Romer Out as World Bank Chief Economist After Rocky Stint

(Bloomberg) -- World Bank Chief Economist Paul Romer is stepping down after a rocky tenure in which he struggled in his efforts to reform the research operations of the development lender.

The departure is effective immediately and Romer will return to his position as a professor at New York University, World Bank President Jim Yong Kim said in a statement to staff obtained by Bloomberg News.

Romer relinquished oversight of the Development Economics Group at the Washington-based bank after less than a year in May when researchers complained about his abrasive style as he tried to make them communicate more clearly. This month, Romer went on to accuse a fellow economist at the bank of potentially manipulating a global ranking on business conditions to the detriment of Chile. A week later, he backtracked, compounding the embarrassment for the World Bank.

“Paul is an accomplished economist and insightful individual, and we have had many good discussions on geopolitical issues, urbanization, and the future of work,” Kim said in the note. “I appreciated Paul’s frankness and honesty, and I know he regrets the circumstances of his departure.”

Big Name

Romer’s appointment in October, 2016 was initially hailed as a coup for the World Bank, which is trying to maintain its status as a leading development voice at a time when governments in some rich nations are increasingly reluctant to finance the development of poor nations. His term was supposed to expire in September 2020.

The World Bank was conceived during the Second World War to help rebuild Europe, and has since evolved into a lender to emerging markets and developing countries.

While heading the research division, Romer received flak for demanding staff cut down on the use of “and” in their writing. He asked for shorter emails and insisted presentations get straight to the point. He also declared several positions redundant and enforced term limits on managers.

Staff were upset with what they saw as his abrasive style, and they said he didn’t listen to their concerns.

Chile Controversy

The final straw may have been the controversy this month when he accused a former colleague of manipulating the bank’s “Doing Business" global ranking, possibly for political reasons, to the detriment of Chile.

The South American country’s drop down the table during the presidency of Michelle Bachelet, a socialist, was due almost entirely to methodological changes, and not any actual deterioration in the country’s business environment, he said. Bachelet’s administration was indignant and demanded an investigation. A week later Romer said he didn’t mean to imply any political manipulation or bias in the rankings.

“What I did want to say is something many of us in the bank believe -- that we could do a better job of explaining what our numbers mean,” Romer said in a blog post.

Romer pioneered research into “endogenous growth,” examining how the diffusion of knowledge boosts output. His name often comes up in short lists for the Nobel Prize in economics.

But in recent years, his attacks on the credibility of macroeconomic models irritated many of his peers. In a scathing critique, he said the arguments in the field could be summarized as, “Assume A, assume B, ... blah blah blah ... and so we have proven that P is true.”

To contact the reporter on this story: Andrew Mayeda in Washington at amayeda@bloomberg.net.

To contact the editors responsible for this story: Brendan Murray at brmurray@bloomberg.net, Sarah McGregor, Scott Lanman

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