluded in Tokyo May 30 with a call for new analytical and evaluation tools to help decision-makers make infrastructure choices that deliver vital services such as energy, transportation and water, to facilitate growth and achieve the MDGs, while also remaining cost-effective and friendly to the environment.
“Our approach to infrastructure must focus not just on economic growth or human growth,” said Bank President Paul Wolfowitz in his opening address to the two-day conference, co-organized by the Development Economics and External Affairs Vice-Presidencies. “It must also focus on ‘smart’ growth, that is, growth that is economically sound, environmentally friendly, socially acceptable, locally desirable, and most important, growth that makes a difference in people’s lives.”

Infrastructure investments have often failed the test in the past, said Japanese Finance Minister Sadakazu Tanigaki, who posed tough questions to the more than 700 participants from around the world: “Hasn’t donor support simply left ‘white elephants’ behind? Have we paid enough attention to adverse environmental and social impacts? Have we had sufficient dialogue with stakeholders?”


The Opening Session of the ABCDE Conference, Tokyo Japan “Rethinking Infrastructure for Development” jointly hosted by Government of Japan

Various dimensions of the challenges outlined by Wolfowitz and Tanigaki were explored in depth in four conference plenary sessions on infrastructure for growth, infrastructure and governance, rural infrastructure and agricultural development, and infrastructure and regional cooperation.

In summing-up remarks Tuesday, the Bank’s Chief Economist Francois Bourguignon reviewed recurring issues and what is needed to solve them. He identified a need to better understand linkages between infrastructure investments and growth; to achieve the right balance between public and private involvement; to deal with cross-border issues and ‘externalities’––both positive and negative, such as shared road and rail links, but also shared pollution––and to establish systems that deliver better data and evaluation.

Under the aegis of this comprehensive framework, he said, the long-ignored management tool of cost-benefit analysis deserves to be revived to guide policymakers who must allocate scarce resources among competing projects and sectors.

“If infrastructure is not going to be neglected, it must be better understood,” he concluded. “Knowing what works and what doesn’t is a key public good.”

In addition to the plenary sessions on infrastructure, this first-ever ABCDE to be held in East Asia also featured 19 parallel seminar sessions organized by partner organizations and governments, and keynote addresses by Sadako Ogata, president of the Japan International Cooperation Agency (JICA), Richard Manning, Chairman of the OECD’s Development Assistance Committee (DAC), Donald Kaberuka, President of the African Development Bank, and Joseph Stiglitz, Nobel laureate and former Bank chief economist.

The Tokyo conference was also the site of the annual meeting of the Researchers' Alliance for Development (RAD), a network of over 500 academics and researchers in development. It was also the venue for presentation of awards for the World Bank international essay competition, in which nine finalists were selected from 1,950 individual submissions from 136 countries. (See Friday’s Today for the story.)  

Japan Announces New Initiatives

The Japanese dignitaries used the event to outline some of their country’s recent initiatives in development cooperation. Ogata said her agency, JICA, will merge with the ODA lender Japan Bank for International Cooperation (JBIC) in 2008, forming what she said would be, “the world’s second-largest integrated development agency after the World Bank.”  She also reviewed JICA’s strategy to integrate its support for human security and infrastructure though a three-focus approach: community-based, comprehensive, and cross-sectoral.

Finance Minister Tanigaki, meanwhile, announced that Japan will contribute $2 million to the World Bank’s Knowledge for Change Program, a partnership initiative that enables bilateral and other donors to complement Bank funds for research in areas of shared interest, such as climate change and agriculture.

Reflections from DAC Chairman Manning

Richard Manning offered reflections on discussions of development agency heads at whose meeting in Kyoto he had presided in the days immediately preceding the ABCDE. He commented on what have been called “emerging donors,” including Russia, Korea, Poland, Turkey, Brazil, China, South Africa, and India, saying that some of them are using aid to position themselves to transform their relations with other countries. This could result in some slowdown in developing-country reform efforts as aid conditionality weakens, he said. But he also predicted that these “new donors” would eventually join the OECD and rally to DAC norms and standards governing development aid.

On untying aid, Manning applauded moves by the United Kingdom, Ireland, Norway, and Australia to untie 100 percent of their aid, as well as Canada’s decision to allow 50 percent of its food aid to be procured in the beneficiary region, rather than Canada. While acknowledging that “a big bang solution” to untie all aid likely would not work, Manning said that when aid is used to meet for political and commercial objectives, it undermines its effectiveness and makes it hard to justify.

“I wouldn’t buy shares in any company that depended on the aid program,” he said, adding that donor countries, “will not achieve (their) political and commercial objectives unless (they) do good development programs.”

Zen Daruma Handover to Slovenia for ABCDE 2007

In closing the Tokyo conference, Japanese Finance Ministry Director General Kiyoto Ido thanked Bourguignon who chaired the ABCDE steering committee, as well as Jean-Christophe Bas, conference coordinator, and Yukio Yoshimura, the Bank’s Vice President and Special Representative for Japan, for having delivered a successful conference.

He also announced that next year’s ABCDE will be held in the Slovenian capital of Ljubljana. Slovenia’s Finance Minister, Andrej Bajuk, in videoconference remarks telecast in the closing plenary, welcomed “the honor of hosting the ABCDE.”

Following a Japanese tradition, Ido then presented a Zen Daruma doll, with a red body and white eyes without pupils. The doll is a good-luck talisman named for the founder of Zen Buddhism. Ido painted a black pupil on one of the blank eyes, symbolizing a wish for a successful ABCDE in Slovenia. “I will now send the doll to Slovenia or bring it myself,” he said. And next year, if the wish comes true, he promised to paint the pupil on the other eye.

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