 Hello, everybody, and welcome. I'm Susan Collins. I'm the Joan and Sanford Wildein of the Gerald R. Ford School of Public Policy. And we are delighted to have everybody here with us this afternoon for our annual City Group Foundation lecture. Today, we are particularly pleased to have a new event in this series, which enables the Ford School to bring very distinguished speakers and policy leaders to campus to talk about a range of different issues. The speaker that I'm about to introduce to you is certainly extremely distinguished, and he most certainly fits that bill. I had the great pleasure of first meeting him in 1989. In Washington, DC, I was at the Council of Economic Advisors, and he was at the time in the State Department and have enjoyed following his distinguished career since then. You will see that there's a complete biography in your program, and so I am not going to give all of the details, but it is a great delight to mention that in addition to a law background that his distinguished career was launched in part through a Master's of Public Policy. And that very varied and impressive career has included a number of very key positions in both the private sector and in public service. And that includes Vice Chair of Goldman Sachs, US trade representative, Deputy Secretary of State in the George W. Bush administration, and I am absolutely honored and delighted to welcome Dr. Mr. Robert Zellick. Thank you very much. We've structured today's event as essentially a conversation. And I also have with me two of my faculty colleagues, Jan Spainar and Dean Yang. Their bios are also in the program, but let me just very briefly tell you that Jan Spainar is a very distinguished development economist. He is an expert on issues related to the economies in Europe and the post-Soviet bloc economies. On my right, Dean Yang is also a development economist and has done really pathbreaking work related to microfinance and also to remittances, which are financial flows that go between migrants and their developing country homes. My own area of expertise is in international economics. And in particular, I've specialized in understanding growth experiences in a variety of countries, including China and India. Well, I'd like to now get started for our main program. And essentially, we will be asking Mr. Zellick a range of different questions and make sure to have enough time for audience participation later on in our program. But to just kick things off, it would be very helpful if you would share with us just an overview of what this World Bank institution is and what it does. OK, Susan. Well, if I could, let me just thank all of you for coming and joining us. I actually am a Midwesterner. I came from Illinois. And when Susan invited me to come to this event, one of the things that attracted me, in addition to having a chance to visit Ann Arbor, was the fact that I had my first job in the federal government in the Ford administration right after graduating from college and had an opportunity to work later in my career with a number of the people that were very closely associated with President Ford and people like James Breaker and Brent Scowcroft and Vice President Cheney and Secretary Rumsfeld and others. And I'll just share with you, because some of you may have a chance to look at these or not. But a number of those figures have had some of their autobiographies come out recently. And as topical as the later chapters are for the press, sometimes the most interesting chapters I actually find are their period with the transition from the Nixon and to Ford administration. And while I only had a chance to meet President Ford in passing on a couple of occasions, actually after his presidency, I think it just, again, underscores what an extraordinary individual and public servant he was. I, of course, trace this to Midwestern values and basic roots. But so it's a nice opportunity for me in a way to also pay my respect for what he stood for in public policy. The World Bank. Let me give you a little bit of a sense of this, because I think one of my real interests has been history. And perhaps I would have even tried to make it as a career, but I'm not sure I could figure out how to make a living at it. But I often look at issues from a historical perspective. And as some of you may know, the World Bank was created in 1944 as World War II was still raging at a conference in Bretton Woods, New Hampshire, along with the IMF, the International Monetary Fund, and a similar organization that became later the WTO. It was an international trading system. And the logic of these three was the effort as people were even concluding the Second World War to try to avoid what they perceived as the sources of economic conflict in the 20s and 30s that had led to the breakdown and led to the Great Depression and led to the rise of fascism and Nazism and led to this terrible World War. And so the IMF was really designed to try to deal with some of the tensions and currencies. It was, in a sense, the successor at that point to the gold standard, where the dollar played a role with fixed exchange rate. That went by the board in the 90s. But if you open your newspapers and see what's going on with the eurozone today, you see the descendants of that issues. The World Bank's official name at the time was the International Bank for Reconstruction and Development. And its first loan was to France. So the real focus was to try to avoid the problems after World War I with the rebuilding and to create economic opportunity and hope, first for Europe and Japan. And the so-called developing countries at that time were actually quite few because many of them were coming out of the colonial period. So the banks started to shift to the developing world later with the movement of the Marshall Plan in with the developed world, with Europe. And then the GATT, the General Agreement on Terrorist and Trade, later became the WTO, was to keep the avoidance of protectionism and tariff barriers and foster trade. There was a little interesting cortisol to that. The actual trade organization that was created out of Bretton Woods was called the International Trade Organization. And it actually failed to pass the Senate. The treaty didn't pass. And so they took the GATT as the second best and later built that as the WTO. And that's interesting because part of what one has seen over the history of 60 or 70 years is the constant challenge of how these rather thin, modest institutions try to encourage the international economic cooperation in a world economy that simply becomes more and more integrated and interdependent, but also has to deal with the world of domestic politics and legitimacy. Now, the World Bank itself has gone through significant evolution over the course of the 70 years or so, and it added various instruments. So the IBRD was complemented in the 1950s with a institution called the International Finance Corporation, which is part of the World Bank Group. So I'm the president of the World Bank Group. And IFC does investments in private sector. And then in the 1960s, there was something called IDA, the International Development Association, which was a recognition that for the very poorest countries, one might need special support. And the number of these countries changes with growth. But today, there's 79. In general, there are countries with per capita incomes below about $1,000 a year. And for those countries, they get grants or very long-term loans 40 years without interest. In the 80s, there was a fourth institution created, MEGA, the Multilateral Investment Guarantee Agency to help support investment by offering guarantees. And there's another body called ICSID, which is an arbitration dispute mechanism. Now, just as the world has transformed tremendously, so has the World Bank Group. And one of the challenges I've been president now for four years is one of the challenges is how one transformed this grand old multilateral institution built for one era for a very different set of challenges, some of which will have a chance to talk about. But let me just give you a brief thought that we can perhaps play out a little bit over time. When I talk about the World Bank Group and I try to explain what it does, part of the difficulty I find is that it's called bank. And so most people tend to assume that banks are primarily in the business of lending or investing money. And that's part of what we do, but in some ways it's only a complementary part. Because when the World Bank Group is most effective, it really combines three different functions. One is to take knowledge and learning and experience about development. And one of the changes over the past 10 or 15 years, this is increasingly coming from developing countries to other developing countries. And we try to understand that, analyze it, customize and share it for other developing countries. But then a second element, which does distinguish this from, say, an OECD or a university program, is we do have finance to put the bear in many different forms. And so for example, our IFC private sector arm is now increasing its equity investment. So it's not only loans, but it's investments. And we try to change and adapt the nature of our loan products to meet various needs. But then third, while we're not an insignificant player, so since the financial crisis began in really its heated form in the summer of 2008, we've perhaps committed almost $200 billion of finance across these agencies. But if you think about the money in the international system, that's still a drop in the bucket. So the question is, can you take this knowledge and learning, the finance, and in a sense, multiply it? So what can we learn about building markets, institution, and capacity? Building microfinance markets. Building local currency domestic bond markets. So in this most recent crisis, you'll see many of the developing countries didn't have the same financial problems they had in the 90s. One of the reasons were in the 90s, many of them were funded with dollars they're investing and earning in a different currency. So if you avoid the exchange rate risk. Or the building of institutions, often for countries that are coming out of strife, Liberia, Afghanistan, Haiti. So institutions, capacity, and markets so that our investments actually have a broader effect than the individual project. We, like any institution, have to continually to push to modernize ourselves. The World Bank has 187 shareholders. So 187 countries that are shareholders. The United States has the largest percentage shares, 15% of those shares. We have offices in about 160 countries. We have people from about 170, 80 countries on our staff. And so part of our challenge also is with our staffing, with the decentralization of our operations, with dealing with new issues that cross borders. It may be climate change, it may be trade issues, maybe biodiversity issues. And increasingly, and this is where I'll stop with this, is that what I think will be one of the biggest transforming aspects of our institution, but frankly, the whole world economy, is that in a relatively short space of time, at least in historical terms, the developing world itself is now a motor and engine of growth. So I've spoken about multiple poles of growth in the system. You want to understand the world economy today. It's not just a question of Europe, the US, and Japan. About 50% of global growth comes from developing countries. So if you're an American business, you are looking to these because these are often the growth opportunities. If you're an American farmer and you want to know about the future prospects for soybean, corn, wheat, others, you have to know what's happening in those markets. And of course, we're in Michigan, the whole challenge of manufacturing its adjustment. So this process that many of you would have seen starting over the course of 20 or 30 years is now moving with real rapidity. And some of the economic challenges we have today at the bank are how do we bring in some of these middle income countries and continue to serve them at the same time that we have them contribute to the institution, both in knowledge and finance, and at the same time try to make sure that those at the bottom, many of which are some of the Sub-Saharan African countries or fragile countries, also have a chance to climb the ladder. Well, that was a very helpful providing the historical perspective. I wonder if I could push you a little further in terms of where you think this evolution may be perhaps a decade from now. I mean, you talked a lot about the history, the change in the balance. The historical role has primarily been a relationship with governments. And I wonder whether you see some change in that balance as this evolution continues. Well, let me start with a couple of basic concepts or approaches and then expand it. One of the things that I've tried to do in the bank as a chief executive is to get people to focus on their clients. This may seem obvious if you're in a business, but one has to recall, this is an institution that came out of this development thinking. We had many expert economists. There's a little bit of a top-down view of how things are done. And as we were talking in a lunch session with some of the students, I think people have learned the hard way about pragmatic experience about what works and what doesn't and customize it for different contexts. So I keep emphasizing we have to stay in close touch with the clients and recognize that these clients are different. The problems of a Sub-Saharan Africa are different from a China and India or Southeast Asia, Latin America. And some of the issues now that we support in the knowledge and learning area with middle-income countries is very different than that of, say, a country coming out of conflict. Second, to approach this as a problem-solving exercise. You've got a lot of scholars here, students that are studying disciplines. In a way, my point is that the textbook knowledge is the important starting point, but you can't stop with that. So this is oversimplification. But you could have people who come to a meeting and say, well, they analyze the problem and say, this is the solution. But if it doesn't work with the politics and the institutions of the country, it's not the solution. So how do you help them solve a problem? Now, what these drive you towards is an institution that has to be both alert to what's happening in client countries but also recognizing it is a multilateral institution. So how do you also, in a sense, draw the inner relationships and the mutuality also with some of the developed countries? And there are different things that one can try to do in this. So for example, in the climate change we were talking, we helped create a series of climate investment funds that not only helped developing countries deal with mitigation and adaptation, but they also draw developing countries into the process of working on climate change. It breaks down some of the barriers. It shows some of the interests. I mean, much of economics or business is the mutuality of interest. And so how do you find those points of commonality? As part of the approach we're taking as an institution, one of the probably the biggest innovations that we've had in the past couple of years is many of you obviously are familiar with the whole anti-globalization and challenging establishment institutions. As someone who's been a public executive in different capacities, I think one of the best antidotes to this is openness and transparency. So we started an open data initiative at the bank. Hope you can check on our website about this. And we, having been in existence for so long, we have some tremendous data sets that we now make totally free and available. We're trying to, our research staff and others are working about ways to mash this and sort of make it more usable in different ways. We're taking, we did some work with some people from Google, Google to actually map it. So you can get on our website, call up a country, see where we have projects. As I mentioned, with the world of telecommunications before too long, I wanna be able to have people to be interact with this in real time. If you think about development studies even when you learned it, this is a huge transformation about what we talk about democratizing development and making it some more open process. It also serves us as an institution because of what it means is, is that communities that might have seen us as a Washington based sort of old bureaucratic organization can interact with us. We created a software, an apps for development competition to draw in software developers to think about how to use this data in different ways. And what I continually see is the, if you approach these in openness, they're endless possibilities. Let me give you one from Haiti. We did some overflights in Haiti after the earthquakes. And one of the things we learned from the photography was that we could work with structural engineers who would never have to step foot in Haiti. They would just use this photography and they could assess about the 60 to 70% of the building structural soundness. But then we also put all the photos up on the web and all of a sudden some different groups started to do some interesting things. They started to do overlays with, for example, some of the sort of the waterways, the potential water courses and others to look at if you built the 10 cities or rebuilt in certain areas, you were creating additional basis for problems. So this again is talking about how the knowledge and learning experience. Let me give you another one. That's again of rising interest. Natural calamities. Deans from the Philippines. If you look at about the distribution of calamities, natural calamities in the world, about 90% of them are in the ring of fire. We've done a lot of work now so that's the sort of volcanic earthquake zone on the Western Pacific. We, with the Japanese, for example, coming out of their tragedy, they're gonna host our next annual meeting and they wanna identify some of their experience of this. And there's a tremendous amount that can be done about early warning, prevention, how you build the buildings, how you place the buildings, so on and so forth. Quick response, which ends up being one of the most vital aspects of recovery. And then the nature of the recovery. And to show in a way how this is moving beyond the traditional North-South patterns, we offered some of our services to Queensland with their floodings. We offered it with Japan and we're trying to take their lessons. So if I think about the future of the bank, we have to continue to be agile just as a private sector organization would be about how we perform the services, what the clients want, but then as a financial intermediary, and I'll close with this, we also have to be agile. So some of you may have recalled maybe older people in the audience, there was a famous line once from a bank robber named Willie Sutton. And when Willie Sutton was asked, why do you rob banks? He gave the rather useful answer as that's where the money is. And so when I came to the bank, one of the things that I thought about was our basic intermediation structure was we raise debt, we're capitalized, we raise debt, we make loans or investments. So it's not a traditional aid type agency. Sovereign wealth funds are a new source of capital. Just as 20 or 30 years ago, it was some of the oil and energy producers. And so we've now created a asset management corporation as a subsidiary of IFC that is putting together investment funds and that is tapping sovereign wealth funds and others to take our investment experience, which had about a 20% rate of return on equities over 20 years in developing countries, and draw the capital into these countries. Now, this is not a charity, it's not development. And when I went to a Dutch pension fund and asked, well, why, what made you interested? We created a billion dollar fund to do some initial investments in Sub-Saharan Africa and some in Latin America for diversification. And their answer struck me as very interesting. They said, we now know developed markets are risky too. Developed made markets are clearly where the growth and the returns are, but we don't know enough about those markets. We don't know where to go. We don't, the transactions cost, the information's cost. Now, we make revenues from this, which we plow back into it, but because we're not a profit maximizer, my real interest is expanding the market. So if those funds can learn more and support private equity funds and others, there'll be great opportunities. So in a way, this is probably a far stretch from what you might have learned 10 or 20 or 30 years ago about the World Bank with traditional development, its knowledge and learning, its new financial systems. And of course, part of this is, and this is why I enjoy coming to universities, is also understand what people are researching and thinking so we can try to understand what people in the academic and policy community are thinking we should be looking at. So I just have to intercede that I remember when I was living in Washington, a period in which there was a group that tried to rob the World Bank because they thought that must be where the world's money is. And so. Well, let me add one other point of this, is that it shows the rapidly changing nature of the international system. Many of you will have heard about the G20 group, which actually was created in the late 90s after the East Asian crisis, but wasn't moved to the summit level until the crisis in 2008. Just last weekend, I was at the meeting of the finance ministers and central bankers for the G20 group. And in early November, I'll be at the G20 summit. And what, in a sense, the developing countries used to be the ones that were kind of, the add-ons, they're the, in a sense, the objects of the subjects. But now that's really changed. So in this discussion that we had last weekend, what is help crystallizing the European's recognition of the challenges in the Eurozone is that the events in August started to have shockwaves in terms of developing country equities, bond spreads, currencies. And the real risk for the economy now is if the confidence problems that have affected Europe and the US go to the emerging markets and it affects business, investment and consumption, then the developing countries, which have by and large been the source of growth in this downturn, will also shrink. And so it gives you a sense for international organizations but also the integration of the economy, how the world of developed and developing has changed is to give you one other sort of headline notion of this. I gave a speech a few years ago where I said we should no longer use the term third world. First off, we were in government at the time of the 8990, the second world went away, so at least they should move up one. But the reality is it's a term that reflects a different mindset, a different concept about developing countries. And frankly, one of the most encouraging things I found was the response I got from developing countries. They didn't wanna be categorized as the subsidiary, the remainder. They recognized that while they also have issues of income and development, that they wanted to, in a sense, have the respect and dignity that everybody wants. So I'd like to jump in if I may about and ask you to expand on some of the themes that you, and some of the points that you touched on, related to the World Bank's financing arms. I appreciate the distinction you made between the financing activities and the knowledge generation and knowledge dissemination activities, the latter of which I've been very fortunate to be involved in with some World Bank collaborators as well as we discussed earlier. But on the financing side of things, one of the, I think one of the important contextual features of the world economy is that, as you said, World Bank financing is just a drop in the bucket. The number one type of international financial flow going to developing countries is foreign direct investment. The number two type of flow is migrant remittances, which is a major and increasingly recognized important flow. Official development assistance or foreign aid only comes a distant number three. So if you put migrant remittances in foreign aid and foreign direct investment together, there are several multiples of official development assistance on a global scale. So in this, you started to touch on some of the points related to what role international institutions like the World Bank can play in a global economy where the vast majority of financial flows going to developing world are private. And I'd be curious, I'd love to hear more about how you think World Bank financing and the financing of other types of international financial institutions can get, can multiply the impact and the scope of private financial flows and other development impacts of private activity? It's a very good question and it's a very rich area. And just to give you a little flavor of this, I try to give a major speech before our spring and our annual meet in the autumn. This year, the speech I gave was called Beyond Aid. It's not saying we're there yet, but it's looking towards these issues. And let's give a few examples. Some of you will remember a big debate 10 years ago about the digital divide and how governments had to provide sort of benefits to people who didn't have access to the digital world. We, along with others, work with Sub-Saharan Africa and simply through policy and regulatory changes in the telecommunication sector, create an environment where $77 billion has flowed into the telecommunications and mobile phone industry in Sub-Saharan Africa. And the number of people who have access from mobile phones has moved from about $10 million to $400 million in a relatively sparse space of time. These are policy changes. Now, we can play a role, again, sometimes in financing to build the capacity and help people make these changes. You've done a lot of work in remittances. As we discussed a little bit, some of the policy lessons about how people can reduce the cost of remittances, how to create decent savings vehicles. But let me give you one that I didn't have a chance to mention. We're working a lot with Australia and New Zealand on some of the Pacific Island states, which have unique problems. When I was in Australia in August, I was able to sign a financing arrangement with Tonga, where we have helped provide the financing for fiber optic cable connectivity, which is critical for their telecommunications, which is critical for remittances, which is critical for the fact that people in Tonga may find jobs in New Zealand and Australia but want to have contacts with their families. So it's a more complex notion of immigration and movement of people with areas. More generally, if one thinks about the nature of a country's problem, in some cases, like Liberia, coming out of a conflict, you might need basic infrastructure and utilities and others, and maybe the private sector's not good to invest in electricity in Liberia. Maybe if you do risk sharing, you can help create the basis for that. And then where we also try to combine our projects is to expand the borders and knowledge about some of these learnings or alert people. So let's take another one, the agriculture. Agriculture prices tended to trend downwards over the course of decades. The world learned a few years ago that that process has probably stopped and there's some reasons for secular demand in emerging markets as people have more income. But one of the things that we try to do is how can we take a problem and transform it into an opportunity? So in the Midwest, prices go up, you get a pretty good supply response. Agriculture, as we, again, our research showed, can be one of the best anti-poverty programs, not surprisingly, it's in rural areas. You get about three times the effect on income generation for poor people. But in many parts of Sub-Saharan Africa, you have to invest all across the value chain. You have to understand the property rights, the seeds, the fertilizers. About 50% of the product is lost on the way to market. And so you're not gonna get the same supply response unless you help identify those and then we can put in money. We regenerate the context for private sector funding and others. And so across the range of activities, in a way, we try to see how we can catalyze both the financing and knowledge side to move beyond aid, to move beyond dependency and recognize there's always gonna be a need natural disasters, humanitarian response, things where the World Food Program and others have been involved with, whether you see it in Somalia or other locations. But even there, we're trying to bridge the gap between the humanitarian side and the development side. Many people may not realize, those tend to be rather separate communities and they go their own way. We're trying to work, for example, the degree, the World Food Program can have tenders for its grain products in emerging markets so that they can get the supply they need and at the same time, we can build this into a development model. So in a sense, the logic is ultimately to see how the development operations can encourage local ownership, share the information, build regional integration and create the frameworks ultimately for private sector growth. If I may step in. Yeah, go ahead. Just one other piece of this that I don't wanna lose sight of. What we're increasingly seeing is there can be lessons that where people used to see this as North-South, there's not only a huge amount of South-South, there's also potential South-North and let me share one with people. I can't go to a developing country today without having interest in public-private partnerships for infrastructure. So one of the lessons, of course, of China in the 90s was you invest a lot in infrastructure which they did with the downturn. It creates jobs today, productivity tomorrow and actually it's a nice mutual beneficiary because it boosts exports of services and many developed country goods as well. But in every developing country, people are trying to think about how you bring in private capital. Now interestingly, in a lot of the middle income countries the primary interest is not the capital. It's that the public-private design leads to better design of projects, maintenance of projects, operational efficiency. And so we've formed an infrastructure center of excellence in Singapore where we're not only trying to encourage projects but we're trying to look at the regulatory and legal framework. We're trying to, in a sense, build the pipeline and we're actually working with the Singaporeans about creating a new investment fund to invest in infrastructure. Now, flip back to the United States. Obviously, there's big concerns about debt and deficits at the state level as well as at the federal level. When I studied accounting, it was a long time ago but we used to have two parts to the balance sheet in that we had assets and we had liabilities. So you got liabilities but a lot of states are sitting on big assets called toll roads. And interestingly enough, Mitch Daniels, the governor of Indiana a few years ago, privatized his toll road. He did a long-term lease, got about $4 billion, put it back into the toll road system. It was politically sensitive at the time. It worked out fine for him in Indiana but they also learned some interesting things. So for example, they learned in one part of the toll road that the 15 cents that they were collecting at each toll booth didn't pay for the workers that were collecting the tolls. So they moved to smart cars and other things. Now, look at the state of Pennsylvania. So I won't focus on Michigan but the state of Pennsylvania not long ago, the legislature wouldn't go along with a toll road monetization. Intriguingly, in chunking China, communist China, we're working on privatization of the toll road. So you ask yourself, if in communist China, they can do privatization of toll roads to invest in infrastructure, maybe there's some things the U.S. could learn too. Great, I'm gonna shift gears just a little bit and go to one of the big challenges that you alluded to earlier, namely Europe. Now, Europe is only partially within your purview in the sense that you have the new member states as your clients and so on. But Europe obviously being the largest free trade area, largest economic block, has historically had huge effects on the rest of the world and is likely, it's some probability, to have a huge possibly negative effect now. How do you analyze it from the World Bank standpoint and what kind of challenge do you see if things don't go really well and what will be the impact on your rest of the world? You're one of the truly global institutions, so your view obviously is very important. Well, it's also an interesting, your question and the observation or an interesting comment on the change role of the World Bank. Robert McNamara was president of the World Bank from the late 60s to 1980 or 81. People probably wouldn't have asked him about European affairs. And it shows the changed nature and in fact, in August, I was starting to make public statements where I was trying after the, you remember the markets were roiled in August, I was starting to worry that up to that point the developing countries had recovered quite nicely. If anything, the danger was overheating, but I was worried this would start to have the effect which we did see and I mentioned. So a World Bank president now engaged with Europeans on some of their fundamental challenges shows the interconnection. More particularly, we're actually headed up to a very important set of meetings this week, a European Union summit. And in the short term, I think there's three challenges that Europe has been stumbling its way towards. In my view, the markets have assumed that there's going to be some resolution so there's some of that expectation is built in. And the question which we'll see this weekend and at the G20 meeting that follows is whether there's enough actions that match the commitments to deal with some of the market anxieties. Number one is the recapitalization of banks and here the Europeans seem to be moving towards a method where you would have the banks be given a certain period of time to either raise private capital if not take it from national governments, if not take it from a fund they've created and which is passed by 17 of the Eurozone Parliaments, the EFSF. Now the devils and the details, how much time, what are the standards? And this is gonna be quite critical also because many of those banks may decide the way they meet the capital standards is by selling assets or shrinking loans so it comes right back to the story of the world economy. You mentioned Central and Eastern Europe or the Balkans, we at the World Bank are working closely with the EBRD and others because you have to suspect that some of those European banks are gonna pull back from some of those regions and you could have a negative multiplier effect which we'll try to offset but those banks are global banks, it could affect the developing countries too. So that's one issue. The second issue is Greece is obviously highly indebted and they'll have to figure out how they deal with Greece's debt but the real question is most analysts believe that Spain and Italy which are much larger if given amount of time and roll over their debt we'll be able to manage if they keep the budget discipline but when markets get scared and panicked as we saw in the US in 2008 they could find themselves where they could roll over their debt and indeed this is what we saw people moving away from these markets in 2008 and the European Central Bank had to step in and buy their debt. So the second question is how will Europeans use this roughly $600 million in this EFSF in a way to perhaps create guarantees first loss provisions so they roll over the debt and then the third issue of course is Greece. Now it's not only and here the big issue is will there be a further discount in Greece's debt? It's not only the substance of these three decisions it's the sequencing. So if somebody decides to take a further hit to Greek debt before you've solved the other two problems then markets are gonna pull out and you've already seen in many European banks that it's much harder to get if not impossible to get term funding unless you've got it collateralized and for extremely good credits and so all these conditions when markets get nervous as we saw in the United States are being exacerbated. I'll go one step further though and that is the things that I've described fundamentally allow Europe to buy time and I've been in a lot of public sector jobs I'm not against buying time but you have to use the time and I think there's still a fundamental issue there are two fundamental issues that Europe is going to have to address beyond this they're not quite as imminent but you can't ignore them. One is what is the future of this monetary union? So you got to this problem okay you roll over the debt but sort of what's to prevent it from happening again? And in European terms this is discussed as do you create a political and fiscal union that matches the monetary union and if so what disciplines? This is the issue that Alexander Hamilton faced early on with the creation of the US credit and these are hugely political issues but I think the systems at a point where they have to decide either they go this way and there's different ways to do it or they face the consequences for overly indebted countries that aren't competitive. The second issue and this is true for the United States as well what we've just talked about are fundamentally issues of macroeconomics in terms of debt and credit the financial policy and sort of monetary policy but you can't ignore the structure of growth and this comes right back to the developing countries. So in what do you do to increase productivity that so it's not just an issue of austerity? So here I'm not just talking about macroeconomic spending programs I'm talking about how trade can boost competitiveness. In the United States this is partly discussed about the tax policy so should you move back to the type of tax reform that I was part of in 1986 where you flatten the base you add to the base and you flatten the tax rates. What innovation policy should you have? Ultimately and this is as you know from your experience a challenge for Europe is it's not just a question of what the government does directly but does the government create the enabling environment for the private sector to boost productivity and innovation and growth? And that's an issue that both the United States and Europe will still face. Well we have a lot of issues that are on the table from the evolution and financing roles and the private partner public partnerships that the World Bank is engaged in. Issues related to the financial crisis and how it goes forward. At this stage I would like to open things up for questions from the floor. We have a microphone there. I'm going to ask that the first questions be given by Ford School students and then we will open it up from there but I will ask people to be very brief with their questions so that we can try to get a number of people in. So again we have a microphone that is there and if people. And maybe if you could give your name and if you're a student or a graduate student. That would be great. Yes please. Yes my name is Alexander Robinson. I'm a graduate student. I want to ask you a question. You recently been criticized by economists for calling for a standard gold standard or some kind of form of gold standard. Why did you say that? Why do you believe you are criticized so heavily? Okay. I didn't call for a gold standard but let me tell you what I did call for and I'll explain some of the bases of the criticism but also the support. This was an opinion piece I wrote in the Financial Times earlier in the year and part of this goes back to what I was discussing with the IMF and the things that happened after 1945. We're in a process of transition in the international monetary system too. So you used to have a gold standard. Then you had the dollar in effect as gold and other currencies were pegged to it since the early 70s you've had for developed countries a flexible exchange rate system. And some of this debate focuses on around the US dollar as a reserve currency. My own belief is the US dollar will remain the predominant reserve currency but you're likely to see as China opens up its capital account that the Chinese remedy may play a role along with the yen and the pound and the euro. So you're moving to a world of multiple exchange rate multiple reserve currencies. And I was suggesting a series of steps that actually should be taken to make the flexible exchange rate currency system work better. Starting with the G7, the developed countries the idea that they shouldn't be intervening unless they all agree that special circumstance permit this is for example what Japan did once. Second you have a group of countries such as Brazil which you've been may have been reading about in the paper that have independent monetary policies have had flexible exchange rates but the exchange rate appreciated then it came back down. This raises questions about how you can use policies that may sort of regulate or deal with capital moving in and out and kind of whether there are best practices to be learned about this. Third, I was trying to emphasize that I think the system would be better off if China moves more quickly to an open capital account and there's something that was created at the IMF called a special drawing right which is really just a form of combined currencies that allow a country to borrow special drawing right. China is not a member of the SDR because it's not a freely exchanged currency so the suggestion was could you create incentives for China to move more quickly by saying if you meet these criteria you would be part of the SDR. It's a similar approach that we use with China when it came into the World Trade Organization. Now and then I suggested the IMF would play a role as kind of a half referee in other words not be able to impose a penalty but be able to point out in this system when somebody was in effect abusing it to try to bring some pressure to bear. Now on that, gold was one last point and I was basically saying that as the IMF looked at the performance of currencies I was pointing out that what I was perceiving and remember this was January was that the price of gold was starting to tell me something about whether markets were confident about monetary policies and currencies. It was starting to go up. So frankly if you'd read my article and invested in gold you'd be a wealthy man today because I was suggesting that this was showing uncertainty. Now that's different than a gold standard that was fixed. It was saying that gold like other commodities sometimes are an indicator of something. Now one reason that it created the tension this is a lesson of communications is the Financial Times decided I wanted to make a front page story by saying it was a gold standard which it wasn't. It was great for them and for me because it started this debate but the other is a deeper point and that is the system that I described is basically in the hands of central bankers. Central bankers want to be seen as the master monetary magicians of a modern era and in a sense when I was pointing to gold I was saying that the markets were raising some questions about their performance and not surprisingly the traditional central bankers didn't like anybody raising questions about their performance. So I'm glad you asked the question because what it kind of integrates is a little bit how the system changes how in this international interdependent economy you need to have some norms but it's not necessarily gonna be rules like within a country. How do you encourage cooperative behavior but how do you also use institutions like the IMF and the World Bank to kind of help prod this and how do you use markets to read signals and market prices for gold or other commodities are totally dependent on this issue. They're dependent on supply and demand but it was quite clear in January and it was clear throughout the year as people moved to gold it was adding to their uncertainty about monetary policies and the value of currencies. Thank you. Thank you. Do the best I can. Hello, my name is Alan Haber. I studied economics here and I worked in many years in anti-poverty work. I'm part of the Movement for Democratic Society. As I've looked at international economics and development economics it looks like while you paint a rosy picture an optimistic picture it is really one of significant failure. The demonstrations all over the world now point to the distress of people that the structural adjustment and austerity programs that are promoted out of the bank the privatizing of the commons. One example, the opposition to the postal saving system which is the most efficient way of primitive private accumulation in all over the world that the banks do not support. It seems to me that you really need a different view not of bailing out the elites but of somehow redistribution of power in the system so that the people actually have a voice in restructuring the economy. And this is not what I see happening from the world bank in the vocal opposition all over the world. Now not only on Wall Street but in virtually every country and in Ann Arbor, Michigan itself is a challenge to the theories that you're promoting where the rich get richer and the poor stay poor or poorer. And we need a different system of how the economy is gonna work. How does a world bank perceive all this? What is going on in the street and the increasing distress in countries all over the world? That's the question that I pose to you. Thank you. Well, first, open debates a good way to learn and discuss these things. I wish I'd get on our website and learn actually what the bank's been doing because a lot of things you referred to the bank hasn't done for 10 or 15 years. Second, I always think as part of the transparency and healthy debate the bank in any institution makes mistakes so we should have an open policy to continue to try to learn from our mistakes as individuals do. Third, most of the demonstrations you're talking about are taking place in developed countries not in developing countries. And this isn't to say that you don't have huge problems of poverty and elimination but keep in mind there's a millennium development goal about cutting poverty in half. China alone will have achieved that. It's removed some 400 million people from poverty over the course of the past decade. Now you said there's all these objections to the World Bank in developing countries that used to be the case. I really don't find that today. Now we're open, we find if people have ideas of things we should do differently but actually China considers us an extremely valuable partner India considers us a valuable partner the African countries consider us a valuable partner. We try to have a two-way street about how to try to learn about things and there's no doubt I'm not trying to sugarcoat the challenges of poverty are enormously hard. But one of the things I tell my staff is if they were so simple somebody would have solved them long ago. So on the one hand we have to be honest and open about trying to learn from mistakes but on the other hand we also have to keep trying to address these issues. So if I look at the progress of developing countries I actually think that they've made enormous progress. China's grown 10% a year for the past 30 years. Sub-Saharan Africa has grown 5% a year over a decade prior to the crisis. It's actually come back relatively well and of course Sub-Saharan Africa of course has great variation. So you've got about a third of the continent's population that is looking for regional integration, infrastructure, energy, private sector development. In a sense they're the new cheetahs that are part of the system and we need to help them also benefit growth. You've got about a third of the population in natural resource development countries. And for them the real issue is governance and inclusive growth. How to make sure that their oil and energy resources isn't just ripped off by certain people, get corruption, avoid the Dutch disease for exchange rates. And those are issues that we and others can help with. And about a third are in post-conflict or conflict states where it not only brings down the states themselves but the neighbors. But let me just give you an example of the sort of things that we're trying to do to prod people's thinking. We just put out a report about our most recent World Development Report which is one of our big flagship reports on gender and development. And I don't know if you've done any work on gender and development but I was struck by the fact that a Bloomberg reporter in the midst of an interview about the Eurozone said, this is really interesting. They said this could be the next emerging market because of the growth potential. Because what you see is a country that ignores 50% of its population is not likely to succeed. And we have a rich amount of detail of how changing policies with property titling, access to credit, openness and occupations can have huge productivity increases. So again, I respect your point of view. Learn a little bit more about what we're doing. The next question, please. Thank you. Hello, Mr. Zelik. I'd like to welcome you to Ann Arbor, our fine city. Also, I'd like to compliment you on your most excellent mustache and... You know, I was told actually, somebody in Europe mentioned this is very stylish. I didn't know I've had it for 50 years. Back in vogue, right? And I would like to ask you a question regarding Citigroup. Citigroup is the financier of this event and they released some internal memos back in 2005 and 2006 regarding what they called the plutonomy. Now, this sort of relates to what the last speaker was talking about, the gap between the rich and the poor in America. What's that? You said memos related to what? Memos, they called it the plutonomy, the gap between the rich and the poor. It's also known as the genie index, the genie coefficient. And they predicted that this would continue to rise in America, Japan and Canada and that it was creating structural problems and their recommendation was to invest in companies that service the richest Americans. And also, they predicted a populist backlash against this sort of wealth inequality as it were based on if the American economy went into a recession. And I'm wondering how you feel about, you know, the genie index in America and that it's increasing. Well, I obviously don't know about Citigroup and its memos. It struck me Citigroup had a series of its own problems more basic as it tried to recover. But your point, I think, is a powerful one and let me address it this way. We have tried to stress at the bank the importance of inclusive and sustainable development. And the inclusive is important economically as well as politically. So I think, again, one of the lessons that people learn is there is a benefit. For example, in China, you've had a worse distribution but you still had rapid growth and so people buy in large field, there's a benefit as they all increase. But in China as well, a lot of the work that we're doing is how do you make sure with education policies, rural and urban and others, you broaden the benefits of growth. But let me give you an example from another group I spoke to earlier this week, Latin America. Latin America is a region that, of course, was characterized by very sharp male distribution. And yet over the past 10 years, there have been some real benefits in Latin America. About 60 million people have been removed from poverty. They've learned a lot of lessons about better macroeconomic financial management better actually than the developed world has. And so they actually had a form of silent revolution in that part of their macroeconomic management that helped them deal with this downturn. They've clearly also benefited from the linkage to China with selling agriculture and some commodity prices. But when I was asked, what's next? My focus was the development of a middle class because if you really wanna think about sustainable growth in Latin America, the real target, and there's a number of private sector parties, would be that middle class. Now this is, when I talk about this, it has different dimensions. One, it's the competitiveness. Now there's what do you need to do in terms of skill development? What do you need to do in terms of productivity? What do you need to do in education so that people can earn the money to be part of the middle class? But there's another part of it, which is what do you need to do with some of the basic health and social conditions? So I was saying actually at this seminar we had before, one of the lessons of the 1990s financial crisis, hard learned as it was, was that the macroeconomic stability wasn't enough. You could lose a generation, literally lose a generation if you don't get proper nutrition, particularly for children between negative nine months and 18 months. It's the most formative period. So what does that mean in terms of policies? We were talking about targeted safety net programs, not ones that bust the budget, but actually drawing on some of the lessons that Mexico did with Opportunatus or Brazil did with Bolsa Familia. We've now expanded these to some 40 different countries. So for about a half of 1% of GDP, you have a transfer program that focuses on the poorest, on the conditions they send the children to school and they get health checkups. These came from developing countries. So without going through all the detail, the thrust is I don't think that simple growth numbers are enough for people to target. The inclusive and the sustainability, the sustainability means resources, environment, but also means systemically. And recall, as we were talking about, I started out by saying economics textbook is not enough. You have to think about this in political institutions. Many of these countries are new democracies. They're fragile. So how do you try to build to support in a sense that everybody's got buying in the process? And let me give you a very real example of this. We've all been stunned by what happened across North Africa and the Middle East. The final chapters of that story haven't yet been written, but we're working with those countries not only on their growth. Egypt had relatively good growth, but growth in a way that allows other people to feel they have the breadth of opportunity. Now, where there will be political and policy debates till the end of time is what's your balance in terms of some of the equality of result versus a quality of opportunity. And so you might have a debate about people that say, look, we've got to give everybody a chance no matter where they're from to have opportunity, but I may not want to have the same tax policies that force same equality of results. And that's what politics are about. But so coming back to the question you asked, I think it's different for businesses. Businesses are gonna do segment different strategies. Walmart focuses on sort of a different income group than Nordstroms focuses on. That's a business's decision. But for a society as a whole, I think the healthiest thing is to make sure that everybody has the opportunity and everybody has the opportunity to fulfill themselves, both for individuals but also for the society. And I think that makes for healthy societies and polities. Thank you. Let me just interject here if I may, to what extent may it happen over the next several years that some of these countries that are somewhat successful in this way will graduate from the poor to lower middle income while they still have a lot of poverty and will not qualify for the IDA for the soft loan and grant window. And if so, are you ready for it? What will you do? Well, as an institution, we have the IBRD lending and recognize the World Bank's a AAA borrower. Okay, so that means we borrow at rates not too much above the U.S. Treasury and our total costs on top of that may be 45, 50 basis points. So they get long-term loans, very attractive to deal with that. But as we've discussed, it depends on the institution. Many of them may not need the money. It goes to the same set of policy questions. And so, but let's even take a harder one. Let's take China. Because China has grown, as I mentioned, 10% a year for 30 years. But what's intriguing is the Chinese are now recognizing that the growth model they used over the past 30 years is not likely to continue to be stable for the future. They've relied very heavily on exports and domestic investment. So consumption is a much smaller share of GDP. And to give you a reference point on this, if China by 2030 continued at the same growth rate, it would be like adding 15 South Koreans to the international economy. It's hard to believe that would be sustainable. So China is working on how can it increase domestic demand? How can it increase consumption? And some of these go to these same issues. Many people may not recognize that China will probably be having more people leave the workforce in five years that come in. So they want to move out of the low value added manufacturing and move up the value chain. Now coming back to some of these other questions, this actually presents opportunities. So I don't want to suggest this as an easy jump, but we're working with China and Africa to see whether you could create some of the enterprise and industrial and manufacturing zones in Africa. What does it take, energy, transport, logistics, so that some of those manufacturing enterprises could move to sub-Saharan Africa? And just to give you a sense of how these interrelate, we estimate roughly there's some 85 million low wage manufacturing jobs in China. In all of Africa, north and south, there's about eight to 10 million. So even if you could just move five million of those jobs, you would be able to have 50% increase and in a sense take what has been the story of East Asia's success, starting with Japan and Korea and Taiwan and Southeast Asia, then China and create an opportunity for Africa to move that ladder. Now, maybe it requires more the agriculture development first and create the higher incomes. But part of this, and to answer the people's question is, look, I'm totally open. This is a field where people have to learn as you go, but I guess part of this is, let's try to understand what has worked. There have been some interesting things that have worked out there, and increasingly it's things from the developing world that can be transferred to others in the developing world. And frankly, what I'm most worried about now is actually the problems in the developed world that will drag down the developed world as well as the developing world. Hi, my name is Chris Mays. I'm a sophomore economics and I'm actually interested in what you are involved in, which is the world being, so I'm really honored to ask this question. With the recent United States economy and being downgraded in the credit rating, I was wondering, what do you think that we can do to help improve our situation? How can we get our credit back? And how long do you think that that would be? Yeah, that's an interesting question. Let me start with the credit rating issue, and then I'll move to the bigger policy. We have, as you'll see, I'm somewhat experience-based with my answers to questions. We have some examples. This actually happened to Australia and Canada, and the unfortunate news is it tends to take longer than you think to get back. And so remember, what a triple A rating really is, is that just a total assurance of payment. And so this was partly debt in financing, it was partly also, I suspect, with some of the rating agencies, a sense that some of the political impasse that raised questions, and so it may take a little longer. But if you look at what happened in markets after the rating decline, actually the value of U.S. treasuries increased, interest rates came down. Now that reflects a little bit what we were talking about in answer to the prior question in that the U.S. securities and dollars are still a safe haven. So if there's problems in Europe, you can expect money will go to the U.S. securities. What I think about the rating downgrade is perhaps reflecting a little bit the historical perspective. I think the real issue will be 10 years from now. Will people look back on this and say, did they take this as a wake-up call? Did they recognize that there were some fundamental things that had to be addressed here, or did they just continue as they went on? So that's the context I would look at it. Now on the U.S. side, I'll again divide this into the macroeconomic and the growth. Look, the United States clearly has spending and debt issues. And Congress has been focusing more on the spending. Maybe that's a good thing. So far they've been focusing on what people call the discretionary spending, the sort of the annual amounts. And the reality is that's not where the real money is. That's not where Willie Sutton's gonna be over time. So the real issue is how do you slow the rate of growth for Social Security and Medicare? Now, my own view, having done with this for a while, is again, remember I didn't say cut. It's slow the rate of growth. The good news is you could slow the rate of growth and deal with this issue. And I frankly suggested to both parties they look at Social Security because it's an issue, it's not as big as Medicare. But it would send a very powerful signal to other governments, the U.S. public markets that the U.S. government can function. And the reality is if you say to people you're gonna have cuts, you're gonna turn off right away. In reality what you could say to people is you can keep the Social Security you have today plus the cost of living increase. It probably would make sense to increase the retirement age gradually over time which reflects longevity. Now, is that a cut? Or is that an assurance of a cost of living increase? The difference is Social Security right now is index to wages. And the wage index rises faster than the cost of living index. So the good news is you could actually deal with this problem in a reasonable way if you start now. But if you keep waiting, it's like Europe. You're gonna get a point where the costs are bigger. So whether it's this idea or something, the government's gonna have to deal with the rate of increase of entitlements. Or frankly it's gonna eat up everything else in the budget. The second thing, I talked about tax reform. And again, what I'm sharing with you a little bit is the experience I've had of both policy but also political and institutions. What I'm seeing out there across different constituencies and different political interests is sort of an interest, a little bit like you had in the early 80s about saying look, we don't like all these tax preferences. Let's broaden the base and lower rates. And frankly I think that would be good for growth in the United States. It would help investors and business people. But I also realize having kind of been through this once before it's easier to say than to do. But I believe that would be another important action. A third one would be trade. Look, I'm a big believer in open markets and trade. Fortunately the Congress just passed these three free trade agreements. But there isn't a pipeline. People haven't really been developing this issue. Trade, remember the United States is 4% of the world's population. If you wanna grow, you gotta look and take advantage of some of these other markets. And trade is a wonderful way where everybody reduces their barriers and frankly it forces people to become more competitive and that means more productive. So those would be three areas to start on. But look, this will be worked out in the political system. It's not my decision. But the core question is the one really, I'm glad you're asking, which is coming back to the ratings business, the US really is gonna have to face up to this question. And I'll just share one other aspect of this. I work internationally as I have for some 25 years. So I spend time in the US but I spend a lot of time abroad and I cover all regions. Developing Europe, Asia and others. And I can't emphasize enough that there's still a feeling out there that the United States is a special place. It's the wealthiest country. It's an innovative place. It's tended to reinvent itself. But because of these financial crises and because of the problems and some of the political impasse, starting to get a feeling that I haven't gotten in the past of, well, will the US get its act together? And all I can tell you is it's not only important for the US, but it's important for the rest of the world. Jan's from the Czech Republic. I dealt with the end of the Cold War. Frankly, the US did some very important things with German unification at the end of the Cold War. The US can't do this alone, but if the US sidelines itself, it's gonna be a much nastier world. Thank you, sir. And this is probably our last question. Okay, well, thank you for coming and you've given so many eloquent, articulate answers. I gotta keep replaying my question. But my background is my name is Amar Iqbal, Michigan grad with econ and then a fellow Kennedy School grad with a master's in public policy. Briefly was at the World Bank IDA division on 1818 H Street. And but spent 14 of the last 18 years abroad with the IFC, working on infrastructure projects in places like Equatorial Guinea, Kenya, Indonesia, and Bangladesh. Well, thank you for your service. Excuse me, oh, thank you. And thank you for the opportunities. But I wanna reflect on Bangladesh. When I started there with the IFC, we worked on a power plant in the energy sector, which at that time was the largest foreign direct investment in the history of Bangladesh. And IFC was a critical component in bringing in even a Citibank, Lone Bee, and other programs. And since then, after that $110 million project, Bangladesh has done several much larger projects and they have their own niche within energy sector. And of course, at the same time, we know about Bangladesh's microfinance, especially through Grameen and other institutions that have been supported by soft institutions such as the World Bank. But what I feel when I go to these places like Vietnam, Thailand, places in Africa, what's missing is that institutionalized entrepreneurism, especially for the middle class. I mean, there's a lot of red carpet treatment for large projects. There's a lot of special emphasis, especially with women in poverty and the microfinance. So what my question would be, I mean, again, you were very articulate about the challenges coming before, but my ground view is that if we can, we could make it more sustainable if we had these, again, middle class type of entrepreneurs who have that drive, who aren't pulling favors and can really drive those economies. And what could the World Bank group do? IFC asset management, but yeah, to further that. Now, very good. And of course to a core question, and there are many dimensions, but I'm just gonna emphasize two because I think they'll be a broader interest. We talked about microfinance and many people know about the idea of sort of small scale credit to sort of small producers. In a sense, what your question goes to is something that we're trying to work on, which is what's the level above? So what's above microfinance in terms of sort of micro small and medium sized enterprises? What are the impediments to getting that forward? Now, one aspect is finance. And so we are trying to be innovative, partly help with financial institutions in the country on the same logic that it's not just what we do, but can you build the structures? And how do you support people who learn how to lend? These are small projects, just like microfinance, but they're a different set of projects because it's easy in many countries for these banks to simply buy the government bonds. So how do you try to support that activity? A second, we're probably one of the biggest investors in private equity funds, small scale funds, at least in Sub-Saharan Africa, maybe globally. I think we invest in about 170 of them around the world. And we're trying to, again, sponsor these so that they can support the development of private sector entrepreneurs. So, and then, as you probably know, beyond the financial sector, we try to look for areas where, again, we're kind of at a wholesale level, but how can we connect other activities? So you mentioned the big players. You may know, we have a linkages program, so we're trying where you have a big investor, a foreign direct investor, how you connect them with small business development. So I remember in Mozambique, visiting a major power plant operation, and we tried to support with their suppliers and others that they would draw on some of the local customer base. But there's a second dimension that is critically important, which you alluded to, which is that it goes to the rule of law, the governance, the anti-corruption, the transparency. So when we look at some of the North African countries, even the ones that had reasonable growth, one of the things that led people into the streets was it looked like it was gained, that it was for an elite, it was for the family of the ruling group. Everybody, it wasn't an open chance. So part of the challenge is to try to work with countries and persuade them that this is in their own interest, have their own capability. But as you know, that sometimes runs against vested interest. It's one reason, again, why these pieces interconnect. One of the reasons why open trade is useful is that some people always emphasize the exports. The imports sometimes challenge the oligopolies and the oligarchies that are connected to the fancy families. So I think part of this is also then trying to prod these countries and whether we partly do this through our own efforts with anti-corruption, with our own projects, but we're trying to expand this much more. How can we help them develop institutions with freedom of information acts, open and transparency? We created an international corruption hunter's network to try to support people doing the prosecutions. We've got an investigations. I think we need to do more in this area, but we're trying to help build legal and judiciary systems so as to create the enabling environment for those opportunities. And again, I'll come back to a point that I've mentioned and answer a couple of the other questions. What I've seen in my own policymaking experience and what I've seen in the developing world is one of the most powerful things is what works elsewhere. And so again, you can come up with the papers and the analyses and show people things, but when they see the demonstration effect, I think this is one of the reasons why East Asia had the growth. And people, you know, Vietnam is a later comer, but they could see what happened along the way and they could see the process and kind of try to imitate it. And so I think that again, the good news is you're actually seeing a lot of success out there. It's frustrating when you see the amount of people that are still enmeshed in poverty and the people who don't have an opportunity, but we just need to keep multiplying those that see the opportunity and kind of press whatever the political system is to allow people to have it. The one last aspect that I'll come back to though is I've talked about the private sector and the business side. I don't want to ever underestimate the fundamentals and the human development side, the nutrition, the education, the basic safety nets where things go down. You know, if we have a program in Africa now called Lighting Africa, it's using off-grid sort of lighting systems, you know, so that even though only 30% of the people in Sub-Saharan Africa have electricity, that in a sense it's driving down the cost for people to be able to have lighting so that kids can study. You know, so you gotta keep, if we're gonna try to increase opportunity and productivity, you also have to help with the nutrition, the education, and the one other piece that we're encountering in all societies, developed and developing, is this critical nexus among education, skills and jobs. This is an issue for Michigan too. You know, how to fit that more effectively depending on the level of development. Well, thank you very much. We have come to the end of our time. We very much appreciate your thoughtful perspective on such a wide range of things and it has been a pleasure to host you here at the Ford School and the University of Michigan. I'd also like to thank my colleagues, Yann Svainar and Dean Yang. And before we close the formal part of this session, I did want to make sure that our audience knows that we have an informal reception just outside of the auditorium and we hope you will stay and continue the conversation informally in that venue. And I'm happy. Can I make one other point? Yes, please. I also, I wanna thank all of you for coming for another reason. And that is, you know, I very much appreciate your interest in America's engagement internationally, whether it be development or trade or business. You know, as I said, I grew up in the Midwest. It was a very different era. I've mentioned to people many times that there's still a huge interest in the United States, but in many countries there's a worry that the United States turns inward. It's natural when people have problems and it's natural they become self-absorbed. My own sense is that one of the things that has always been America's trump card is its openness to goods and ideas and people and capital. And I often tell people abroad, as you know, sometimes I think unfairly, people associate Midwest with isolationism and other things like that, that there's much more interest in this than sometimes people expect. But I very much appreciate the interest that all of you have and demonstrate in this because when you think about the challenges that we've just discussed in a relatively short time and then add on other ones like climate change or biodiversity and security, I have a firm believer that it's gonna take kind of US playing a critical role, but part of the challenge is how do you do it in this changing and multilateral system, which is where the World Bank comes back in. How do you adjust this old institution built in one era to play this role? But ultimately I've been involved with politics and policy enough to know that it depends on an informed electorate and people who care. So thank you very much.