## Empowerment—the Amartya Sen Lecture, By Christine Lagarde Managing Director, International Monetary Fund

_IMF News, June 6, 2014_

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## Bibliographic details
- Authors: Christine Lagarde Managing Director
- Published: June 6, 2014

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### Introduction
- Speech delivered by Christine Lagarde, Managing Director, International Monetary Fund.
- London, June 6, 2014.
- Lecture framed around the intersection of justice and economics: the issue of empowerment.
- Three layers of empowerment addressed: individual, institutional, and multilateral.

### Empowerment of individuals — Findings and implications
- Central thesis: empowerment = economic opportunity and the ability to freely choose one’s path in life; cutting away obstacles to human flourishing.
- Obstacles addressed: income disparities and gender disparities.

Income disparities
- Observation: the gap between the haves and the have-nots has risen substantially in recent years; “we might have avoided a second Great Depression, but we have not avoided a second Gilded Age.”
- Amartya Sen’s capability approach emphasized: judge advantage by capability to do the things people value.
- Mechanisms by which inequality hinders empowerment:
  - Lack of decent nutrition, healthcare, education, skills, and finance reduces people’s capacity to get ahead.
  - Economic insecurity can cause underinvestment in skills and education.
  - Higher inequality associated with lower levels of contentment and less intergenerational mobility.
- Policy implication: policies to tame excessive income inequality can be win-win if carefully chosen and calibrated.
- Policy examples recommended:
  - Boost spending on health.
  - Boost spending on education.
  - Active labor market policies.
  - In-work benefits.
- Education highlighted as a uniquely powerful agent of empowerment.
- IMF contribution: development and public opening of massive open online courses (MOOCs) for government officials and the general public to enhance knowledge and skills in IMF-related policy areas.

Gender disparities
- Key statistics and findings:
  - Globally, women earn only three-quarters as much as men, even with the same job and same education.
  - Women are underrepresented in the formal sector and overrepresented in the informal sector.
  - Women spend twice as much time on household chores as men—and four times as much on childcare.
  - Women make up 70 percent of the billion people living on less than a dollar a day.
  - Women are the first to be submerged by economic crisis and are more likely to be fired when they reach the top.
  - One study cited: women spend up to 90 percent of their earnings on health and education, as opposed to just 30-40 percent for men.
  - Women account for 70 percent of global consumer spending.
  - Eliminating gender gaps in labor force participation could raise income per capita by:
    - Middle East and North Africa—27 percent.
    - South Asia—23 percent.
- Amartya Sen’s contribution: attention to “missing” women and the moral imperative to increase women’s voice and agency.
- Policy implications recommended:
  - Focus on education for girls and women.
  - Strengthen ownership rights for women.
  - Expand employment opportunities outside the home.
  - Promote policies to boost women’s participation in economies such as Korea and Japan.

### Empowerment of institutions — Findings, metrics, and country examples
- Premise: institutions and governance structures significantly shape individual empowerment through accountability, transparency, and impartiality.
- IMF role in capacity building:
  - Devotes a quarter of its budget to capacity building.
  - Since 2008, provided training to most of its 188 member countries, and technical assistance to 90 percent of them.
  - Low-income and lower-middle income countries receive two-thirds of the IMF’s technical assistance and half of its training.
  - Special focus areas: tax systems, public fund management, financial sector oversight, quality of economic statistics.
  - The IMF acts as a global conduit for sharing knowledge and know-how through technical assistance and training.

Country and regional examples of IMF capacity building
- Myanmar:
  - Identified as the IMF’s third largest recipient of technical assistance.
  - Reforms assisted: setting up an independent central bank, removing exchange restrictions, establishing a functioning foreign exchange market.
  - Current priorities: tax administration, financial sector oversight, economic statistics.
  - Myanmar’s tax revenue noted as a mere 7 percent of GDP.
  - Goal: boost tax revenue to fund health, education, and infrastructure and expand access to credit, including for women and rural areas.
- Cambodia:
  - Assistance to restore legal framework and trust in the financial system after Khmer Rouge legacy.
  - Result: broader rural access to banks compared to a decade ago.
- Kosovo:
  - Post-independence capacity building: creation of a brand new central bank and subsequent training support to other central banks.
- Peru:
  - Rapid growth but lagging tax capacity; a fifth of revenue lost through avoidance and evasion.
  - IMF assistance aimed at strengthening tax collection and public finance management to support programs like Juntos (conditional cash transfer).
- Arab transition countries:
  - Assistance in tax policy and administration, financial sector reform, monetary policy, capital markets, and statistics.
  - Delivery through regional technical assistance center and regional training institute.
- Sub-Saharan Africa:
  - Conference on “Africa rising”; emphasis on strong fiscal regimes to manage resource revenues for current and future generations.
  - Technical assistance provided to Kenya, Mozambique, and Tanzania.
  - Hands-on help delivered through five regional technical assistance centers in Gabon, Ghana, Côte d’Ivoire, Mauritius, and Tanzania.

- Overarching point: empowerment of people depends fundamentally on empowerment of institutions; continuous institutional capacity building is needed across all members as the global economy becomes more intricate.

### Empowerment of multilateralism — Analysis and recommendations
- Argument: many contemporary challenges are global (demographics, climate change, rising inequality, fragile states) and require multilateral cooperation.
- Central tensions:
  - World becoming more integrated via trade, finance, technology, and communications.
  - Simultaneous diffusion of power and potential fragmentation toward more diverse stakeholders.
  - Risk: tension between integration and fragmentation could cause indecision, impasse, and insecurity.
- Moral foundation: Amartya Sen’s view that shared humanity entails responsibilities beyond one’s neighborhood.
- Policy implications and institutional roles:
  - Preserve and update effective multilateral instruments and institutions developed postwar.
  - Make institutions like the IMF fully representative of current global economic reality.
  - Develop a “new multilateralism” that engages emerging powers and expanding networks and coalitions embedded in the global economy.
  - Invest in global social capital and a global civil society that provides space for all voices and long-term perspective.
- IMF’s role emphasized:
  - Convening 188 countries to share knowledge, collaborate, and lend mutual support.
  - Acting as a convener and capacity builder to foster cooperation that unlocks opportunities and reduces obstacles to empowerment.

### Conclusion — Core messages
- Economic empowerment equated with freedom, dignity, and opportunity.
- Three pillars to promote empowerment:
  - Enabling policies (education, health, labor market and social policies).
  - Enabling institutions (accountable, transparent, impartial capacity for fiscal, monetary, and financial governance).
  - Enabling international cooperation (reinvigorated multilateralism and inclusive global engagement).
- Amartya Sen invoked as a guiding intellectual force whose thinking on capability, justice, and global responsibility informs the path to empowerment.

*International Monetary Fund.*

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## References

- [Myanmar and the IMF](http://www.imf.org/external/country/MMR/index.htm)
- [Cambodia and the IMF](http://www.imf.org/external/country/KHM/index.htm)
- [Republic of Kosovo and the IMF](http://www.imf.org/external/country/UVK/index.htm)
- [Peru and the IMF](http://www.imf.org/external/country/PER/index.htm)
- [Republic of Mozambique and the IMF](http://www.imf.org/external/country/MOZ/index.htm)
- [United Republic of Tanzania and the IMF](http://www.imf.org/external/country/TZA/index.htm)
- [Technical Assistance -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-capacity-development)
- [Speeches](https://www.imf.org/en/news/searchnews)
- [Christine Lagarde](https://www.imf.org/external/np/omd/bios/cl.htm)
- [PRESS CENTER](http://presscenter.imf.org/)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2015/09/28/04/53/sp060614_