World Bank President's Opening Address: Wolfensohn Addresses Human Crisis; Seeks Solution Through Balanced Framework

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In his address, Wolfensohn noted that the Annual Meetings were taking place in "the shadow of a global crisis," in circumstances very different from those in which last year's meetings were held. A little more than 12 months ago, developing countries as a whole were on a path toward strong growth. Although East Asia was stumbling, no one was predicting the extent of the region's fall. There was optimism about Russia, and South Asia seemed set to enjoy future years of 6 percent growth.

And then came a year of "turmoil and travail." Recalling the hopefulness he had felt in the past, Wolfensohn shared more recent memories of people who had lost hope. "We must address this human pain," he said.

What lessons can be learned from the experiences of the last 12 months? he asked. What can the World Bank do differently in the future to try to avoid such shifts in the economic and sociopolitical landscape? Wolfensohn stressed that countries should invest in education and health, put in place the macroeconomic fundamentals, and build modern communications and infrastructure. However, he pointed out, their development would be endangered if they did not have an effective financial system, adequate regulatory supervision and bankruptcy laws, effective competition and regulatory laws, transparency, and accounting standards. "Countries must have a policy of inclusion," he emphasized, because "it is the totality of change in a country that matters." The notion that development involves a balanced economic and social program is not revolutionary, but it is not the approach that the international community has been taking. Without a change of approach, it may be possible to build a new international financial architecture, but, Wolfensohn warned, it will be a house built on sand.

New Global Financial Architecture

This talk of a new global financial architecture reflects a growing sentiment that there is something wrong with a system in which even countries that have pursued strong economic policies are battered by international financial markets. In the more than fifty years since the establishment of the international economic institutions after World War II, the world has not experienced a major crisis. In that time, the institutions have evolved with the global economy. But the current crisis has exposed weaknesses and vulnerabilities that must be addressed. Wolfensohn, exhorting his listeners to...