World Bank Chief Economist Paul Romer resigned Wednesday, two weeks after apologizing to the nation of Chile for the way it was treated in one of the institution’s flagship reports on business competitiveness.
World Bank President Jim Yong Kim announced the departure in a memo posted on the international development organization’s intranet and viewed by The Wall Street Journal.
The abrupt departure follows a Journal article two weeks ago in which Mr. Romer raised concerns about the extent to which repeated changes to the methodology of the World Bank’s “Doing Business” report had hurt Chile’s rankings over several years.
Mr. Romer had expressed concern about the potential for political motivations in the shifting rankings, and numbers subsequently published on his blog showed that Chile’s ranking had slid sharply due to methodology changes for the first three years of Michelle Bachelet’s presidency.
Chile’s ranking changed almost entirely because of the way the World Bank had altered its methodology, and not because of changes in Chile’s business environment relative to that of other nations. Without the Bank’s methodology changes, Chile would have dropped two places in the rankings, Mr. Romer’s numbers showed. With the changes, Chile’s ranking declined by 23 places.
Not all World Bank officials shared Mr. Romer’s concerns. Chief Executive Officer Kristalina Georgieva said in a letter to Chile’s finance minister last week that Mr. Romer’s comments were “unfortunate,” and she wrote, “we do not have any evidence to support the notion that the methodology is skewed to disfavor Chile or that any of the changes in the methodology were conducted for any other than technical reasons.”
In a follow-up blog post, Mr. Romer said that he hadn’t “seen any sign of manipulation” and “I’m sorry that in my attempt at promoting clarity, I myself was not clear.”
The World Bank has announced that there will be an independent external audit of the competitiveness report, a move welcomed by skeptics of the report.
“Aside from obvious questions raised by Paul Romer’s resignation, serious concerns remain around the ‘Doing Business’ report,” said Nadia Daar, head of Oxfam International’s Washington, D.C., office. “Hopefully the next chief economist will be given the mandate to bring coherence and fairness to this ranking.”
Mr. Kim’s memo didn’t cite a specific reason for Mr. Romer’s departure, saying only that Mr. Romer “is an accomplished economist and insightful individual, and we have had many good discussions on geopolitical issues, urbanization, and the future of work. I appreciated Paul’s frankness and honesty, and I know he regrets the circumstances of his departure.”
Mr. Romer couldn’t immediately be reached for comment. The World Bank didn’t immediately elaborate on the statement.
Mr. Romer had joined the World Bank in October of 2016 from New York University. Mr. Kim’s memo said Mr. Romer would return to his job as a professor.
Mr. Romer’s background as one of the most prominent researchers into the roots of economic growth appeared, at first blush, to be a good fit for an international financial institution focused on economic development. But despite an overlap in research interests, Mr. Romer’s disputes with other economists at the Bank have repeatedly boiled over into the public eye.
In a memo last year, Mr. Romer chastised the economics department for vague writing, saying that such writing “lets an author convey a false impression yet retain plausible deniability when someone tries to verify the claim.”
In a separate memo he criticized an internal budget memo of the Development Economics Group, one of the departments under his purview, that he felt was misleading. He wrote, “if people in the Bank cannot believe everything [the Development Economics Group] writes, they can’t believe anything we write.”
Some of the World Bank’s staff reacted angrily to what they saw as Mr. Romer’s strident approach, and his management authorities were subsequently reduced last summer, though he remained chief economist.
But his comments about Chile caused a much greater uproar than previous episodes, drawing a complaint from Chile’s president.
Alejandro Guillier, the Chilean left-leaning senator who lost in the nation’s recent December election, said the changes were a “betrayal of public faith.”
The World Bank’s board of executive directors issued a statement expressing confidence in the Bank’s research but also expressing “regret and concern about the impact on Chile.”
Mr. Kim’s memo said a search for a new chief economist would begin immediately.
Write to Josh Zumbrun at Josh.Zumbrun@wsj.com
