Capacity Building as Life-Long Learning: The Joint Vienna Institute

IMF News, June 30, 2017

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Authors: Mitsuhiro Furusawa
Published: June 30, 2017

Introduction

Speaker: Mitsuhiro Furusawa, IMF Deputy Managing Director; remarks prepared for delivery at the Joint Vienna Institute, Vienna, Austria, June 30, 2017.
JVI has been supported by Austrian partners (OeNB and Ministry of Finance) for 25 years.
Core message: capacity building must be continuous—lifelong learning is essential for individuals, countries, the IMF, and the JVI to remain relevant amid rapid structural and technological change.

Global Outlook

World Economic Outlook (April): global activity picking up with cyclical recovery in investment, manufacturing, and trade.
Key growth projections:
- World growth: 3.1 percent in 2016; 3.5 percent in 2017; 3.6 percent in 2018.
Positive signs: stronger activity, stronger demand expectations, reduced deflationary pressures, optimistic financial markets.
Obstacles to recovery:
- inadequate implementation of measures to address legacies of the global financial crisis such as high levels of corporate debt and nonperforming bank loans;
- the threat of inward-looking policies that threaten global economic integration;
- the continued slow growth of productivity, especially in the advanced economies.

The Challenges Facing the Region

Regional medium-term outlook and projections:
- Emerging Europe: growth reaching 3 percent in 2017 and rising to 3.3 percent in 2018.
- Russia and the rest of the CIS: growth rising from 1.7 percent in 2017 to 2.1 percent in 2018.
- Caucasus and Central Asia: growth of 2.4 percent in 2016; expected to pick up to 3.1 percent in 2017 and 4.1 percent in 2018.
- Turkey: growth has rebounded somewhat after a sharp drop amid elevated political uncertainty.
Downside risk tilt to the outlook for the JVI region.
Principal policy challenges (country-specific but broadly relevant across the region):
- Fiscal consolidation and reducing public debt in a growth-friendly fashion.
- Further strengthening of monetary policy frameworks to support increased exchange rate flexibility and to keep inflation under control.
- Addressing weaknesses in financial sectors, including by further repairing balance sheets, restraining high dollarization, and reducing NPLs.
- Implementing structural reforms to raise medium-term growth prospects, including diversifying economies, reducing reliance on remittances, and building sustained and inclusive growth.

The Role of the IMF and the JVI

Capacity development (institutional and individual) is crucial for effective policy advice and lending to have impact.
Training and technical assistance represent a significant portion of the Fund’s operational budget.
Delivery channels:
- global network of training and technical assistance centers;
- JVI as the first of the IMF’s regional training centers and a model replicated elsewhere.
Current scale: there are now eight IMF regional training centers and programs around the world.
JVI’s contributions:
- Delivers IMF training and training by many partners, including Austrian authorities.
- Has provided know-how, facilities, substantial funding, and relationship-building among policymakers across the region.
Capacity development is not “brick and mortar”: focus is on ensuring qualified staff can use new legal and regulatory tools, formulate policies, and execute them.

Training at JVI

Lifelong learning ethos embedded in JVI’s operations.
Participant mix varies by course: junior, mid-level, and high-level officials.
Curriculum covers basic to advanced topics to address skill gaps at all career stages.
Evolution of course content:
- Early transition period: fundamentals of how market economies work.
- Post-global-financial-crisis: increased emphasis on financial sector issues, fiscal and monetary policy roles in crisis mitigation.
- Recovery phase: shift toward medium-term structural policies to generate strong, sustainable, equitable, and inclusive growth.
New approaches to training being introduced:
- cooperation with central banks in the region;
- peer-to-peer events;
- online training;
- public lectures; and
- active outreach work.

Inclusive Growth

Inclusive growth defined as broadly shared benefits and opportunities of economic growth; reflects:
- growth that is robust and broad-based;
- growth that promotes productive employment across the labor force;
- growth that embodies equal opportunities in access to markets and resources;
- growth that protects the vulnerable.
Challenges to inclusion:
- Technological change, including automation and robotics, increasing risk to low-skill jobs.
- Need for broad-based access to education to address automation risks.
- Intergenerational sustainability concerns, including climate impact of growth strategies.
- Persistent low female labor participation and high gender wage gaps in most countries.
Tradeoffs: creating sustainable and inclusive growth is complex and may require balancing competing objectives.
Role of growth: foundation for inclusion but exclusive focus on growth can undermine inclusion; high and persistent inequality can threaten growth sustainability.
Institutional response: the Fund’s recently revised capacity development curriculum is being delivered in its entirety this year, including at the JVI, to present IMF expertise in an up-to-date and systematic fashion.

Conclusion and Policy Imperatives

JVI’s flexibility and dynamism have enabled it to remain relevant for 25 years; positioned to meet future challenges.
IMF commitment: continue to provide financing, policy advice, and capacity building to the region whenever asked.
Call to action for country authorities: continue to use the JVI to strengthen institutional and human capacity.
Closing note: congratulations to JVI on 25 years and encouragement for continued use and support of the institute.

Source: Speech by Mitsuhiro Furusawa, IMF Deputy Managing Director, “Capacity Building as Life-Long Learning: The Joint Vienna Institute,” Joint Vienna Institute, June 30, 2017.