(Adds World Bank saying middle-income countries eligible)
WASHINGTON, Feb 9 (Reuters) - Arguing that the global recession will be protracted unless all countries take coordinated action, the World Bank's chief economist proposed on Monday a $2 trillion fund to stimulate development and growth in poor countries.
Justin Yifu Lin, a senior vice president at the World Bank, said his plan would be a "global recovery fund in the spirit of the Marshall Plan" that he hoped would be discussed at the G20 summit in April in London.
Escaping a protracted world recession depends upon "whether we can overcome protectionism" and "whether we have the wisdom to come up with some kind of decisive, large enough, coordinated fiscal stimulus among the developed and developing countries," he told a Washington think tank.
Lin said rich countries, led by the United States and Europe, as well as states with huge financial surpluses like China should commit about 1 percent of their GDP -- $400 billion a year -- for five years to a $2 trillion fund to lend to developing countries.
A World Bank official later clarified that the plan floated by Lin would also permit middle-income countries to borrow funds.
The loans would in the short term boost demand and offset slack consumption, while over the longer term remove infrastructural bottlenecks in the developing world so that demand could be sustained, Lin said.
"If we can work together, then we have the opportunity to get out of this crisis in a shorter period of time, but at the same time pave a foundation for long-term, inclusive and sustainable growth for everyone in the world," he said.
Lin's proposal follows a call earlier this month by World Bank President Robert Zoellick for the creation of a vulnerability fund for poorer countries that would support crucial investment in infrastructure projects that would create jobs while laying a foundation for future productivity.
The World Bank wants rich nations to allocate at least 0.7 percent of any domestic stimulus package to the fund, and will urge G20 leaders meeting in London in April to back the idea. (Reporting by Paul Eckert; Editing by Kenneth Barry and Diane Craft)