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The G-7 in 1996: What is at Stake -- Address by Michel Camdessus
June 24, 1996
Mr. Prime Minister, Mr. Mayor, Mr. Chairman, ladies and gentlemen:
For many years there was a classroom exercise—one we all had to go through—in which we had to decide just when it was that the 20th century began. Was it in 1907 with the "Demoiselles d'Avignon"? Or perhaps 1913, marked as it was by so many other striking works of art? Or maybe July 1914 in Sarajevo? This question is not likely to be resolved any time soon, and you surely do not expect me to be the one who provides the answer. However, there is one thing that I can tell you, if you do not already suspect as much: the 21st century began in late December 1994, when the markets demonstrated, by the intensity of their reaction to a Mexican devaluation that failed because of the lack of credible policies to accompany it, just what globalization means. That was the first day of the 21st century, and that is the century we are now in. It was fitting that the G-7 initiated some thinking on the opportunities and risks this entails in Halifax, and it is even more fitting that they have come to Lyons to delve more deeply into this issue. Is not France's intellectual—and culinary!—capital a supremely well chosen site for deeper reflection and more visionary thought? This all goes to say just how pleased I am to take part in your discussions today.
What is at stake for the G-7 in Lyons is no trivial matter and has ramifications that extend well beyond the G-7 countries. In this globalized world, the issues facing the G-7 are, of course, the issues facing the entire world. This will be the focus of the thoughts I will be sharing with you, in an effort to define just what is at stake and to examine how the seven major industrial countries should henceforth exercise their increasingly shared leadership.
Globalization: opportunities and risks
It has become a commonplace to say that, like all groundswells of economic history, globalization is full of opportunities and risks. The risks, to be sure, will never be completely eliminated, but let us ensure that human wisdom will be exercised in such a way that the opportunities nevertheless win the day. The possibilities before us are considerable. In recent years, world trade has expanded by over 6 percent per year—double the rate of world economic growth. The international capital markets offer massive amounts of investment capital to countries that are in the position to attract it, and thus, to take advantage of unprecedented opportunities for trade, investment and growth. In fact, the forces of globalization—including rapid technological innovation, continued trade and exchange liberalization, and the development of the international financial markets—are completely revamping the economic and financial relationships among countries. As a result, economic success today has less to do with a country's geographic location than with the orientation and the predictability of its economic policies, its capacity to ensure economic security, and, hence, its ability to attract investment. Indeed, success depends less on a country's natural resources than on its human resources. And because of this, there are now a number of new players in the world—countries that have managed to tap the international markets, channel those resources into productive investment, and position themselves to take advantage of expanding trade opportunities. And I am convinced that more countries will join their ranks in the years ahead.
There is much that could be said along these lines, but let us focus on at least two points that will enable us to gauge the extent of this change. Has sufficient attention been paid, for example, to the fact that it was the strong growth of about forty of these countries that spared the world a generalized recession in 1991-92? Almost all these countries—I would point out without false modesty—were exemplary in their steadfast pursuit of the structural adjustment measures recommended to them by a Washington institution that shall remain nameless. In this way, they achieved autonomous growth, separate from that of the industrial countries, and to this day they remain one of the key engines of growth in the world. What is more, we should observe the impact on the world's geopolitical chessboard of this advance on the part of the developing countries. It can be summed up in six figures. Consider world output in 1984 and 1994, and apply the hardly fanciful assumption of continued growth in the industrial countries and the developing countries at their current rates of 2.5 percent and 6.5 percent, respectively, for the next ten years as well. The conclusion is simple. In 2004, the output of the developing countries will outstrip that of the industrial countries. This will be a massive structural shift in the traditional North-South relationship. One would have to be blind to overlook it and exceedingly shortsighted not to consider its consequences and wonder how this might be transformed into an opportunity for the world.1
The fact remains, however, that this new era is not without risk. In my view, there are already two particularly pressing ones. The first is financial. The global economy has suffered several costly financial crises over the last decade. Plunging asset prices, major bouts of exchange market volatility, a crisis in emerging markets sparked by events in Mexico, and the collapse of several major financial institutions, in the industrial and emerging market countries alike, all underline one of the major weaknesses of our system. Thus far, the international community has been able to cope with these episodes, but not without difficulty. Will it be prepared for the next one?
The second risk is that of marginalization. While some countries are harnessing the forces of globalization to accelerate economic progress, others clearly are not. Indeed, countries that are unable to participate in the expansion of world trade or attract significant amounts of private investment run the risk of being left behind by the global economy. And the countries at greatest risk of being marginalized are precisely those most in need of the trade, investment and growth that globalization could bring. This raises the prospect of a widening gulf between countries that are able to take advantage of globalization and those that are left by the wayside. The world community cannot merely sit by and watch this happen, because it knows that it is now a unified whole. It knows that a financial crisis, regardless of its origin, can become worldwide in a flash. It knows that even if it could steel itself against the feeling that it is unacceptable to do nothing in the face of extreme poverty, it could not disregard the risk that marginalization entails for the world's geopolitical equilibrium.
This, then, is the backdrop. But the Group of Seven here in Lyons will not be starting with a clean slate. In response to the shock of the Mexican crisis, it initiated an in-depth review of the proper responses to such challenges. And dare I say, giving the Seven their due, the G-7 countries had the wisdom to recommend that the IMF:
At the same time, the G-7 encouraged the IMF to continue supporting its poorest members—by continuing lending operations under what we have so awkwardly named the Enhanced Structural Adjustment Facility (ESAF), the Fund's vehicle for lending to low-income countries, and by working together with the World Bank to develop a comprehensive approach to assist the poorest countries with unsustainable multilateral debt burdens. In addition, the G-7 called on the Bretton Woods institutions and the UN to cooperate with donor countries to establish a new coordination procedure to enable post-conflict countries to make a smooth transition from the emergency to the rehabilitation phase of a crisis.
I am pleased to say that much of this agenda has been completed. Our surveillance over member country policies and performance has become more continuous, more intensive, and more probing. To ensure that we have accurate, comprehensive, and timely economic and financial information, especially in the period between consultations, all members are required, as a minimum, to provide the Fund with certain core data. We are now better equipped to evaluate the sustainability of financial flows, as well as developments in countries potentially at risk and where financial market tensions could have spillover effects. To promote transparency vis-à-vis the markets, we have recently invited all countries, but especially those that are tapping or seeking to tap the international markets, to subscribe to what we call the Special Data Dissemination Standard, which should result in considerable improvements in the quality of financial information. In addition, by end-1996, we plan to implement a general data dissemination standard applicable to all members.
Although these measures have reduced the risk of future Mexico-type crises, they have not eliminated it. Therefore, we have clarified, and to some extent codified, the procedures whereby the IMF can respond rapidly and decisively in crisis situations while maintaining the conditionality associated with its financial support. The use of these procedures must remain exceptional; our contribution must continue to have a catalytic effect and, as in the past, must remain contingent on the adoption of a strong economic program by the country requesting such exceptional assistance.
Ultimately, the Fund's ability to fulfill its many responsibilities depends on its having adequate financial resources. I should mention that in addition to Mexico, we currently have large programs in effect with Russia, Ukraine, Argentina, and Algeria, and soon our Executive Board will consider a new arrangement for Venezuela. Indeed, we have roughly 30 programs in effect that are financed out of the general resources of the Fund, totaling about $37 billion in program commitments. As you may know, the basic source of IMF financing is members' subscriptions, or quotas—what might be called our share capital. In Halifax, the G-7 urged continued discussions on the Eleventh Review of Quotas, which we hope will lead to a timely and substantial increase. As I am fond of round numbers and the figure is fully justified, I am asking that they be doubled. In addition, the G-7 called for immediate action to double the resources available to the Fund under the General Arrangements to Borrow. A first step has recently been taken in this regard: the G-10 countries and a number of other countries which are now able to support the system2—unlike in the early 1960s when the GAB was introduced—have recently agreed on the broad outlines of new arrangements to double these credit lines.
We are also endeavoring to follow up on the G-7's interest in including all members in the SDR system. To this end, we are now working to build a consensus on a one-time special allocation of SDRs through an amendment of the Articles, so as to reduce the existing disparities among members. Moreover, following the membership's decision to put the ESAF on a permanent footing beginning early in the next century, we are now far advanced in discussions on how to do so. At the same time, we have made considerable progress in our work with the World Bank on how to help some of the heavily indebted poor countries achieve a sustainable external debt position. Finally, the Fund has expanded the scope of its policy on emergency assistance to include post-conflict situations.
So where do we stand today on the ambitious agenda sketched out in Halifax? I think it is fair to say that a lot has been accomplished since last year. With the encouragement of the G-7, and the indispensable support of the rest of our membership, substantial progress has been made both in reducing the risk of financial crises and in devising the mechanisms needed to support the poorest countries in their efforts to avoid economic marginalization. But we—the IMF and its members—should not allow the progress made so far to lead us into slackening our effort. We must probe more deeply and look to a farther horizon. And so we have come to Lyons, not just to complete the agenda suggested in Halifax, but to go beyond emergency measures and decide on the broad outlines of a renewed strategy that will enable us to step forward more confidently into this globalized economy.
What proposals might be put to these seven great economies—and, to no lesser extent, to all other economies—in order to maximize the opportunities and minimize the risks of the first decade of the third millennium? I would recommend that they practice three virtues. Not, of course, the three cardinal virtues of the catechism—though the world would gain a great deal from that—but rather their secular younger sisters: responsibility, solidarity, and a confident and imaginative approach to change. I need hardly tell you that I am thinking not so much of these ethical suggestions as such, but in particular of their practical applications. Here are a few illustrations.
Responsibility: in today's world, this entails the twofold obligation of universal adjustment and the search for stable markets and financial institutions. This is an especially urgent duty on the part of the G-7 and European economies, which have such a great influence on developments in the world economy as a whole. Universal adjustment, then, and permanent adjustment as well. I am fond of stressing three key aspects of this kind of adjustment for all:
1. I spoke earlier about transparency. Rigor, too, is needed in every country's economic policy. Rigor! It would perhaps suffice to say probity. In a world where crises as serious as Mexico's can spring up overnight, there can be no "almosts" in the conduct of macroeconomic policy. Nothing is more essential for containing the risks and maximizing the opportunities of globalization than this first form of responsibility for government leaders, namely probity and, where required, rigorous management.
This is required first of the major industrial countries, owing to their systemic responsibilities. I will not go on at length about the approach which the G-7 must and certainly will adopt for itself on Friday; like two peas in a pod, it will resemble the recommendations of the Fund's Interim Committee in late April and of the OECD in late May; for the most part, consensus has been reached in this regard. But rigor is also required of the "emerging" countries that must establish or enhance their credibility in the markets, and of the poorest countries that are threatened by marginalization. A globalized economy will not be made more human by less rigor in the industrial countries or less discipline in the structural adjustment of the developing countries, but rather, and quite the contrary, by a renewed sense of urgency in the structural adaptation of all economies, be they industrial, in transition, or developing.
I know that structural adjustment gets a bad press. I know the suffering that goes with it everywhere. I hear the countless protests, the economists' disagreements about a "so-called model," and the cries of well-meaning souls claiming to express the despair of the people and calling for an alternative. How could one be insensitive to all that? But how also can one ignore the lessons of universal experience? It is the seriousness of such adjustment efforts that creates a greater likelihood of external support and balanced growth for tomorrow. I scarcely see any alternative to that. In the modern context, putting the necessary effort off until tomorrow can have dramatic consequences. It is essential that substantial progress be made before the world economic cycle reverses itself, perhaps sooner than expected, and probably before the end of the century! And this requirement is all the more essential in the case of African countries, and the poorest countries, in their race between development and population growth! For them, the only alternative to rigor is marginalization and stagnation. All countries, but especially the developing countries and the economies in transition, must therefore take steps to reduce to a minimum the risks that were so eloquently illustrated by the Mexican crisis. They must, more than ever, strengthen macroeconomic discipline so as to guarantee a stable environment for domestic and foreign investors. And let us not forget that while foreign capital may provide a valuable—and sometimes vital—supplement to domestic saving, it can never replace it: domestic saving managed by sound financial institutions remains the key to investment and sustainable growth.
The challenges of globalization are therefore yet another reason for the developing countries and economies in transition to accelerate their adjustment and reform efforts. And this is precisely what they are doing! The world is at work. Seventy-eight countries and not just the smallest ones are currently pursuing such programs with Fund support or completing the negotiation of such programs with the IMF. However, if these efforts are to have any real meaning, they must be aimed at the ultimate objective of human development.
2. The search for high quality growth aimed at human development
At a time when globalization is increasing the need for managerial discipline and requiring sacrifices by all, it is essential that their ultimate justification be clearly identified. It should be clear to all concerned that what hangs in the balance is sustainable growth that is capable of promoting greater equity, enhancing equal opportunity, fighting exclusion, and respecting human freedom, cultural diversity, and the environment; in short, growth that is all that much more likely to succeed in a context of democratic participation and sustained effort to improve governance.
Of course we all know that even the best macroeconomic model has one thing in common with the prettiest girl in the world: it can only give you what it's got. It will give you growth if it is implemented firmly and steadily. But the political authorities must look beyond this:
We all know the potential for international contagion of these modern-day plagues. If one may speak of the duties of good world citizenship on the part of governments, it is clear that one of the foremost such duties is to undertake reforms to contain and ultimately eradicate these scourges. And thinking about what this responsibility implies brings me to the subject of governmental reform.
3. Governmental reform
At a time when the world's horizon is broadening, reform of government with a view to improving its ability to shoulder the tasks of sovereignty and solidarity, becomes a condition for the proper integration of every country into the world economy. Government must be reformed, restored in terms of its dignity and capacity to protect the commonweal. Accordingly, as I have been frequently told in the transition and developing countries, no reform is more critical to the success of economic reform than that of the justice system. I shall return to this idea in a moment.
I cannot leave the topic of the responsible approach to the economy without raising a second major point, that of the contract to reduce the potential sources of instability in each country and in the international monetary system as a whole. First of all, banking systems must be secure and sound. For many years, the IMF has provided extensive technical assistance in the banking sector, advising member countries on banking regulation and supervision, as consolidation of this sector is essential for achieving sustainable long-term growth. But as the banking crisis in industrial countries and emerging markets has shown, further action is needed.
The Mexican crisis demonstrated that countries with weak and inefficient banking systems are more vulnerable to contagion, and less able to manage the effects of volatile capital flows and exchange rate pressures. Moreover, the spillover effects in some Latin American countries also showed how weak banking systems can magnify and prolong the effects of such crises on other economies.
The supervisory authorities in the major industrial countries have long been aware of such risks, and in recent years considerable progress has been made in strengthening bank regulation and supervision in the G-10 countries. There is now widespread agreement that these improvements need to be extended worldwide. I am convinced that the dissemination of a clear set of internationally accepted standards could provide the basis for the regulation and supervision of banking systems around the world. Obviously this would only be a small, first step, as standards alone would not be sufficient. Their effectiveness would depend on the ability and willingness of the authorities to exercise constant and difficult vigilance, and to make the decisions necessary to implement such standards.
The question is, what would be the most effective way to establish and gain acceptance for such standards? The G-10, and especially the Basle Committee on Banking Supervision, has achieved good results among the small group of industrial countries it covers; but in my view it would be desirable to support the extension of these standards to the rest of the world and to do so without waiting as one could do in a less dangerous world for spontaneous action on the part of individual economies.
I believe that a new initiative is called for and that the Fund, because of its legitimacy and universal responsibility for surveillance, has a role to play in facilitating this "globalization" of the standards for bank supervision developed in Basle and tested with ever growing success in the G-10 countries. In this regard, our experience in disseminating standards concerning the transparency of statistical information has been encouraging.
As you no doubt suspect, this attention to the stability of banking systems mandated by recent events does not detract in the least from our concern with promoting, as our Articles require, exchange stability, especially among the dollar, the yen, and the European currencies. In an era characterized by massive flows of goods and capital, few would deny that disorderly exchange rates can pose a serious obstacle to sustainable global prosperity. The question is how to put in place and maintain a viable exchange rate grid. In this regard, emerging from a controversy that has raged for thirty years now, there is one point on which agreement is firm and unanimous: the first two conditions for such stabilization are the soundness of macroeconomic and monetary equilibria, especially in the G-7 countries, and the quality of their cooperation.
The G-7 countries must therefore consolidate the major parameters of their respective economies. For the United States, this means continued fiscal consolidation; for the European members of the G-7, it means shaking themselves out of their economic slump, reducing labor market distortions, and curbing fiscal deficits; Japan, in turn, must focus on sustaining its recovery while ensuring that it tightens its fiscal policy sufficiently as the expansion gains strength. As you know, the IMF works closely with the G-7 countries in their mutual surveillance and in their efforts to coordinate macroeconomic and monetary policies. But what is to be done when, despite this, exchange rates deviate from what might be considered "zones of plausibility"? This question opens a debate in which my own stance is rather in the minority, even if I am in the good company of Paul Volcker and a number of other noteworthy observers. I am among those who regret that the trajectory and the dynamics put in place by the Plaza and Louvre Accords have been, if not abandoned, at least allowed to slumber by the G-7. Not, however, to the point of renouncing cooperation in the exchange rate area, and I would note that this discreet cooperation was remarkably successful last spring and summer, when the G-7's economic policy coordination and some appropriate signals to the markets enabled the Seven to restore a much more reasonable constellation of exchange rates. I hope that today—at the very least—they will build on this success, which demonstrates that even when reserves are limited in comparison with the size of their markets, G-7 coordination does have an impact. There can be no doubt that exchange rate stability can be greatly enhanced if the major countries take to heart their responsibilities as the issuers of reserve currencies. They can do so, and in my estimation they must. The fact remains that the next stage in this process of renewing the international monetary system that is constantly beginning anew will be largely dominated by the most important and the most promising monetary development in the post-Bretton Woods period: the advent of the euro. I am surprised to see that the Europeans who accept, with some grumbling, the discipline of Maastricht do not fully grasp its extraordinarily positive implications.
For the economic equilibrium of the world, the virtue of solidarity is the twin sister of responsibility. Indeed, globalization imparts a worldwide dimension to competition that is becoming more and more open and intense; this adds all the more urgency to the efforts to achieve more effective solidarity. This is a major duty of the G-7 countries. But it is also a duty of all countries—even poor countries—regaining control of their own economies. I have seen that solidarity in action. I am highly encouraged, I must say, by the number of countries agreeing to finance our ESAF.
But allow me to stress first how responsibility and solidarity are interlinked: a keener sense of responsibility in the conduct of internal affairs in every country is the first, and most essential, step toward solidarity in a world where the success or failure of one country has such a pronounced impact on its neighbors. That said, for solidarity to be practiced more effectively, there are, to my mind, three areas where we must endeavor urgently to contain some current slippage in order subsequently to move forward: development assistance, assistance with transition, and their corollary, the appropriate financing of multilateral institutions.
There has been dangerous slippage in the area of development assistance. Official development assistance has for many years been stagnant at half the United Nations target of 0.7 percent of GDP. Now it is dwindling. What has happened to the "peace dividends"? All too often, the social component of structural adjustment programs is underfinanced because the industrial countries continue not to accord the appropriate priority to this social cooperation function. Even more seriously, using the fallacious alibi of budgetary savings, many advanced countries are making cuts—sometimes severe ones—in their development assistance budgets. I am pleased to note that President Clinton, in his speech to the Annual Meetings of the IMF and World Bank last autumn, made it clear that cuts in programs such as IDA were not required to balance the U.S. budget. This holds true for the other industrial countries as well and must be heeded. It is also important that the developing countries remain keenly aware of their duty to manage the donor funds made available to them in an exemplary manner. Too many refusals to grant development assistance have the alibi that such funds are wasted. This slippage, as well as the so-called "donor fatigue" must be vigorously combated if the international community wishes to be in a position to keep the poorest countries from marginalization and to steer the world away from the tensions and crises that extreme poverty cannot but engender wherever it occurs. Marginalization is not inevitable, and every country has its opportunity in this globalized world. I am struck by how broadly the leaders of Africa share this conviction. They now recognize the need for and wisdom of structural adjustment, which is behind the success of the most advanced African countries, and they stand ready to move in this direction. But think how much easier their task would be, and how much sooner it would be effective, if they found partners prepared to provide the necessary support to the poorest countries, which are doing the impossible to pull themselves up by their own bootstraps.
Another illustration of this increased need for solidarity is the transformation process in the countries of Eastern Europe. This is one of the major tasks for this end of century. In 1994 and 1995, these countries made remarkable progress. Economies are taking off again; everywhere governments are working to develop strategies which the IMF supports as best it can. The indicators are now positive, but social and political tensions remain high; a world is being born, or reborn, in the midst of disruptions, disorder, scandal, and precarious structures that benefit the wiliest. We must support these countries without giving in to fatigue. The problems are immeasurable, but so are the fruits of success, not only for these countries, but for the entire world.
I see a third instance of this duty to exercise solidarity in constructive support of multilateral institutions. It would be wonderful if the G-7 were to prompt us anew to strengthen our cooperation and the quality of our actions. The duty to excel is up to us first and foremost, to be sure, but that will not suffice. We must also be provided with the means to carry out our tasks or, at least, be allowed to make the best use of our own resources to that end. Why should I hide my shopping list from you? How can we pretend to call on the United Nations to spearhead human development when dues in arrears have driven it into bankruptcy? And how can the World Bank be expected to retain its major role in the worldwide fight against poverty and for development if the IDA, its principal instrument in this effort, is maintained on a downward path? As for the IMF, I have already explained the importance of increasing our quotas; I raise the matter again only to express the hope that this come to pass as soon as possible. The IMF is also seeking to mobilize all of its resources—including its gold—in an extremely prudent manner so as to be able to play its role, including that of supplier of balance of payments support for the poorest countries. I ask that we be allowed to do so and that the industrial countries—alongside the developing countries that are already making a sizable contribution—agree to provide a contribution which, modest though it may be, is no less essential. Here, I am sure you understand, I am referring to my efforts to make our facility for financing the poorest countries (ESAF) permanent and self-sustaining in the long term. Doing this will kill two birds with one stone, as it will also settle the problem of financing our participation in the joint initiative that we have undertaken with the World Bank to address the debt problem of the heavily indebted poorest countries.
As important as ESAF and the debt initiative are, they will not solve all the poorest countries' problems of underdevelopment and vulnerability. These countries will continue to need bilateral support. This cannot replace fuller access to world markets, especially for the kinds of products for which they have, or are likely to develop, a comparative advantage: agricultural and mineral products and basic manufactures. At the same time, the poorest countries also need to be able to count on continued bilateral assistance on concessional terms.
That being said, we know that aid resources are not limitless. Thus, it makes sense to concentrate scarce concessional resources in countries where they will be put to the most effective use. Countries seeking international assistance—from bilateral or multilateral sources—need to do their utmost to establish a domestic policy environment in which this assistance can be used productively. Not only does this require sound macroeconomic policies and comprehensive structural reform, but also an institutional framework that gives confidence and security to savers and investors. Experience shows that governments can best achieve this by implementing the governmental reform to which I referred a moment ago. I am convinced that countries which prove themselves capable of ensuring law and order, providing reliable public services, establishing a simple, transparent regulatory system that is equitably enforced, guaranteeing the professionalism and independence of the judiciary, and integrating themselves pragmatically and openly into regional groupings, are the countries that will win the race for development. There is no doubt but that this effort, which can only be called re-creating government and achieving administrative excellence, must be the focus of the contribution made by the countries receiving assistance to the new partnership I described last May at the Euro-African Convention in Bordeaux.
And finally, Mr. Chairman, there is the third virtue or, if you will, the invitation to bring the imagination into play to ensure a confident and creative approach to change. This is an immense topic, because it is in every area that the G-7 must show itself capable of change, capable of seizing each and every opportunity afforded by these times, before they slip through our fingers. Change, of course, but change what? It is difficult to say, as it is likely that by taking the risk of singling out one avenue of investigation, one runs the risk of being suspected of wishing to trigger a certain response. Allow me nevertheless to take this risk and to suggest a few themes from among a thousand.
Last but not least, at a time when globalization is advancing so rapidly, how can we find suitable structures in which everyone is equitably represented, thereby lending them legitimacy, which would make it possible to improve the formulation of global strategies at the world economy level? It has frequently been said that there is a need for a forum in which all countries are represented in accordance with rules they recognize as legitimate, and where they might by supported by a secretariat of acknowledged professionalism and integrity.
The Interim Committee of the IMF, in which countries like Brazil, India, Indonesia, among others, are permanently represented alongside the Group of Seven countries, and which meets sufficiently frequently—twice a year, and more often if need be—already fulfills this role, at least in part, and has all the means necessary to carry it out more fully. We are therefore endeavoring to ensure that it does so. This is the aim of the recent initiatives to achieve consensus and announce through regular declarations, such as the Madrid Declaration of October 1994, the global macroeconomic strategy called for by a changing economic situation. The proper definition of such strategies requires, however, that leaders broaden their vision beyond the macroeconomic, monetary, and financial areas in order to incorporate social, trade-related, and other dimensions. This is being sought through increasingly close cooperation with the other institutions that have responsibilities in these areas, such as the ILO, the WTO, etc.
But there is still one unanswered question. How can we involve the highest political authorities in defining the institutions' strategies and direction? Here, of course, I hear an objection: just as it could be said that war is too serious a thing to be left to the generals—and perhaps that peace is too important to be left to the diplomats—it may also not be prudent to turn over the fate of the global economy to the world's Ministers of Finance. The objection is well founded, and it would be good to seek out opportunities in which the elected leaders of the peoples of the world would meet to examine at their level the major strategic choices of this shared management. This is the role that the major conferences organized by the United Nations and the summits of heads of state are intended to play. Their contribution has already been quite valuable, but it is essential that a formula be found that is even more representative of the world today, given the number of countries whose resources and size enable them to join in assuming responsibility for the affairs of the world. What avenue might be explored? This is a question I raise only to prod institutional imaginations, which are somewhat dulled, while fantasizing—is it really a fantasy?—that the invitation of four heads of international institutions to the Lyons Summit for almost half a day is perhaps a white pebble on such a path.
Whether the trail of white pebbles is followed or not, allow me to conclude, Mr. Chairman, by voicing a twofold wish:
1. According to a study by the IMF's Research Department, the industrial countries' share of world output will decrease from 57 percent to 47 percent from 1984 to 2004, the developing countries' share of world output will increase from 34 percent to 48 percent, and the share of the countries in transition will decline from 9 percent to 5 percent.
2. Besides Saudi Arabia, which has been involved since the
1980s, these include a group of European countries and emerging countries.
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