Professor Paul Romer to World Bank

NYU’s Paul Romer Named Chief Economist of World Bank

Jason Scharf, Contributing Writer

This month, Professor Paul Romer moves from NYU Stern School of Business to begin his tenure as Chief Economist at the World Bank, headquartered in Washington D.C. Since 2010, Professor Romer has taught economics at Stern, where he founded the NYU Stern Urbanization Project—focusing on policy reform and economic growth in major cities.  Prior to coming to Stern, Professor Romer, who holds a B.S. in mathematics and a PhD in Economics from the University of Chicago, taught at Stanford University’s Graduate School of Business.

Created in 1944 alongside the International Monetary Fund, the World Bank seeks to end extreme poverty by providing loans to developing countries. Global populations are quickly moving from rural to urban areas; and Professor Romer’s research on cities in developed nations will be an excellent fit for the World Bank’s current initiatives to raise the standard of living around the globe. I had the chance to ask Professor Romer a few questions regarding how his time at Stern has prepared him for this new endeavor:

NYU Stern Professor Paul Romer

Jason Scharf: What made you decide to take the position of Chief Economist of the World Bank?

Professor Paul Romer: I was asked informally whether I was willing to be considered for the job. I said yes but thought that the odds that I would end up with the job were low. The turning point came when I met with President Jim Yong Kim. We discovered that we shared a sense of urgency about scale. We had each reached the conclusion that the world cannot afford to waste time on strategies for poverty reduction that do not scale to billions of people. I decided on the spot that it would be inspiring to work for him.

Jason Scharf: How do you feel your work first at the Stern Urbanization Project and then at the Marron Institute of Urban Governance has prepared you for the position?

Professor Paul Romer: Back in 2007, I was also asked whether I would be interested in being considered as a candidate for this job. My background is in theory. I said no, because I did not think that I had enough practical knowledge about development. There is still a lot for me to learn, but because of my work here at Stern, now I think that I can “bring to the table” a useful perspective—specifically that urbanization is essential to the process that economists call “the structural transformation of an economy,” which involves a shift from employment primarily in agriculture to employment in manufacturing and services; and that some government entity must lead the process of urban development.

Jason Scharf: What do you hope to accomplish as the Chief Economist of the World Bank?

Professor Paul Romer: My goal is work with all the other people at the Bank to develop a strategy for impact at scale. Encouraging successful urbanization is one possibility, but there are many others.

Jason Scharf: How has NYU contributed to your career?

Professor Paul Romer: NYU in general, and Stern in particular, gave me a wonderful opportunity to explore new intellectual issues and to do so using new organizational structures. For example, in building the team at the Urbanization Project and at the Marron Institute, it was essential that we be able to hire world class leaders in an area such as urban planning—literally the best people in the world—even though they do not have the kind of scholarly publication record that a university requires for someone who receives tenure as a full professor. NYU let me have a term contract and let me hire others on a term contract and, furthermore, give them the respect and status they deserve for their accomplishments. More generally, NYU gave me the freedom to bring into the university the approach to knowledge work in teams that software engineers call “agile development.”

Jason Scharf: What is the best advice you could give to current MBA students?

Professor Paul Romer: Every MBA is likely to be part of a team of people doing knowledge work. So you should take the time to understand what agile development means and encourage every team to adopt this style. To get started, anyone can read the Agile manifesto:

But this is only the beginning. You can’t become an electrical engineer merely by memorizing Maxwell’s equations. You will not know what agile development is after reading the manifesto.

By the way, agile teamwork is related to the methods for achieving high quality of teamwork in manufacturing that Edward Deming developed and taught as a faculty member at Stern.

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