Typical street scene in Santa Ana, El Salvador. (Photo: iStock)

Typical street scene in Santa Ana, El Salvador. (Photo: iStock)

IMF Survey : Lagarde Calls for Greater Focus on Empowerment

June 6, 2014

  • Personal empowerment can be blocked by income, gender disparities
  • Empowerment depends on good institutions, capacity
  • Enhanced international cooperation also important for empowerment

More must be done to empower people to achieve their potential, IMF Managing Director Christine Lagarde said in delivering the 2014 Amartya Sen Lecture in London.

Graduates at Seoul Women’s University, Korea: raising women’s empowerment means focusing in part on education (photo: Yonhap News/Newscom)

Graduates at Seoul Women’s University, Korea: raising women’s empowerment means focusing in part on education (photo: Yonhap News/Newscom)


She pointed out in the June 6 address at the London School of Economics that people will have greater chances of flourishing if more is done to empower individuals, national institutions, and the multilateral framework.

“Fundamentally, there are no shortcuts to a vibrant economy—it must be built up from the bottom up, from the empowerment of every single individual,” Lagarde stated. “We must do whatever we can to help people help themselves, to let people lift themselves up—through enabling policies, enabling institutions, and enabling modes of international cooperation.”

Income, gender disparities

Of the many obstacles to individual empowerment, those based on income and gender disparities are among the most pressing, Lagarde noted.

She cautioned that excessive income inequality can hinder individual empowerment because it is intimately connected to opportunity.

“In more unequal societies, too many people lack the basic tools to get ahead—decent nutrition, healthcare, education, skills, and finance,” often creating a vicious cycle whereby economic insecurity discourages people from investing in their own skills, noted Lagarde. Societies with high levels of inequality also see lower levels of contentment and less mobility across generations.

‘Win-win’ policies

As a result, “policies to tame excessive income inequality are win-win” and “can spur empowerment and economic advancement.”

Similarly, the fact that women earn only three-quarters as much as men and account for 70 percent of the billion people living on less than a dollar a day “is a matter of justice but also a matter of basic economics,” observed Lagarde.

Increasing women’s independence and empowerment means focusing on education, ownership rights, and employment opportunities outside the home. Lagarde also noted that “eliminating gender gaps in labor force participation can lead to big jumps in income per capita.” She referred to the IMF’s recent recommendations to boost female employment in Korea and Japan—“where women are still not visible enough.”

Stronger institutions

Given that a person striving to reach their potential has to navigate through a range of institutions, institutions play an important role in empowering people, Lagarde stated.

She noted that the IMF is working with governments to design, build, and strengthen their institutions.

Capacity building aims to fulfill the IMF’s mandate to promote global economic and financial stability, and accounts for a quarter of its budget. Since 2008, the IMF has provided training to all 188 member countries, and technical assistance to 90 percent of them.

Lagarde cited several examples where the IMF has worked with country authorities to strengthen and empower their institutions, including:

• In Myanmar, the IMF helped to set up an independent central bank, remove exchange restrictions, and establish a fully functioning foreign exchange market;

• In Cambodia, the IMF helped to put in place a legal framework to restore trust in the financial system;

• In Peru, the IMF is helping to strengthen tax administration and the management of public finances so that more can be spent on vital social programs;

• In the Middle East and North Africa region, the IMF is assisting with tax policy and administration, financial sector reform, monetary policy, capital markets, and statistics; and

• In countries like Kenya, Mozambique, and Tanzania, the IMF is providing assistance to put in place strong fiscal regimes to manage resource revenues.

Empowerment in the wider world

Lagarde went on to note that “empowerment today depends not just on what is happening in your own country, but what is happening in the wider world.” Today’s global challenges are so complex and far-reaching that they cannot be solved through provincial mindsets but require a “reinvigorated sense of multilateralism.”

This involves making the IMF, which has been a global convener of international cooperation for 70 years, fully representative of the current global economic reality.

It also necessitates a “new multilateralism” that engages “not only with the emerging powers across the globe, but also with the expanding networks and coalitions that are now deeply embedded in the fabric of the global economy.” One important pillar of this effort is to develop a global civil society that “provides space for all voices, takes a broad global perspective, and adopts a genuine long-term vision.”

“With such a framework,” Lagarde concluded, “the international community can unblock obstacles and unlock opportunities: providing the space for all to flourish—and to be empowered.”

Concern for marginalized

Lagarde interspersed her remarks with several tributes to Nobel Economics laureate Amartya Sen for a lifetime of work that has “combined deep theoretical rigor with heartfelt concern for the poor and the marginalized.” Sen “has always understood that the concerns of economics are closely related to the concerns of justice and fairness.”

She also praised Sen for drawing attention to the issue of “missing women”—women who would be alive today had they not been neglected—and saw the issue as “one of the greatest moral causes of our time.”