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Ex Director, Maastricht University India Institute, Maastricht University

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High time that IMF be headed by a candidate from emerging economies?

Traditionally IMF head has been a European. Now could be a good time to democratize this international institution and make it relevant in the changed/changing economic environment in which the pivot of global finance and economy is shifting towards newly emerging economies.

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    May 16 2011: Do you think it will really make a difference when invisible steering is in the hand of someone else more powerful.....
    We had U Thant, Kofi Annan & now Ban Ki Moon heading UN did that make any difference at all ?
    • May 16 2011: Hi Salim,

      Good point, but regarding the UN heads from non-mature economies, we know that the most crucial issues rest ultimately in the hands of veto powers no matter who heads the organization. Current frustration over climate change, aid-debt-trade dilemma are simple examples of how these issues go in non-decision bin as/if they do not serve the interest of the big-5, hence the quest for reform and democratization.

      But our question talks about financial institution i.e. IMF (or World Bank for that matter). We know that the World Bank heads come from the US and IMF from Europe. With the passage of time, we see the gravity of global economy shifting to the emerging economies (be it manufacturing, consumption, reserve surplus, sovereign wealth funds, FDIs, innovation, employment, GDP growth rate, and so on) it might not be very constructive if the member states with little or no money dominate and act as financial managers for those with money.
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        May 17 2011: Your invitation to this conversation has given me a good cause to try and understand who all these international institutions really are and who they really serve..were formed to serve. The world leaders in ethics and humanitarian values who were the framers of the Global Democrcay Project ( see my link and quote above) have really helped me frame the IMF, the UN, the World Bank in a very different context.To put it in extremely simple terms for the purpose of illustrtation non- EU countries seeking a leadership role in the IMF is sotr of like townies going to an exclusive country club to negotiate its use as a public park. ( That's as far as I have gotten in my understanding of the IMF and your question..and it fits and makes comprehensible so much else I have run into in my reserach on oil prices and US policies)
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          May 23 2011: Hi Lindsay
          You exactly came to the point to which I wanted to focus. Thanks

          Being from a country where the funds from World Bank & IMF has been flowing since decades for so called eradication of poverty for decades with no change .... Until Dr. Younus came up with Micro-Credit concept though that also debateable for some other reason , but definitely that had some impact in generating money flow at village level. That means until something happens intrinsically , extrinsic factor has nothing to do but develop dependency on it as it is designed to do so....... just one example

          The World Bank , Food for Work starts just during the harvesting time of farmers in my countrty. What does it mean ? It means after investing their hard labour, merit & small money they have when farmer is about to get a bit of return (i can't term that as profit, it's so marginal) , Food for Work program keeps price down , farmers loose what they invested and push them further down the poverty line.

          I wonder a CEO from developing country or poor country how can change this game ?
        • May 23 2011: Dear Salim,

          Good point you made. But I guess the discussion is about those countries who have demonstrated that they can raise the quality of life, eradicate poverty in whatever degree. A CEO from developing country could surely change if he/she has done it at home. And there are far too many examples of such CEOs in that re-emering part of the globe :)

          Key lies in sincerety of leadership, hard work and integrity of people - work ethics. Someone said long ago ' no lunches are free'... I thought, even breakfasts are not :)
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          May 24 2011: Dear Sanjay
          As moderator you are doing great and your subject is great as well.

          Ok I am focusing to a country who raised quality of life to a great extent , that's South Korea. Just giving an example of 1997 economic crash what happened South Korea. When the crash came what was the role of those two global institutions? Did they come forward to rescue ?

          Many Korean Conglomerate went in the hand of US economic Giants, funds from World Bank & IMF could stop that but they didn't. Finally with a call from goverment korean ladies queued infront central bank with thier jwelleries to give it to bank so that national economy survive.
          You can say 1997 is too far from 2011, I agree , but did the economic or political erena shifted to a greater extent during this time.Do you think a Ban Ki Mun in IMF or World Bank 1997 could do anything different. CEO needs his full team to support him in his execution , that's my point.

          Hypothetically , just think to what will happen to highly growing & emerging economy of China if suddenly if only US / EU conglomerates in one fine morning say , no we will no more place any order to China , what will happen to numerous manfacturing factories and millions of workers ?

          These so called emerging economy is not innovation based , they are just manufacturer. Marketing strength elementary , Brand equity almost zero. Only have their huge domestic market , but right that time domestic market lost purchasing capability hence consuming. Only penetrated to the lower segment of consumers global market where profitability is low.

          Please don't take me wrong as I drew a gloomy hypothetical picture. I jsut drew that to show how dependent these emerging economies are on developed economy.

          Not being an economic or financial expert I talked much where many thing can be wrong even, just point out those , I want take the learning opportunity being wrong.
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        May 18 2011: Hi Sanjay
        Understand your point, I have no disagreement with you about someone to head IMF & World Bank from Emerging Economy. My worry is that there is a high possiblity the person will be acting as acted by UN head. By the way World bank started as an extended agency of UN.

        Moreover who funds and controls the fund of IMF & World Bank? Funds of both are linked with world financial market and of which 5 big shareholders are France, Germany, Japan, the United Kingdom and the United States. In such scenario do you think being headed by someone from emerging economy will shape up the game any differently ?

        But if s/he can really change the game that definitely will be a great achievement !!!
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          May 18 2011: Salim..yes these are the core question..questions about the validity, integrity and viability of the IMF istelf. I have used this conversation as an excuse to invest a fairly considerable amount of time in understandung the IMF..hours and hours and hours. And I would have to say if it doesn't reform itself it will make itself extinct. The head would obviously not come from a developing nation..the whole premise is developed nations making decisions about devleoping nations many of which not conidentally ontrol important global resources.Chnaging the head..even ifthe head was non EU would notfundanmentally chnage the IMF or its stragety for developing nations.

          Many have this idea that the IMF and the World Bank are some how benevelont associtions inteded to help emerging nations take control of their own destinities, Important for evryone ti take a look themselves beyod this mythology and understand what the UN, Wolrd Bank, Nato, and IMF really are about..
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          May 24 2011: Salim a sweet point..a kind one..

          my purpose isn't to bust Sanjay's dream but to look toward what I believe he dreams of with him..in support of all the undeveloped and under developed countries so poorly served by the IMF and the Wolrd Bank.

          My internal gyroscope alines in only one direction

          and that is towards the truth.

          towards discerning truth

          toward uncovering truth where it has been long hidden.
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        May 23 2011: Salim thak you for sharing this first hand view of what the IMF actually does in developing and under developed countries and how far that is from the reality of who they say they are. I grew up to honor the UN, the Wolrd Bank, the IMF, even Nato and WTO as venerable insutitions stannding for and furthering the global welfare. I have believed all my life as most Americans have that the point of the wolrd bank and the imf was to end poverty in these nations to help them become their own viable economic and political soverign enitities,

        I now see that is not so. I am shocked even frightened by that. Still trying to understand it and still trying o work throgh what the EU should do about the IMF and wht the united states should do about the Wolrd bank.

        For the health of our wolrd..for the sake of rights tha we hold to be for all poeple..they cannot continue to be as they have been.

        I am hoping to visit thi ssoon in a speparte TED Converstaion when I have more of my facts tsraight and understand more of the history. But thnak you for telling the Ted Community that all is not what it seems to be with the IMF.
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          May 24 2011: Nice to hear from you Lindsay & you are welcome.

          So far I know one of the big sources of fund of IMF & World Bank is Money Managers of Stock markets like Wall Street. The interest rate in matur economy like US & Europe is very low , so they lend money to World Bank & IMF as they lend that money to the third world and devloping world who needs cash flow for they survival of their economy at a much higher rate, so stock market Money Managers makes money out of that.

          So it's not solely in the hand of political leadershi as well.
          I don't want to demoralize Sanjay who actually having good dream , just giving some reality touch. Like Sanjay I also love dreaming, because every new thing happens starts with a dream.

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