## Age of Ingenuity: Reimagining 21st Century International Cooperation

_IMF News, December 4, 2018_

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## Bibliographic details
- Published: December 4, 2018

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### Introduction
- Eighth Henry A. Kissinger Lecture, Library of Congress, Washington, DC — Christine Lagarde — Managing Director — International Monetary Fund; Washington, DC; December 4, 2018.  
- Lecture theme: creativity and long-term vision rooted in history as a basis for adapting international economic cooperation to current challenges.

### I. 75 Years of Creativity & Vision in International Economic Cooperation
- Historical turning points and institutional responses:
  - Bretton Woods founding (1944): creation of the International Monetary Fund and the World Bank to promote international monetary cooperation, support expansion of trade and economic growth, and discourage harmful policies.
  - IMF role complementing the Marshall Plan in postwar European recovery.
  - Early 1970s: Nixon suspended US dollar convertibility into gold, leading to modern floating exchange rate structure and adaptation of the IMF’s role.
  - 1973 oil crisis: IMF created new tools for energy emergencies.
  - 1980s Latin American debt crisis: IMF interventions to stabilize.
  - Post–Berlin Wall: assistance for transition from centrally planned to free market economies.
  - 1990s: responses to the Mexican peso crisis and the Asian financial crisis.
  - 2008 global financial crisis: G20 and Federal Reserve actions; IMF committed over $500 billion to help secure the global economy.
  - Post-2008 decade: IMF supported economic programs in over 90 countries and adapted lending instruments, including zero-interest loans for low-income countries.
- Institutional characteristics emphasized:
  - Adaptability: “build on what worked, change what did not, and adapt.”
  - US leadership: seen as central to forging compromise and supporting a collaborative international economic order.
- Long-run U.S. economic outcomes since Bretton Woods:
  - Real US GDP increased by a factor of eight.
  - The average American’s real income has quadrupled.

### II. The Next Chapter: How to Reimagine International Cooperation
- Systemic shifts and risks:
  - Drivers of change: geopolitics, shift in economic power from west to east, rise of non-state actors, technology acceleration.
  - Data surge: “90 percent of the world’s data was created just over the last two years.”
  - Interconnected risks: weapons of mass destruction, cyber-security, interconnected financial system — many challenges transcend borders.
- Two contrasting scenarios by 2040:
  - Age of Anger (dystopian risks):
    - “By 2040, inequality could surpass the levels of the Gilded Age.”
    - Strong tech monopolies and weak governments could stifle start-ups and entrepreneurs.
    - Health breakthroughs could allow the richest to live past 120, while millions suffer extreme poverty and disease.
    - Social media could exacerbate the aspiration gap, fueling resentment and mistrust between nations.
  - Age of Ingenuity (aspirational vision):
    - “By 2040, we would see flourishing economies predominantly running on renewable energy.”
    - Women fully empowered in the workforce as an economic and social game-changer.
    - New pension systems and health care portability reflecting the changing nature of work in the digital economy.
    - Corporations embracing social responsibility; technological advances saving lives and creating millions of jobs.
    - Trade expansion and peaceful co-existence prevailing.

### a. Keys to the Age of Ingenuity — Four priority areas for cooperation
- Trade:
  - Urgent need to “fix the system” and “de-escalate” trade tensions.
  - Policy measures recommended:
    - Eliminate distortionary subsidies “whichever form and color they take.”
    - Protect intellectual property rights without stifling innovation.
    - Remove rents and enable new trade agreements to unleash e-commerce and trade in services.
    - Improve macroeconomic policies to reduce external imbalances, including trade surpluses and deficits.
  - Rationale: trade lifts productivity and accelerates innovation.
- International taxation:
  - Problem: companies have worldwide presence but no worldwide tax solution; tax optimization leaves “too many tax dollars … on the table.”
  - Policy measures recommended:
    - Multilateral cooperation to collect owed taxes and avoid a tax race to the bottom.
    - Close loopholes that lead to base erosion and profit shifting.
    - Devise regulations for a digital economy where many companies have no single established base of operations.
  - Purpose: funding for public investment—strengthening infrastructure, improving education, and preparing societies for technological transformation.
- Climate:
  - Observed impacts: recent major hurricanes in the Caribbean; wildfires in California.
  - Evidence: “A new US government study shows that the economic impact from climate change could significantly reduce America’s GDP in the coming decades.”
  - Policy stance: Paris Agreement (2015) as the best toolbox to move toward a zero-carbon economy; framing climate action as survival for future generations.
- Good governance and anti-corruption (bedrock issue):
  - Corruption undermines trust and economic vitality; diverts resources from education and health.
  - Key statistics and findings:
    - “The annual cost of bribery alone is over 1.5 trillion dollars — roughly two percent of global GDP.”
    - Millennials identify corruption as the most pressing concern in their countries (WEF Global Shapers Annual Survey 2017).
  - IMF engagement:
    - Scrutinizing the macroeconomic impact of corruption.
    - Worked with over 110 countries on improving efforts to tackle money laundering and terrorist financing.
  - Policy measures recommended:
    - Invest in institutions and persistently verify institutional delivery.
    - Cross-border collaboration to counter illicit financial flows amplified by fintech and cryptocurrency.
    - Leverage technology—biometrics, blockchain, cybersecurity partnerships with engineers—to build safer systems that protect financial integrity.
  - Broader point: fighting corruption can model cooperation across trade, tax, and climate and help restore trust.

### Conclusion
- Historical reflection: December 4th significance — on December 4th, 1918, President Woodrow Wilson sailed for France to negotiate a hoped-for lasting peace; a symbolic origin for creativity and visionary thinking in US foreign policy.
- Call to action:
  - Build on what worked, change what did not, and continually evolve.
  - Make 2019 a turning point for a new “Age of Ingenuity” centered on people, transparency, accountability, and shared gains from globalization.
- Closing exhortation: restore trust and reimagine international cooperation to build prosperity and peace for future generations.

*International Monetary Fund — Age of Ingenuity: Reimagining 21st Century International Cooperation — Christine Lagarde — December 4, 2018.*

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## References

- [Christine Lagarde](https://www.imf.org/en/About/senior-officials/Bios/christine-lagarde)
- [Argentina and the IMF](http://www.imf.org/external/country/ARG/index.htm)
- [France and the IMF](http://www.imf.org/external/country/FRA/index.htm)
- [United States and the IMF](http://www.imf.org/external/country/USA/index.htm)
- [The IMF and Good Governance -- A Factsheet](https://www.imf.org/en/about/factsheets/sheets/2023/the-imf-and-good-governance)
- [Speeches](https://www.imf.org/en/news/searchnews)
- [PRESS CENTER](http://presscenter.imf.org/)
- [Corruption: Costs and Mitigating Strategies](https://www.imf.org/en/Publications/Staff-Discussion-Notes/Issues/2016/12/31/Corruption-Costs-and-Mitigating-Strategies-43888)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2018/12/04/sp120418-md-kissinger-speech_