Rethinking the Governance of the International Monetary Fund

Transcription

1 Oxford Scholarship Online You are looking at 1-10 of 15 items for: International Economics ecodev ecofin Rethinking the Governance of the International Monetary Fund Abbas Mirakhor and Iqbal Zaidi acprof:oso/ This chapter attempts to set out the principal issues that need to be resolved in formulating a proposal for quotas and voice reform in the IMF that could command broad support. Following John Rawls, it argues that justice is the first virtue of social institutions, and uses his theory of justice to provide a method for understanding what should be the case, in the context of voice and voting shares, before international institutions, such as the IMF, are to be justifiable to their members. The implementation of this process suggests, among other things, that a major revision of the quota formulas is long overdue, and leaving this unaddressed raises serious questions regarding the IMF's governance which could develop into a core mission risk and jeopardize the relevance of the institution. Proposing IMF Reforms for Low Income Countries Bessma Momani acprof:oso/ This chapter surveys recent IMF reform proposals emanating from academia, policy networks, think-tanks, member states, and even within the IMF. It argues that these IMF reform proposals are overly focused on governance reforms and do not adequately cover substantive policy changes. Low income countries would better gain from IMF reforms that addressed substantive policy issues; issues that debtors had long pursued about the efficacy, application, and fundamentals of Fund Page 1 of 6

2 advice. These functional reform issues have been sidelined in current Fund reform proposals because the debate has been dominated by state officials, primarily from the emerging market economies, who are concerned with increasing their relative power in IMF decisionmaking. The chapter suggests internal IMF reforms, organizational and bureaucratic changes, that will help meet the needs of LICs. The Role of the IMF in Low Income Countries: An Institutional Approach Domenico Lombardi acprof:oso/ This chapter elaborates on the role of the IMF in support of its low-income members, pointing to the global character of the institution and to its superior ability due to the multilateral nature to serve as a financial institution, an information provider, and a commitment device. The IMF assists low-income members through a range of activities that are normally bundled together, including lending, offering policy advice, and providing assistance with capacity building. The study reviews the features of IMF policies towards its low-income membership and points to the main challenges to their success. Signaling, Aid, and IMF Financial Arrangements for Low Income Countries Timothy Lane acprof:oso/ This chapter focuses on how the IMF interacts with macroeconomic policy formulation in low-income countries (LICs). It addresses four related concerns. Can the IMF remain fully engaged with LICs without having a loan program (such as the PRGF) in place? How can it sign up to a macroeconomic approach characterized by greater fiscal flexibility? Is its approach (jointly with the World Bank) to debt sustainability adequate, especially in the context of aid concessionality? Is the type of technical assistance it offers suitable to the needs of LICs? The general conclusion Page 2 of 6

3 is that the Fund has made considerable progress in addressing these issues, but that much more remains to be done: specifically, it should strengthen the underpinnings of its technical assistance and advice, develop a more focused low-income analytic perspective, build its own capacity to assist countries to explore their macroeconomic options, and more systematically evaluate its technical advice in the light of the outcomes this has helped to induce. The IMF's Approach to Macroeconomic Policy in Low Income Countries David Bevan acprof:oso/ Donors often make foreign aid conditional on an on-track IMF-supported program. This practice is supported by evidence that aid is more effective in the presence of sound macroeconomic policies. But it is important to consider whether IMF program approval is the measure of policy soundness most relevant to decisions on aid. Moreover, the use of IMF financing as a signal like any signaling mechanism affects the incentives of the parties concerned, including aid-receiving countries, donors, and the IMF itself. This chapter examines these issues and their implications for aid allocation and variability as well as for IMF financing. Bretton Woods and the Debate about Development Harold James acprof:oso/ This chapter examines the evolution since the Bretton Woods conference of the IMF's approach to problems of low income countries. In particular, it seeks to locate that approach within the debate among economists about whether there is a special development economics. In that context, it examines the IMF's approaches to inflation, the twin gaps, fiscal issues, external debt issues, and exchange rate policy choice. Page 3 of 6

4 The Role and Performance of the IMF in Aid to Low Income Countries: Lessons from Evaluation Joanne Salop acprof:oso/ This chapter examines the treatment of aid to Sub-Saharan Africa in programs supported by the IMF's Poverty Reduction and Growth Facility (PRGF), along with relevant Fund policies and communications. It builds on an evaluation by the IMF's Independent Evaluation Office The IMF and Aid to Sub-Saharan Africa which explored the validity (or not) of three external criticisms. The first is that PRGFs blocked the use of aid through overly conservative macroeconomic programs. The second is that PRGFs lacked ambition in projecting and identifying opportunities for the use of aid, which may in turn have tempered donors' actual provision of aid. The third is that PRGFs focused little on poverty reduction and growth. The chapter also explores the institutional drivers for Fund behavior and the disconnectedness identified in the evaluation between the Fund's rhetoric on aid, poverty reduction, and the Millennium Development Goals, and its operational practices. The Case for a Universal Financial Institution James M. Boughton acprof:oso/ All financial institutions specialize, in dimensions that may include categories of assets and liabilities, types of services offered, customer demographics, and geographic coverage. The IMF is the only international financial institution that is truly universal in its geographic scope, prepared to lend on request to virtually any country in the world. Why has this status come about? What are its costs and benefits? Is it an appropriate model for a world where macroeconomic imbalances, financial crises, and disparities in economic development must compete for attention and resources? Page 4 of 6

5 Introduction Tito Boeri in Brain Drain and Brain Gain: The Global Competition to Attract High-Skilled Migrants Published in print: 2012 Published Online: September 2012 ISBN: eisbn: acprof:oso/ The worldwide race to attract talents is getting tougher. So far the winner has been the USA, attracting PhD candidates and graduates not only from emerging countries, but also from the EU. However, more countries are adopting immigration policies specifically aimed at selecting and attracting skilled workers. This chapter argues that the reason why the race is becoming so tough is that skilled migration is a way out of a policy dilemma facing many governments. It makes immigration not only economically advantageous, but also politically acceptable. In fact, highly skilled immigration not only contributes to economic growth in the recipient country, but also reduces earning inequalities in the host country. However, the potential benefits associated are not always fully understood by European countries. The potential impact of the Great Recession on the race for talent is also discussed. Finally, convergences in policy recommendations developed in the two parts of the volume are discussed. Financier or Facilitator? The Changing Role of the IMF in Low Income Countries Graham Bird and Dane Rowlands acprof:oso/ With the added challenge of trying to meet the Millennium Development Goals, close attention is being paid to the relationship between the IMF and the low-income countries with which the Fund has the majority of its programs. This relationship covers a number of inter-connected issues incorporating both external financing and economic adjustment. For any poor country, conceptually there will be an optimal blend of external financing, short run stabilization and longer term economic reform. The key question is whether and to what extent the IMF helps countries discover and implement this blend. Circumstances may change over Page 5 of 6

6 time. At a time when aid flows are declining the principal test facing the IMF is whether it can organize additional external financing either directly through its own lending facilities or by catalyzing others to lend. If aid flows are rising and the constraints imposed by external financing are being relaxed, the test is whether the Fund can help ensure that the additional financial resources are used to maximum benefit. This chapter overviews the general issues involved, but it also examines in greater depth the relationship between IMF programs and aid inflows to lowincome countries. Page 6 of 6