This paper focuses on concerns over wages, jobs, and future prospects are real and pressing for those who are not well equipped to thrive in this new world. History clearly tells us that closing borders or increasing protectionism is not the way to go. Many countries have tried this route, and just as many have failed. Instead, we need to pursue policies that extend the benefits of openness and integration while alleviating their side effects. Emerging and developing economies have been the prime beneficiaries of economic openness. According to the World Bank, trade has helped reduce by half the pro¬portion of the global population living in extreme poverty. China, for instance, saw a phenomenal drop in its extreme poverty rate—from 36 percent at the end of the 1990s to 6 percent in 2011. Another example is Vietnam, which—in a single generation—moved from being one of the world’s poorest nations to middle-in¬come status—which has allowed for increased investments in health and education.
This paper explores how poor countries might take advantage of globalization to raise their living standards and converge toward the advanced economies. The poor country, which has cheap labor and inadequate capital, acquires the supe¬rior technology that the rich country has. With everyone rationally expecting greater things in the poor country, investment there takes off. People in the rich country save more to invest and take advantage of the new higher returns in the poor country. The poor country runs a substantial current account deficit and imports needed capital that the rich country happily, and profit¬ably, provides. The developing countries showed limited willingness and capacity to open up to competition. They had only a limited ability to attract foreign investment. The IMF ended up studying why some members failed to progress despite prolonged use of IMF resources. The Philippines, for example, had about 20 nearly consecutive IMF lending programs.
This paper explains various challenges posed by the new global economy for the IMF. The urgent tasks of restoring stability to crisis-ridden countries have been accompanied by other more far-reaching questions. The five speeches included in this collection cover a broad range of activities and thinking over the past year. The themes range from immediate crisis management to the broad questions of a new architecture for the global economy; and from the specific concerns of individual countries and regions to the conditions for a strong and equitable world economy. One of the speeches, delivered in September 1998, steps back from prevailing worldwide market turbulence, seeking lessons from the crises, and stressing that conditions vary extensively among emerging economies. Clear, calm analysis is essential by market participants to differentiate among economies. Another speech sets out initial thoughts not just on the key elements of a new financial architecture, however, also on the role that can be played by each constituency in the world economy.
International Monetary Fund. Secretary's Department
This annual publication is a record of the IMF's Annual Meeting and contains the opening and closing addresses of the Chairman of the Board of Governors, presentation of the Annual Report by the Managing Director, statements of Governors, committee reports, resolutions, and a list of delegates. Usually published in March.