On June 30, 2006, the World Bank's Development Research Group (DECRG) published Research Highlights 2005, the first of an annual series that describes the major research themes and highlights of the Bank’s principal research unit and provides a complete list of its output. We spoke to L. Alan Winters, the Group’s Director, about the significance and scope of DECRG’s research agenda and its widespread impact on development thinking.
Q. As the Bank’s principal research unit, what is the scope of DECRG’s research agenda and who benefits from its work?
A. The Development Economics Vice-Presidency as a whole provides intellectual leadership, data, and analytical services both to the Bank and the development community. The broad objective is to promote understanding of development policies. As part of this Vice-Presidency, the Development Research Group undertakes and stimulates high-quality research. We aim to generate new knowledge on the development process and policies that enhance it.
While we do plenty of country-specific and sector-specific analysis, our focus is really on general lessons and their wider applicability, with a view to serving poor people in developing countries. To maximize the chances of helping these people, we inform not only the Bank’s operations and senior management of our findings, but also policymakers, academics, the development community at large, and the general public.
Q. Can you give us some examples of the impact the Research Group’s work has recently had on development thinking, policy, and processes?
A. Certainly. A recent example is the roll-out of industrial pollution monitoring in China, a country which faces one of the toughest pollution challenges in the world. This was the direct result of more than a decade of DECRG research. We conducted pilot studies in partnership with local agencies in several countries to test the emissions disclosure approach that is now standard in China.
DECRG research has also helped establish the intellectual foundations for the South Asia region's approach to local development, emphasizing the role of accountability mechanisms and encouraging the Bank to promote the panchayat system in India. In fact, our work has strongly influenced the Bank’s vision for lending in this region.
Another strand of our research has helped to shape policy in China and Namibia. We find that explicit deposit insurance systems, traditionally seen as essential to a robust financial system, can actually cause more harm than good in contexts where institutions are under-developed and poorly supervised. In such contexts, adopting explicit deposit insurance promises at best to assist financial development only in the very short run. Over longer periods, it is more likely to undermine market discipline in a way that reduces bank solvency, destroys real economic capital, increases financial fragility and deters financial development. When informed of these findings the authorities in China and Namibia shelved their plans for deposit insurance.
Q. How are your primary research themes selected? What influences their selection?
A. That’s a good question. The challenge is to anticipate topics sufficiently early to have research ready to address them when needed. Sometimes, as with our Doha Round research, this is straightforward and tied to an important event. In most cases, though, it’s risky and difficult, to say the least. Our research agenda reflects our perception of the needs and priorities of Bank Operations and the broader development community, informed from many sources, such as operations staff, policymakers, civil society or researchers outside the Bank. We also rely a lot on the guidance of the Chief Economist, François Bourguignon, of course.
Q. What sort of outputs do your researchers produce?
A. DECRG projects often produce datasets and analytical software, but our most important outputs are ideas, which are examined, tested, and finally published. Preliminary findings are published in working papers and shared through seminars, conferences, websites, and so on. If they survive, they typically come out in books and journals and are disseminated through various outreach activities.
Publication is a good discipline for researchers because it requires clear and open disclosure of the elements on which research findings are based and opens up our work for scrutiny and challenge by peers and for public debate. It is a means both to prove and to improve the quality of our work. When research meets high academic standards, it becomes credible and hence effective.
Q. So your research is really academic, then?
A. The outlets through which much of our work is released may be academic, but our research is not the same as academic research. Our research agenda is dominated by relevance to development policy, with the result that most of what we do is empirical. We’re more concerned with results on the ground than with just theory or methodology – which is why it is mandatory for our researchers to spend thirteen weeks a year providing support to Bank Operations.
Q. What major research themes do you see emerging over the next two years? Are you researching major global concerns of today such as climate change and communicable diseases?
A. The demand for research is almost limitless. Issues such as climate change, the trading system, international finance and avian flu figure prominently in our work because solutions are global public goods – solving the problem for one country more or less solves it for everyone. No nation or region has much incentive to invest individually in such global issues because most of the gains will be reaped elsewhere, but in the Bank our constituency is global, so we can take a global view.
Among the broad, though not specifically global, issues I hope to see progress on in the next few years are: how access to finance can address growth and equity; the micro-economic underpinnings of economic growth, including in the informal sector; employment issues; the strengths and weaknesses of local development efforts; the understanding of why public service provision can be so weak, and improvements in methods of collecting household data.