## Growing Institutions? Grow the People!

_IMF Blog, August 10, 2012_

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## Bibliographic details
- Authors: Sharmini Coorey
- Published: August 10, 2012

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### Institutions depend on people
- Quote: “When you speak about institutions, in fact, you are speaking about the people.” — Gani Gergüri.
- Core argument: Without sound institutions it is very hard to achieve sustainable economic growth; the quality of institutions hinges on the quality of the people running them—their educational background, training, business culture, and policymaking approach.
- Theoretical foundation: Draws on Douglass North and the new institutional economics; references Acemoglu and Robinson’s thesis in Why Nations Fail that differences in deep institutions (formal and informal rules of economic, political, and social interactions) explain sustained differences in economic performance.
- Inclusive vs extractive institutions: Inclusive economic and political institutions are essential for avoiding stagnation and supporting a dynamic process of constant innovation and Schumpeterian creative destruction.

### Relevance to recent crises and advanced countries
- Eurozone crisis lesson: Weaknesses in national macroeconomic and statistical institutions in supposedly “advanced” countries were at the root of the crisis, especially in Greece.
- European-level institutions: Lack of supportive fiscal and regulatory institutions at the European level—and the political integration required for them—contributes to markets’ continued anxiety about the common European currency.

### IMF actions on capacity development
- Institutional response: The IMF created a new Institute for Capacity Development to take a holistic view of capacity development work and to develop an IMF-wide strategy for capacity development.
- Scope: The IMF seeks to help its 188 member countries train skilled professionals and build institutions accountable for delivering public goods such as a stable currency, efficient tax collection, and trustworthy data.

### The Joint Vienna Institute (JVI) experience and lessons
- Milestones:
  - Conference in Vienna marked the 20th anniversary of the Joint Vienna Institute.
  - The JVI was created in 1992, three years after the fall of the Berlin wall.
- Reach and impact:
  - For the past two decades, close to 30,000 officials at all levels of seniority have received some form of training in applied economics and finance at the JVI.
  - Conference convened more than 140 policymakers and academics to discuss lessons from the global economic crisis and regional challenges.
- Alumni testimony: Governor Gergüri recalled a personal JVI experience: “It was my first time going outside the country... It was exactly ten years ago here in Vienna, in this very melodious city. I came here, had the three-week course in monetary and financial statistics. I was flooded with enthusiasm because I was opening a small window for big opportunities―for my institution, and then this is the way I started in fact to build also my career.”

### Toward a new approach to training and capacity development
- Need for tailoring:
  - Priorities for training depend on countries’ levels of economic development, EU or regional integration status, and individual circumstances.
  - Heterogeneity requires more tailored approaches and closer integration of training with national capacity development strategies.
- Linking individual skills to organizational capacity:
  - Move beyond measuring improvements in individual skills to assessing impact on the capacity of units and organizations to perform functions.
  - Make training and technical assistance more demand-driven and monitor how well organizations utilize trained people.
  - Exploit synergies between technical assistance and training.
- E-learning and outreach:
  - Urgent need to harness the potential of e-learning to reach officials who cannot travel to Washington or regional centers and to help officials better prepare for courses.
  - Web-based tools could help explain the IMF’s purposes and policies to a broader public, including civil society.
- Informal and peer-to-peer learning:
  - Value of learning outside formal courses in small, informal, high-level peer-to-peer meetings.
  - Explore JVI and IMF training centers as nodes in a broader network offering flexible, customized seminars beyond standard two-week courses.
- Broader engagement:
  - Enhance outreach to civil society, journalists, parliamentarians, students, and the public at large.
- Incorporate non-traditional thinking:
  - Crisis has forced reconsideration of economic doctrine and policies; textbooks on macroeconomic stabilization, growth models, and financial supervision are being rewritten.
  - Continue and systematize inclusion of alternative and emerging non-conventional views in training programs.

### Policy implications and recommendations
- Invest in people: Prioritize building human capital (education, training, professional development) as the foundation for stronger institutions.
- Develop IMF-wide capacity strategy: Implement a holistic, IMF-wide strategy for capacity development through the Institute for Capacity Development.
- Make training impact-oriented: Evaluate training by organizational and institutional outcomes, not just individual skills.
- Scale through technology: Accelerate adoption of e-learning and web-based tools to expand reach and effectiveness.
- Strengthen coordination: Improve coordination between technical assistance and training and integrate training into national capacity strategies.
- Foster flexible and peer-based learning: Expand flexible, customized seminars and peer-to-peer exchanges beyond traditional course formats.
- Broaden audiences: Enhance outreach to civil society and other non-traditional stakeholders to build broader understanding and support for institutional reforms.
- Integrate pluralistic thinking: Systematically include alternative economic perspectives and emerging ideas in curricula.

*Source: Growing Institutions? Grow the People!, Sharmini Coorey, August 10, 2012.*

---

## Content in this bundle

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- **The Primacy of Institutions**
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- **Breacher of the peace**
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---

## References

- [Robinson](http://www.imf.org/external/pubs/ft/survey/so/PodcastArchive.aspx)
- [Why Nations Fail](http://www.imf.org/external/pubs/ft/fandd/2012/03/books.htm)
- [crisis](http://www.imf.org/external/pubs/ft/survey/so/2012/CAR062112A.htm)
- [Institute for Capacity Development](http://www.imf.org/external/np/sec/pr/2012/pr12156.htm)
- [conference in Vienna](http://www.imf.org/external/np/seminars/eng/2012/jvi/)
- [technical assistance](http://www.imf.org/external/np/exr/facts/tech.htm)
- [training](http://www.imf.org/external/np/ins/english/index.htm)
- [training centers](http://www.imf.org/external/np/exr/facts/afritac.htm)
- [students](http://www.imf.org/external/pubs/ft/fandd/basics/index.htm)
- [reconsideration](http://blogs.imf.org/2011/03/13/future-of-macroeconomic-policy/)

_Source: https://www.imf.org/en/blogs/articles/2012/08/10/growing-institutions-grow-the-people_