The World Bank has long proclaimed its dream of “a world free from poverty.” Likewise, the International Monetary Fund may arguably desire “a world free from financial crisis.” These are crucial and daunting objectives, but they are too narrow for the twenty-first century. To remain relevant, the Bretton Woods institutions must fully adapt to the needs of the world’s rapidly emerging countries, and they can begin that process at this spring’s IMF-World Bank meetings in Washington.
As many now acknowledge, the IMF should look beyond managing financial crises and start addressing non-cooperative economic behaviors – notably in the monetary field. The international community would gain from the IMF’s becoming a center of joint-monitoring and permanent dialogue among the world’s rich, poor and emerging nations. But for that to happen, the latter two need a greater say.
Fortunately, such reform is at last on the agenda. Last autumn’s IMF-World Bank meetings approved an increase in voting quotas for some of the most under-represented emerging economies: China, Mexico, South Korea, and Turkey. A second round of adjustment will need to involve other fast-paced economies without crushing the voice of the poorest.
As for the World Bank, it does not need to “reposition” itself so much as to root itself in emerging countries, as does the development aid industry in general. The international community must resist shortsighted calls to withdraw from middle-income nations on the ground that they could now “go it alone.”