- James Boughton
- Published Date:
- July 2014
This booklet is an excerpt from a longer version of this essay that also explains 11 ideas that shaped the IMF. It is available online at www.eLibrary.IMF.org
Some of the key economic terms used in this booklet are explained in Finance & Development magazine’s Back to Basics series, on the web at http://www.imf.org/external/pubs/ft/fandd/basics/index.htm.
A complete digital history of the Fund is on the IMF’s eLibrary at http://www.elibrary.imf.org/page/imfhistory.
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About the Author
James Boughton is a Senior Fellow at the Centre for International Governance Innovation in Waterloo, Ontario, Canada. From 1992 to 2000 and from 2003 to 2012, he was Historian of the IMF. This booklet is updated and revised from the prologue to his book, Tearing Down Walls: The International Monetary Fund 1990–1999 (IMF, 2012).
Joseph Procopio of the IMF Communications Department managed the production of this publication, working with Kieran Daly of the design studio, Winking Fish.
For all its weaknesses, the League of Nations did undertake economic tasks including lending for financial stabilization. It also demonstrated the potential benefits of multilateral economic cooperation, at least to those who worked there. Its staff included a highly distinguished cadre of economists, several of whom later greatly influenced the IMF through their work (e.g., Tjalling Koopmans, Ragnar Nurkse, and Jan Tinbergen), by joining the staff (e.g., Jacques Polak and Marcus Fleming), or even becoming head of the institution (Per Jacobsson). For an analysis of the economic work of the League, see Pauly (1997). For a brief memoir, see Polak (1994, pp. xiv–xv).
Keynes’s initial work on the clearing union plan is described in Harrod (1951, pp. 526–28); Horsefield (1969, Vol. I, pp. 14–16); and Skidelsky (2000, pp. 199–209). The “founder-States” proposal is in Horsefield (1969, Vol. III, p. 15).
Testimony before the U.S. House Committee on Banking and Currency; quoted in Gardner (1980, p. 141).
This argument should not be carried so far as to imply that multilateralism died altogether after the Second World War. The establishment of the Marshall Plan in 1947 and the global agreement in 1968 to create Special Drawing Rights are two prominent examples in the positive column.
Largely, but not exclusively. Yugoslavia was an original member, Romania joined in 1972, Vietnam remained a member after its unification in 1975, the China seat passed to the People’s Republic in 1980, and a few more centrally planned economies—notably Hungary and Poland—joined in the 1980s.
Remarks at an Economic Forum on “Governing the IMF” (September 17, 2002). See http://www.imf.org/External/NP/EXR/ECForums/2002/091702.htm. For a similarly critical analysis of the perceived lack of intellectual diversity in the staff, see Momani (2005).
As of 2001, slightly more than 40 percent of IMF economists were from developing countries. Some 4 percent were from Russia, the Baltic countries, other countries of the former Soviet Union, or Eastern Europe. By 2013, the percentage of staff from these “transition” countries exceeded 8 percent (IMF, 2013, p. 9).
For an overview, see Yergin and Stanislaw (2002, pp. 234–36). The basic premise is that developing countries become economically (and sometimes socially) dependent on—and perhaps exploited by—industrial countries, to the point that their own development stalls.
Switzerland also joined the IMF in 1992, overcoming a longstanding national reluctance to join multilateral institutions.