Panelists participate in a seminar on technology and inclusive growth in front of a full audience during the 2016 Annual Meetings (photo:IMF)
Spotlight on Today's Global Challenges
October 17, 2016
- Meetings brought together over 11,500 participants
- High-level panels discussed key issues ranging from gender equality to technology
- Improving economic participation prominent message throughout meetings
Every year, the IMF and World Bank bring together key thought leaders and policymakers to tackle today’s most pressing global challenges at the Annual Meetings.
Set against the backdrop of weak global growth and growing popular discontent about trade and globalization, the wide-ranging program of seminars focused on how to lift growth and make it more equitable. The high-level seminars covered issues on gender equality, technology and innovation, infrastructure development, and inclusive growth. Below is a glimpse of the key topics discussed.
The Cost of Corruption: Youth Perspectives #IMFYouth
Corruption can undermine the incentives of young people to get a good education and therefore limits their access to jobs, the panelists said. Corruption can also undercut a country’s efforts to promote inclusive growth and can lead to poverty and inequality.
Panelists agreed that governments should help youth become more engaged in fighting corruption by promoting a culture of openness and transparency. “Leadership really makes a difference in my view,” said IMF General Counsel Sean Hagan. “You have to have good role models. You have to have people who lead by example,” he added.
Watch the video of the event.
Technology, Innovation, and Inclusive Growth #NewEcon
Technological change has the potential to transform the lives of people around the world for the better, but it will be important to get the formula right or the digital divide will grow, panelists said at this seminar. “Whether we’re talking about big data, the Internet of Things, digitization, or 3D printing, the technological revolution is reaching deep into every sector of our economies,” IMF Managing Director Christine Lagarde said in opening remarks. The Fund needs to pair with technology experts to gain a deeper understanding of the impact of technological change, she added.
Panelist Leila Janah, Founder and CEO of the nonprofit Sama, cautioned that “while we’re seeing massive gains for many people, we’re also seeing at the very bottom a stagnation, which has led to unrest.” Policymakers should consider distributional policies such as a basic income for people who will inevitably be left behind, she said.
Read more in the IMF news story , watch the webcast, and check out F&D magazine on technology.
Toward Better Infrastructure in Developing Countries #IMFonInfra
The current scale of infrastructure investment is not sufficient to meet the needs of developing economies, panelists said at this seminar. Despite a broad increase in such investment in developing countries since 2000, “our infrastructure deficit is huge,” said Kemi Adeosun, Minister of Finance of Nigeria. “Even if we devoted all of our budget to infrastructure for the next five years, we can’t plug the infrastructure gap,” she said.
Panelists pointed out that governance was crucial for improving the investment climate. Paul Collier, a Professor at the University of Oxford, stressed that “public monopoly utilities should be commercially run with no access to government funding” because they deter private investment. IMF Deputy Managing Director Mitsuhiro Furusawa noted that the IMF is helping countries strengthen public investment management. The Fund has several tools to assess the financial implications of public investment, while safeguarding debt sustainability and macroeconomic stability, Furusawa said.
Watch the webcast.
Making Macroeconomics Work for Women #IMFGender
Women’s economic empowerment and equality “is one of the key challenges of our time,” IMF First Deputy Managing Director David Lipton said as he introduced this seminar. He reiterated the five specific actions the IMF will take to close the gender gap which IMF Managing Director Christine Lagarde outlined at the September 2016 meeting of the UN High-Level Panel on Women's Economic Empowerment.
Panelists said closing gender gaps involved more than increasing women’s labor force participation. They also said many economic measures fail to capture the vast amounts of unpaid work by women. One pressing need is for better data and statistics, according to Rwanda’s Finance Minister, Claver Gatete. Priority can be given to policies that close gender gaps when countries can assess positive and negative outcomes accurately, he noted. New technology also creates avenues for improving women’s economic participation, especially by broadening access to education, training, and mobile banking services.
ActionAid’s Nyaradzayi Gumbonzvanda urged that women’s equality be defined broadly, not only as an issue of economic growth but also as a shared commitment to improve the well-being of everyone, especially the most vulnerable.
Watch the webcast and visit the IMF’s Genderpage and view ActionAid International’s video.
Fiscal Policy in the New Normal #IMFonFiscal
Fiscal policy is a crucial instrument for supporting near-term growth, while ensuring medium-term sustainability, said panelists at the seminar on Fiscal Policy in the New Normal.
According to Ledger Schuknecht, Chief Economist in Germany’s Ministry of Finance, how fiscal space is used is an important consideration. However, there are political and institutional constraints on the implementation of fiscal policy. Brad DeLong, Professor of Economics at UC Berkeley, said “national communities and national boundaries constrain us today in ways that are perhaps not the wisest.” India’s Chief Economic Advisor Arvind Subramanian argued the case for greater public investment as more compelling in advanced economies, but said the political systems in these countries appear to be unable to deliver this.
IMF’s Fiscal Affairs Department Director Vitor Gaspar said fiscal policy to support long-term growth is very much about political economy. He summed up, referencing Franz Kafka’s short story, A Country Doctor: “Diagnosis is easy; to find an understanding with people is hard.”
Watch the webcast and read more on Fiscal Issues at the IMF.
Asia in the Evolving International Monetary System #IMFAsia
International monetary institutions created in the 1940s face a host of challenging modern problems, from climate change to abrupt shifts in capital flows across borders, according to former policymakers from Asia who spoke at this IMF seminar.
On whether the so-called global financial safety net is strong enough, Barry Eichengreen, Professor, University of California, Berkeley, said that resources have grown compared with liabilities. But he said one way to make the safety net stronger would to be to make permanent the bilateral swap arrangements adopted during the crisis. The panelists concurred that such swap lines––extended by major central banks to provide temporary liquidity to other central banks––could also be broadened to include more countries by conducting them via the IMF.
For more on this seminar, read the IMF news article and watch the webcast.
Inequality: Managing the Impact of Globalization and Technology #IMFonInequality
Panelists in a seminar on inequality tackled causes and potential cures for inequality, and the implications for policymaking. Inequality within countries is on the rise, and countries need to combat the economic, social, and political effects with a mixture of tax policy, income transfers, and education––a task often difficult to achieve.
Panelists said trade, technology, and demographics all play a role. Redistribution policies are important in providing equality of opportunity. Access to health care, education, and financial inclusion are all needed for a level playing field. But we need to pay more attention to individuals who have been left behind, including by providing more training throughout a person’s lifetime to make sure they have the skills they need as the economy changes.
Read more in the IMF news article and watch the webcast.
The Shifting Global Economic and Political Landscape: Fragmentation or Integration? #GlobalShifts
It is time to bring political economy into the conversation on globalization at the Fund, panelists said at this seminar. “The links between politics and economics really are a two-way street,” said First Deputy Managing Director David Lipton. “Economic policymakers now have to deal with the constraints and the realities of politics. At the same time, policymakers, as they grapple with some of the medium-term challenges…will shape the politics of tomorrow and will shape the environment for policymaking going forward.”
Ian Bremmer, Global Research Professor at New York University and president of Eurasia Group, said we are facing “a profound geopolitical recession.” Non-state actors are becoming a bigger threat, but also part of the solution. Yet international organizations are not set up to work with non-state actors, he said.
Panelists also pointed out that the role of international institutions has changed in response to changing political realities. The G20 has expanded its focus from economics into areas such as refugees, climate, women’s participation, and the internet, said Lars-Hendrik Röller, Chief Economic Advisor to the German Chancellor.
Watch the webcast.
Making Trade an Engine of Growth for All #IMFonTrade
Panelists at this seminar agreed that the positive results of trade are indisputable, and said policymakers need to respond to trade’s critics and ensure its benefits are more widely shared.
“It [trade] helped reduce by half the proportion of the global population living in extreme poverty, creating a global middle class for the first time in human history,” IMF Managing Director Christine Lagarde said. “The charge that is often leveled is that it sends jobs overseas, particularly in manufacturing,” said Roberto Azevêdo, Director-General of the World Trade Organization. He said technology changes and innovation have caused more than 80 percent of job losses in advanced economies.
Canada’s Minister of International Trade Chrystia Freeland said, “we have to understand that the anger is real—that the global economy is not working for many people.” Policymakers thus owe their constituents better policy responses, such as redistributionist tax policies and a more progressive trade agenda, she added.
Former Mexican President Ernesto Zedillo pointed to the importance of restoring a ‘virtuous circle’ between trade and growth. He also stressed the need for emerging markets to take matters into their own hands. “I have a message for emerging markets: don’t play defense, play offense,” Zedillo said.
Watch the webcast and read the iMFdirect blog on trade.
Emerging Markets’ Response to Recent Exchange Rate Pressures #FXpressures
Emerging market central banks have adopted policies that have helped their countries absorb external shocks, such as the plunge in prices of oil and other commodities, according to central bankers taking part in this IMF seminar.
In South Africa, when world prices of metals mined in the country fell along with other commodities, the resulting decline in the value of the rand cushioned the impact, said Maurice Obstfeld, the IMF’s Economic Counsellor and Chief Economist, who moderated the panel.
The situation was similar in Russia, which adopted a floating exchange rate in late 2014, said Ksenia Yudaeva, first Deputy Governor of the Bank of Russia. “It helped the economy adjust quite fast to this shock,” she said.
In Colombia, the central bank has allowed the currency to float freely since 1999, and it has taken advantage of periods when the peso strengthened to accumulate foreign currency reserves, said José Darío Uribe Escobar, Governor of the Banco de la Republica of Colombia.
“Problems can come from any direction,” Yudaeva said. “Our job is to identify potential shocks and be prepared to react.’’
For more on this seminar, read the IMF news article and watch the webcast.
Read blogs on emerging markets.
The Future Growth in the United States—What Goes Up Must Come Down? #IMFandUS
Moderator Sam Fleming, U.S. Economics Editor at the Financial Times, presented four potential reasons for the declining rate of growth in the United States: low labor force participation, low productivity growth, low investment, and a lack of business and labor dynamism.
Karen Dynan, Assistant Secretary for Economic Policy and Chief Economist at the U.S. Department of the Treasury, said the entry of women to the workforce levelled off around the turn of the century, which also coincided with lower productivity growth. She advocated for policies that help working families, such as subsidized childcare, to allow more women to join the workforce.
John Haltiwanger, Professor of Economics at the University of Maryland, blamed lower productivity growth on fewer entrepreneurs in the post–2000 period. He said it appears the United States has “run out of significant innovation” and where innovation does happen—in young and entrepreneurial firms—it is not diffusing across an industry, as it can be disruptive and expensive to bring in new technology.
Watch the webcast.
One-on-One with Christine Lagarde, featuring Michael Lewis #1on1Lagarde
The IMF’s Managing Director Christine Lagarde held a Sunday morning breakfast chat with Michael Lewis, best-selling author of The Big Short, about the U.S. housing bubble and the 2007–08 financial crisis, and Liar’s Poker , based on his experience as a Wall Street bond salesman in the 1980s. Asked by Lagarde whether the behavior of big banks had changed since then, Lewis said there had been some progress—for example in compensation and reducing proprietary trading by big institutions—but that big problems remain.
Lewis advocated for putting more women in senior financial roles to offset the effects of “male over-confidence.” He also noted the difficulty of communicating to the public on sophisticated financial issues. He said outsiders like him can help institutions like the IMF explain complex issues in simple terms. “I can speak about these things in looser terms. But if you try to communicate with people who know nothing whatsoever about finance in a way they will understand, it would cost you with the people you have to deal with every day.”
“We deal with finance ministers, we deal with governors of central banks, who themselves are hostage to their own governments first, and to public opinion and the next election,” Lagarde said. “We need to…reach out to public opinion, to explain what the positive outcomes and the benefits could be of doing this, that, or the other.”
Watch the webcast.
