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A quarterly magazine of the IMF
  September 2004
Volume 41, Number 3
IMF at 60

IMF at 60
James M. Boughton
Throughout its 60-year history, the IMF has adapted to changing world economic and political conditions. The IMF's official historian discusses how the institution has developed and outlines four key issues demanding attention in the years ahead.
(215 kb, pdf file)

The IMF Story—a time line
This illustrated time line highlights important dates in the IMF's history, starting with the years that led to its creation and continuing through the 60 years of its existence.
(94 kb, pdf file)

Forces Shaping the IMF
of Tomorrow

Picture This focuses on the issues that are likely to shape the work of the IMF over the next 25–50 years. Charts illustrate, among other things, the effects on the IMF of increasing world trade, aging populations, and the changing demand for the IMF's financial resources.
(44 kb, pdf file)

Rethinking IMF Governance
Leo Van Houtven
Increasing interference by the G-7 countries and what many regard as inadequate representation of developing countries have led to calls for a reform of the IMF's decision making. The author, a former secretary of the IMF, discusses overhauling the IMF's Executive Board, including by making voting power more equitable.
(79 kb, pdf file)

Why Developing Countries Need a Stronger Voice
Cyrus Rustomjee
A former IMF Executive Director who represented about half of sub-Saharan Africa argues that these countries, now the IMF's largest client base, should have more influence over decision making in the institution. He also calls for a radical rethink of the IMF's lending facility for the poorest countries.
(63 kb, pdf file)

Putting a Stop to Self-fulfilling Crises
Daniel Cohen
In the 1990s, capital markets lost confidence in countries' ability to repay their debts, leading to "self-fulfilling"
debt crises-that is, the perception that a country is high risk raises interest rate spreads and, consequently, the debt-service burden, leading to a crisis. The author suggests that the IMF play the role of lender of first resort, which would help countries avoid the trap of a self-fulfilling debt crisis.
(127 kb, pdf file)

How Should the IMF
Be Reshaped?

Three former IMF Managing Directors offer their views on the hot issues facing the IMF: how to strengthen surveillance, better prevent and resolve financial crises, and improve the equity and effectiveness of the way the IMF is governed.
(45 kb, pdf file)

Development Issues

Avoiding Banking Crises
in Latin America

Agustín G. Carstens, Daniel C. Hardy, and Ceyla Pazarbasioglu
Poor banking practices and a weak institutional framework have played a major role in making Latin American countries vulnerable to financial crises following shocks. One reason is that supervisors have often lacked independence and supporting institutional arrangements The authors suggest priority measures for the region.
(95 kb, pdf file)

From Vision to Action
James M. Boughton and Zia Qureshi
While the world is agreed on the Millennium Development Goals, they are unlikely to be realized unless developed and developing countries work actively together to achieve the joint vision.
(50 kb, pdf file)

Foreign Aid:
Grants versus Loans

Benedict Clements, Sanjeev Gupta, Alexander Pivovarsky, and
Erwin R. Tiongson

Recent initiatives have called for more foreign aid in the form of grants in lieu of loans, which may have led many developing countries to accumulate massive debts. This article addresses the question of whether the proposed shift will have fiscal considerations for recipient countries. Based on empirical tests, the authors conclude that grant aid should be accompanied by a strengthening of institutions.
(92 kb, pdf file)


Letter from the Editor
(29 kb, pdf file)

Letters to the Editor
Europe's single currency; mobilizing against disease; local initiatives needed for achievement of MDGs; globalization and ethics.
(30 kb, pdf file)

In Brief

News from international agencies
IEO reports on what went wrong in Argentina and how the IMF's poverty initiatives have fared.
(31 kb, pdf file)

People in Economics

Freedom as Progress
Laura Wallace profiles Nobel Prize-winner Amartya Sen, the first Indian national to win the prize for economics. He is known for his contributions to social choice theory, welfare economics, and economic measurement. This article explores his thoughts on critical economic issues, such as globalization, domestic reforms, and the role of democracy-with a special focus on India.
(76 kb, pdf file)


Reform What Pace Works Best?
John McMillan of Stanford University reviews experience with reform and concludes that the approach to economic change should be gradual. Oleh Havrylyshyn, former IMF Deputy Director in the IMF's European II Department, counters that evidence from the postcommunist transformation suggests that the big bang approach to reform has generally been better than a more gradual approach.
(120 kb, pdf file)

Back to Basics

Liberalizing Capital Account Restrictions
M. Ayhan Kose and Eswar Prasad
Cross-border capital flows, which have surged over the past two decades, have been associated with some benefits but have also played a role in some financial crises. The authors note that many developing economies have followed advanced economies in taking steps to liberalize their capital accounts--a development that has accounted for much of the increase in capital flows. The authors conclude that capital account liberalization is not an unqualified blessing and poses risks if implemented in unfavorable circumstances, particularly without supporting policies.
(43 kb, pdf file)

Book Reviews

Why globalization Works, Martin Wolf

Open World: The Truth About Globalization, Philippe Legrain

How Soccer Explains the World: An Unlikely theory of Globalization, Franklin Foer

The IMF and Economic Development, James Raymond Vreeland
(59 kb, pdf file)

Country Focus

A turnaround in federal fiscal policy and higher oil revenues are projected to produce a fiscal surplus in 2004, although state and local government spending continue to grow strongly.
(28 kb, pdf file)

Straight Talk

Assume Anarchy? Why an orthodox economic model may not be the best guide for policy
Raghuram Rajan suggests that a better starting point for analysis than a world with only minor blemishes may be a world where nothing is enforceable and property and individual rights are totally insecure.
(33 kb, pdf file)