Growing Institutions? Grow the People!

Posted on August 10, 2012 by iMFdirect

By Sharmini Coorey

(Version in Español)

“When you speak about institutions, in fact, you are speaking about the people.” These words, by Kosovo’s central bank governor Gani Gergüri at a recent conference in Vienna, capture an important truth that is often overlooked when we economists discuss amongst ourselves: without sound institutions, it’s very hard to achieve sustainable economic growth.

And the quality of those institutions hinges on the quality of the people running them―their educational background and training, and the prevailing business culture and approach to policymaking.

The work of Douglass North and the school of thought known as the new institutional economics has taught us that differences in deep institutions—defined as the formal and informal rules of economic, political and social interactions—are responsible for sustained differences in economic performance. This is also the central thesis in Acemoglu and Robinson’s fascinating new book, Why Nations Fail.

Inclusive (as opposed to extractive) economic and political institutions are central in nations’ efforts to avoid stagnation and ensure sustained prosperity. This is because sustained prosperity is a dynamic process of constant innovation and a never-ending cycle of Schumpeterian creative destruction, which can only be supported by open, inclusive institutions. Their thesis is certainly consistent with the contrasting experience of different countries in Central, Eastern and Southeastern Europe under communism and during the past two decades.

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Filed under: Advanced Economies, Africa, Asia, Civil Society, Economic Crisis, Emerging Markets, Employment, Europe, Finance, Financial sector supervision, Global Governance, Globalization, IMF, Inequality, International Monetary Fund, Latin America, LICs, Low-income countries, Middle East, Multilateral Cooperation, Politics | Tagged: , , , , , , , , , , , , , , , , , , , , , , , | 3 Comments »

Convergence, Crisis, and Capacity Building in Emerging Europe

Posted on July 27, 2012 by iMFdirect

by Nemat Shafik

Central, Eastern and Southeastern Europe has been through a lot. In two short decades, the region moved from a communist planned system to a market economy, and living standards have converged towards those in the West.

It has also weathered major crises: first the break-up of the old Soviet system in the early 1990s, then the Russian financial crisis in 1998, and finally the recent global economic crisis. How did these countries do it?

From the Baltic to the Balkans, the region’s resilience and flexibility are the result of hard work and adaptability. But more than anything, it is the strong institutions built over the last two decades that have enhanced the region’s ability to deal with the momentous challenges of the past, the present—and those to come.

(more…)

Filed under: Economic Crisis, Emerging Markets, Europe, Financial Crisis, IMF, International Monetary Fund, Multilateral Cooperation | Tagged: , , , , , , , , , , , , , , , , , , , , , | Leave a Comment »

Making Sure Middle East Growth Is Inclusive

Posted on May 10, 2012 by iMFdirect

By Nemat Shafik

(Version in عربي)

The uprisings that spread across the Middle East and North Africa in 2011 taught us that even rapid economic growth cannot be maintained unless it is inclusive, creates enough jobs for the growing labor force, and is accompanied by policies that protect the most vulnerable. And the absence of transparent and fair rules of the game will inevitably undermine the development process.

Hopes after the revolutions are high and so are people’s expectations. Hence, there is a need to pay more attention to socioeconomic issues in making policy decisions. In my speech today at the Arab Economic Forum in Beirut, I argued that we need an “Economic Spring” to complement what has become known as the “Arab Spring.”

Gloomy picture needs attention

At over 25 percent, the youth unemployment rate in the region’s oil-importing countries exceeds that of any other region in the world—a rate that reaches up to 30 percent in Tunisia and 32 percent in Morocco. Ironically, education in the region is not a guarantee against unemployment. In fact, unemployment tends to increase with schooling, exceeding 15 percent for those with tertiary education in Egypt, Jordan, and Tunisia.

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Filed under: Economic Crisis, Economic outlook, Emerging Markets, Employment, Finance, growth, IMF, Inequality, International Monetary Fund, Middle East, Public debt | Tagged: , , , , , , , , , , , , , , , , , , , , , | 2 Comments »

A Spotlight on the IMF’s Technical Assistance

Posted on October 13, 2011 by iMFdirect

By Nemat Shafik

(Version in عربي)

Of the three main pillars of the IMF’s work, technical assistance has been a sort of middle child; it doesn’t get the attention of the oldest and youngest children, yet in many ways is the glue that holds the family together.

The other two pillars are well known: we lend money to countries in times of need and crisis, and conduct annual check-ups of their economies and financial systems, known as surveillance.

As countries around the world cope with the global economic crisis, the IMF’s technical assistance is a vital part of the work that we do to help countries prevent, prepare for and resolve crises.  Technical assistance also helps countries master the form and details to govern themselves in an effective and legitimate way. (more…)

Filed under: Advanced Economies, Africa, Economic Crisis, IMF, International Monetary Fund, Low-income countries | Tagged: , , , , , , , , , , , , | 20 Comments »

Heartbreak and Hardship—Finding a Way Out for Fragile States

Posted on September 7, 2011 by iMFdirect

By Dominique Desruelle

War-torn Iraq, quake-ravaged Haiti, conflict-devastated Sierra Leone. So many countries around the world face the legacy of terrible hardships that have left them scarred and fragile.

Everyone agrees that countries need help to recover from these situations. But it is not easy to come to a shared understanding on what this really takes.

Some have questioned whether the IMF has a meaningful role to play. They argue that engagement in fragile states—countries with weak institutions and infrastructure, internal conflict, and governments that face difficulties delivering core services to the population—should mainly be left to bilateral donors and development institutions.

And they couldn’t be more wrong. Helping a country’s economy to work better—the IMF’s core expertise—is a central building block to move beyond fragile situations and achieve better lives for its citizens. (more…)

Filed under: concessional lending, IMF, International Monetary Fund, LICs, Low-income countries | Tagged: , , , , , , , , , , , , , , , | 1 Comment »

Bridges to Growth, Not Roads to Nowhere: Scaling Up Infrastructure Investment in Low-Income Countries

Posted on December 3, 2010 by iMFdirect

By Hugh Bredenkamp and Roger Nord

(Version in  Français )

For low-income countries, the absence of reliable infrastructure—roads, railways, ports, but also power supply—has become an increasingly binding constraint on growth. And we know that investment in infrastructure can raise productivity, boost growth, and help reduce poverty. But as straightforward as it sounds, getting investment decisions right is no easy feat.

For starters, low-income countries have massive investment needs. The World Bank has estimated that, in sub-Saharan Africa alone, the total financing need is around $93 billion per year. And one third of this still unfunded.

Even when financing is available, there’s a raft of other issues to tackle. What investments offer the biggest boost to growth? How much investment is needed and by whom? How to finance this investment without taking on too much debt? (more…)

Filed under: Economic Crisis, LICs, Low-income countries, Public debt | Tagged: , , , , , , , , , | 7 Comments »

Listening to Voices: The IMF’s Dialogue with Civil Society

Posted on November 29, 2010 by iMFdirect

By Caroline Atkinson

The IMF has made a concerted effort to engage more actively with civil society organizations in recent years. This is part of a broader effort to be more transparent and accountable to the broader public in our member countries.

So, an emphasis on change at the 2010 IMF-World Bank Annual Meetings provided the perfect opportunity to break new ground in our relationship with civil society. (more…)

Filed under: Annual Meetings, Civil Society, IMF, International Monetary Fund | Tagged: , , , , , , , , , , , | Leave a Comment »

Topical Trust Funds—The New Assistance Vanguard

Posted on March 29, 2010 by iMFdirect

By Alfred Kammer

The IMF has begun implementing a new approach to financing its technical assistance by creating a series of topical trust funds that bring together interested donors.

The idea behind the new topical trust funds is to support broader initiatives on policy topics and engage donors on a broader, longer-term, and more strategic basis.

Let me illustrate this with two examples of trust fund programs that we are currently developing. A program on Tax Policy and Administration aims at helping countries mobilize more domestic resources in support of investment toward reaching the Millennium Development Goals, while also reducing their aid dependency.

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Filed under: Africa, Economic Crisis, Low-income countries | Tagged: , , , | 2 Comments »

IMF Opens Up: Partnerships with Donors a Win-Win

Posted on March 18, 2010 by iMFdirect

By Alfred Kammer

I would like to talk about one of the IMF’s core mandates that is highly successful but rarely grabs headlines: technical assistance for capacity building.

Although less glamorous than the surveillance and lending operations of the Fund, for many countries these advisory services in areas such as macroeconomic policy, public financial management, tax policy and revenue administration, financial sector supervision, or statistics are indispensable. They help IMF member countries identify weaknesses in policies and institutional frameworks, develop concrete reform proposals and strategies, and put together the nuts and bolts for translating the IMF’s policy advice into concrete implementation of reforms.

(more…)

Filed under: Africa, IMF, International Monetary Fund, Low-income countries, Multilateral Cooperation | Tagged: , , , , , , , | Leave a Comment »

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