“Am I surprised the EBRD is still going after 25 years – yes, I am!” says Ian Goldin with a hearty laugh. “During the early days, we all thought it would be just a transition bank and its role would then diminish,” he continues. “I honestly couldn’t have imagined the bank would be operating today on this scale and across such a broad range of countries”.
Goldin was the EBRD’s Principal Economist from 1994 to 1995. While his tenure was relatively short, he left for good reasons – to return to his native South Africa as an advisor to then President Nelson Mandela – and remains close to the EBRD, speaking at the Annual Meeting today.
Now a Professor at Oxford University’s Martin School, Goldin leads a cross-disciplinary programme of collaboration and research into the identification of long-term global problems. The EBRD, he says, “can make a significant contribution” towards tackling the challenges of the next 25 years.
“This is the most modern of the multi-laterals – it doesn’t have the ideological and bureaucratic baggage of the others,” he says. “Because the EBRD is focused primarily on the private sector, it can seize opportunities”.
In his newly-published book – “The Age of Discovery” – Goldin draws parallels between the Renaissance and globalization. “The Renaissance showed turbo-charged change can bring good things but also extremism and set-backs,” he says. “While the Gutenberg Press sparked a revolution in how ideas travelled, bringing scientific and artistic breakthroughs, it also led to massive challenges to authority, extremism and health pandemics”.
The internet and the broader process of globalization have been “similarly transformative”, says Goldin, yet with drawbacks. “Openness and connectivity is a huge force for good but also brings cascading risks – financial, cyber and health risks – that need to be addressed,” he says.
Pointing to “the accelerating pace of technological change”, Goldin warns of significant disruption. “If half of existing jobs will be lost over the next 25 years, and I predict they will, where will the other jobs come from?” he asks. “How do you transform your industries, your education systems, to cater for this change – to interface with new technologies, particularly artificial intelligence?”
When thinking about Central and Eastern Europe, Goldin sees “lots of parallels” with the past. “The openness we’ve seen since the Berlin Wall fell has clearly brought huge benefits, but big risks too”. With its “transition mandate”, the EBRD is “well-placed” to address such concerns. “In the end, future jobs in Eastern Europe, as everywhere, depend on the private sector flourishing, which needs infrastructure, transparency and, above all, governance – all at the heart of the EBRD’s mission”.
Has the transition process turned out tougher than Goldin and his EBRD colleagues of the 1990s envisaged? “Far tougher,” he says. “In some places, it’s got stuck and even reversed – the Russian judicial system, for instance, has barely advanced since Yeltsin”.
Do such difficulties explain why the EBRD is still around? “As well as transition complexities, new issues have also come onto the agenda – such as climate change,” he says. “Then we had the financial crisis, which brought on-going issues of capital access and infrastructure funding problems”.
What does Goldin make of China joining the EBRD earlier this year? “It’s great,” he says. “China has borders with many countries where the EBRD lends, is a big potential co-financier and we need to encourage trade along the ‘New Silk Road’”.
And when asked about the future of the EBRD, Goldin refers to another of his recent books, “The Pursuit of Development”, which discusses how the balance between the state and the private sector has changed. “We used to focus solely on economic growth but development is now much broader,” he says.
“Since the days of Thatcher and Reagan, the pendulum has swung,” he adds. “While the market and prices remain key, it’s also about creating an enabling environment – effective regulation, competition policy, supportive macroeconomic policy”.
Does he think the EBRD retains broad support among the nations providing financial backing? “As the success and coverage of the bank has grown, its technical skills and access to capital have expanded – so many feel it’s become a resource that deserves to be used”.
So will the bank be around in another 25 years? “If you’d asked me back in the 1990s, I’d have said no,” he says with a smile. “Chastened by that and inspired by how it’s grown, I’d now say yes – but with so many challenges, the EBRD must keep reforming and changing, not cling to the past, and always look to be effective for its shareholders”.