"We're most excited about (Paul Romer's) deep commitment to tackling poverty and inequity and finding innovative solutions that we can take to scale," said Kim in a statement.
Romer is currently a professor at New York University (NYU) and director of NYU's Marron Institute of Urban Management.
With his interest and understanding in urban and economic development, Romer helped built the Marron Institute of Urban Management and is also the founding director of the Urbanisation Project at the NYU' s Stern School of Business, Xinhua news agency reported.
Romer is also known as a proponent of "endogenous growth theory", which holds that economic growth is primarily the result of investment in human capital, innovation and knowledge.
He founded a start-up Aplia, an education technology company dedicated to increasing student effort and classroom engagement.
Romer's appointment will be effective from September this year, said the World Bank.
"This position gives me a unique chance to learn about the thing that fascinates me most -- producing knowledge that is useful in the sense that it yields benefits on the scale of billions of people," said Romer on his blog on Monday.