November 29, 2023

Economix Blog: Kaushik Basu Named to World Bank Post

On Wednesday, the World Bank announced its new chief economist: Kaushik Basu, a Cornell University economist and the former chief economic adviser to the Indian ministry of finance.

As noted by Justin Sandefur of the Center for Global Development, he will be the first Indian chief economist at the bank and the second from the developing world. (His predecessor, Justin Yifu Lin, is a Chinese national.) For years, developing economies have pushed for a greater voice within the Washington-based Bretton Woods institution.

“Kaushik is uniquely suited to help us offer evidence-based solutions and advice to client countries and provide innovative excellence in leading our development research,” Jim Yong Kim, who took over as the World Bank’s president in July, said in a statement announcing the hire. “Kaushik brings firsthand experience from a developing country and will be a terrific asset to the institution.”

Mr. Basu has “a reputation as an out-of-the-box thinker and a deep understanding of policy issues and their interface with politics,” a former Cornell colleague, Eswar Prasad, wrote in an e-mail.

His academic and government work has focused on development, comparative and public economics. In recent years, he has written on exchange rate manipulation, inflation, recessions and stimulus and child labor, among other topics.

A paper he released last year caused a bit of a stir: While advising the Indian government, Mr. Basu argued that countries could reduce the incidence of “harassment bribes” – e.g., “I’ll approve this home renovation project for you for a small fee…” – by making it legal to give a bribe, though not to receive one.

“This will cause a sharp decline in the incidence of bribery,” Mr. Basu said. “After the act of bribery is committed, the interests of the bribe giver and the bribe taker will be at divergence. The bribe giver will be willing to cooperate in getting the bribe taker caught. Knowing that this will happen, the bribe taker will be deterred from taking a bribe.” (Mr. Basu notably argued against giving an amnesty for past incidents of bribery.)

Mr. Basu is to start at the bank Oct. 1. In the meantime, you can follow him on Twitter.

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