Feature

2007 Hooding Ceremony Speaker

Stephen Karam, AM’90 is a Senior Urban Economist in the World Bank’s Finance, Infrastructure and Private Sector Development Group of the World Bank’s Middle East and North Africa Regional Vice Presidency. In the urban department, he has prepared several lending operations and analytical work, the latest of which is “Intergovernmental Fiscal Relations and Municipal Finance Issues in the MNA Region: A Survey of Eight Regional Country Experiences,” issued by the World Bank in March 2007. He currently works on programs and projects in Yemen, Jordan, West Bank & Gaza, Egypt and Saudi Arabia.

Prior to his current assignment in the Bank, he worked as a Private Sector Development Specialist and later as a Sr. Country Officer for the West Bank and Gaza Country Department. He began working with the World Bank in 1997. Prior to joining the Bank, Mr. Karam worked for Chemonics International and United Nations agencies in a number of Middle East North Africa Countries, primarily focused on microfinance and industrial/free zone development projects. He holds a bachelor’s degree (1984) from Holy Cross College in Worcester, Massachusetts and master’s degrees in Middle East Studies (1991, Social Science Division) and public policy (1990, Harris School) from the University of Chicago.

Read the text of Karam's remarks below:

Returns to a Harris School Education
Hooding Ceremony Remarks
Stephen Karam. Sr. Urban Economist, The World Bank

Good Morning. It is great to be back in Chicago to be reminded why it is called the “Windy City” and to greet a new crop of Harris School graduates as you advance in your careers as policy analysts.

In preparing my remarks for today, I was fortunate to have had the opportunity to speak with a few of you in advance. In doing so, I was first of all very impressed with the exceptional qualifications you have and the kinds of questions that you asked. Each of you showed an eagerness to apply newly acquired concepts and thinking to the challenges that policy makers face on a daily basis. My messages to you then as now are the same: First, that there is a growing appreciation, interest and demand for good (Harris-style) policy analysis – particularly in the developing world -- as countries grapple with the challenges of combating poverty while addressing the institutional development needs that make these solutions sustainable. The second is that policy still faces – as it always will -- a myriad of political influences and interests that makes good policy formulation an ephemeral concept if not grounded in the political context in which you are working.In responding to your questions, I decided to prepare some thoughts around the theme of “return,” this being the second time I’ve returned to Chicago since my graduation seventeen years ago and knowing, as well, that every Chicago graduate is well-grounded in the economic concept of “returns.” No doubt, any parents here today are also keenly interested in a return – an understandable material interest in the outcome of a Harris School education.

When I was at the Harris School some seventeen years ago it had just gone through a transition from being a Committee at the University to becoming a full-fledged Graduate School. The establishment of the Harris School itself represented a somewhat radical break from the traditional approach and methods of training those interested in a career in the public sector. Indeed, rather than preparing you to be functionaries in a public administration (a kind of finishing school approach to the training of civil servants), your Harris School education has given you skills to analyze policy problems and develop innovative solutions – whether from inside or outside the public sector. Your policy skills are portable, relevant and increasingly being applied well beyond the confines of the United States. And as a graduate of the Harris School and the University of Chicago more generally, you carry with you a reputation of an institution that is recognized for its academic rigor, its intellectual foundations, and its quest for knowledge that grows from “more to more” – something a World Bank colleague of mine recently referred to as a “pedigree education.”

Over the last ten years, my work at the World Bank has brought me into contact with public officials faced with the most daunting of challenges. The questions they face today are complex and, in many ways, persistent. They ask for advice on how to reduce poverty, how to decrease subsidies, how to protect the environment, how to increase revenues for local governments, among many others. In short, all of the questions that drive the minds of policy analysts here today. The good news is: policy analysis is in high demand.

Returns to the Environment: Emissions Trading. Al Gore’s recent movie, “An Inconvenient Truth,” places global warming squarely in the center of the global policy agenda. What’s interesting to me is that it may be a Chicago Economist who has the most profound impact on reducing carbon emissions. I recall in our Formal Models class a discussion about Coase’s Theorem on property rights as it relates to pollution or environmental degradation. If I recall correctly, his Theorem states that, in the absence of transactions costs, two parties can bargain to a mutually beneficial outcome. The key is to define those property rights through a market based exchange. At the time, I was stuck by the profound implications of this economic concept – the notion that the absence of something – a non-emission – could be sold on a market as if it were a commodity. But was this merely a Chicago economist’s casuistry? What meaning does it have, I wondered, outside the Harris School classroom. Ten years later, Coase was awarded the Nobel Prize in Economics and not long thereafter a global carbon market came into being. Last year, some €22.5 billion of carbon credits were traded representing over 1.6 billion tons of CO2 emissions. Developing countries’ share represented only a fifth of this, but demand is growing.

Today, I am involved in the preparation of two new World Bank lending operations in the Middle East that will allow client Governments in Jordan and Yemen to take advantage of this new global carbon finance facility. Not only will the solid waste landfills that we finance protect fragile water aquifers in one of the most water scarce regions of the world, they will also help to earn a return through carbon finance credits – we estimate this to be in the range of US$12 million. And in Jordan, introducing low energy consuming street lighting, as well as solar and wind technologies will have important returns to innovation. The upshot: Your Harris School education – even what may appear to be an esoteric modeling exercise at the time – has relevance in today’s world.

Returns to Good Housing Policy: Better Targeting of Housing Subsidies. The World Bank’s mandate has a specific focus on poverty reduction. In a country such as Yemen – by far the poorest in the Middle East with a per capita GDP of less than $350 annually -- our work is not only relevant, it is essential. Access to affordable housing and secure land tenure is in many ways the crux of the problem. But lack of secure property rights has also deterred new private investment that could potentially contribute to economic growth and job creation.

Yemen, like many governments in the Middle East, has established public housing programs that are intended to address the problem of informal settlements by providing the poor with access to affordable housing. But recent World Bank policy analysis that I was involved in shows that as little as 20% of the beneficiaries of the Government’s housing policy are in fact poor. Poverty targeting is a particular challenge in developing countries where policies are often heavily influenced by political pressures. Rent-seeking behavior and entrenched interests continue to be a real challenge as policy makers in the region struggle to find solutions. A class I took with Dean Mayer at the Harris School on Organizational Theory helps to understand organizational structures and behaviors and provides a reference point in advising foreign governments on ways of reducing leakages and improving targeting of the poor.

Returns to Development Policy. Recent scrutiny of global development policy and outcomes has placed a primacy at the Bank on addressing what we call the “results agenda.” This agenda is ever-more important as we strive to assist our client governments in meeting ambitious Millenium Development Goal targets. At least two of the Harris School’s graduates here with us today will begin working soon for the Bank’s Internal Evaluations Group (IEG). Their task will be to help understand better what tangible impact the World Bank’s operations and analytical work are having, and undoubtedly, they will contribute to finding new ways to improve our impact. Their engagement by the Bank is yet another sign of the value and regard that a Harris School education has today.

As you embark on your promising careers as policy analysts, I offer you this message to take away: Your work is important, it is relevant and it is now, more than ever before, in high demand. Your Harris School education has given you the tools and the intellectual rigor to take on these challenges and, as my experience has shown, it is bound to deliver many happy returns.

Thank you.