IMF Weekend Read

 

Dear MARIA, In today's edition, we highlight: Double down on growth policies and seize on fresh ideas: Georgieva Simon Johnson on technology, institutions, and prosperity Supporting recovery in the Middle East's conflict-affected economies Call for Civil Society Policy Forum proposals Anne Case - the longevity economist, Chart of the Week, and more EMERGING MARKET ECONOMIES Double Down on Growth Policies and Seize on Fresh Ideas, says Georgieva (Credit: Kim Haughton/IMF Photo) During a time of sweeping transformations in the global economy, in terms of technology, demography, and geopolitics, the recipes of the past may no longer provide the path to prosperity for emerging economies, said IMF Managing Director Kristalina Georgieva in opening remarks at the AlUla Conference for Emerging Market Economies in Saudi Arabia this week. Agility, adaptability, and resilience will be the key ingredients for future success, she emphasized. Georgieva highlighted three areas to watch: first, with inflation expected to return to target levels faster in advanced economies than in most emerging markets, monetary policy may be more complicated for emerging economies; second, many emerging economies are dealing with high debt, limited fiscal resources, and mounting spending pressures; and third, structural reforms are critically important to improve competitiveness, increase productivity, and enhance growth prospects. “Transformational reforms to improve the business environment will be essential: cutting red tape, increasing competition, and encouraging entrepreneurship,” said Georgieva. “All of this can help countries create jobs and harness the benefits of promising technologies such as AI. Why is this so important? Because only when we achieve higher productivity growth can we meet the aspirations of people everywhere for better lives for themselves and their children. ” Read the concluding statement from the conference. Read the Managing Director's Remarks Countries with better institutions are more prosperous. A truism perhaps, but then why are they so hard to build and sustain? That is the question that Simon Johnson has sought to explain since the fall of communism. And it lies at the heart of research for which he won the 2024 Nobel Prize in Economic Sciences. Johnson, a former IMF chief economist and professor at MIT's Sloan School of Management, shares the award with James Robinson and Daron Acemoglu, who’s also coauthor of his latest book Power and Progress, which challenges the assumption that technology equals progress. In this podcast, Johnson says that, when controlled by a select few, tech innovation can be self-serving and risk undermining the institutions that make it possible. MIDDLE EAST AND NORTH AFRICA Supporting Recovery in Conflict-Affected Economies (Credit: Kim Haughton/IMF Photo) On the sidelines of the inaugural annual global Conference on Emerging Market Economies in AlUla, the Saudi Finance Ministry and the IMF co-hosted a high-level roundtable on “Working Together to Support Recovery in the Middle East’s Conflict-Affected Economies,” bringing together finance ministers of countries in the region, the Foreign Affairs Minister of Syria, representatives from the World Bank, and heads of other International Financial Institutions and the Arab Coordination Group. Participants agreed on three priorities to support conflict-affected countries: a continuous diagnostic of the challenges and economic and social context facing each conflict-affected country; enhanced capacity development; and mobilization of financial assistance from the international community. An informal coordination group will be established to support these efforts, and discussions will continue at the upcoming IMF/World Bank Spring Meetings in April, noted IMF Managing Director Kristalina Georgieva and Saudi Arabia’s Finance Minister Mohammed Aljadaan in a joint statement. Read the Statement CIVIL SOCIETY CSOs Invited to Submit Proposals for Spring Meetings Civil Society Policy Forum (Credit: IMF Photo) The Civil Society Policy Forum (CSPF) has become an integral part of the IMF Spring and Annual Meetings, providing an open space for civil society organizations from all over the world to engage and exchange views with IMF staff, their peers, government delegations, and other stakeholders on a wide range of topics.  Representatives from civil society are invited to submit their panel proposals for the next CSPF (April 22-25, during the 2025 IMF-World Bank Spring Meetings). The February 27 deadline for submissions is fast approaching, but there’s still time left to submit a proposal via this form.  Read More About Civil Society and the IMF F&D MAGAZINE Anne Case: The Longevity Economist (Credit: Jim Graham) For decade after decade in the United States, children typically stayed healthier and lived longer than the generation that came before them. The country, it seemed to Anne Case, had been doing something right. But then, says Case, coauthor with Angus Deaton of the 2020 New York Times bestseller Deaths of Despair and the Future of Capitalism, something “important, awful, and unexpected” began to derail America’s century-long progress in reducing mortality. It involved a slew of factors: job displacements, substance abuse, fraying social ties, and ultimately, the failure of capitalism in recent decades to adequately care for working-class Americans. It was a situation that was tailor-made for Case’s approach to economics. Gary Seidman profiles Princeton’s Anne Case, who studies the intersection of health and economics, for F&D magazine’s People in Economics series. Read the Article Global foreign direct investment grew again in 2023 after declining the previous year. FDI climbed $1.75 trillion, or 4.4 percent, reaching a record $41 trillion, according to the IMF’s latest Coordinated Direct Investment Survey, which provides detailed information on direct investment positions between countries. FDI rose in most regions,  but especially in Central and South Asia, Europe, and North and Central America. Direct investment between advanced economies grew by $880 billion, or 3.6 percent, while those from advanced economies to emerging market and developing economies rose by $538 billion, or 7.6 percent. As our Chart of the Week shows, the United States extended its lead as the top destination for FDI. Singapore recorded the largest gain in 2023, with its position rising $307 billion, followed by $227 billion for the U.S. and $164 billion for Germany. Meanwhile, the Netherlands and Luxembourg posted the steepest declines but remained in the top five, alongside the United States, China, and the United Kingdom.  Read Our Analysis Weekly Roundup STAFF PAPER Europe’s Productivity Weakness: Firm-Level Roots and Remedies Europe faces a well-known productivity problem, with a large and widening aggregate productivity gap relative to the U.S. In this new IMF staff paper, the authors explore the firm-level roots of Europe’s productivity growth slowdown through an analysis of data covering the universe of firms in Europe and the U.S. over their life cycles. The findings suggest that removing remaining intra-Europe barriers to accelerate factor and product markets integration, alongside national reforms to facilitate swifter resource reallocation and enhance human capital, could help revive Europe’s productivity growth. STAFF PAPER Social Security Reforms, Retirement, and Sectoral Decisions In many countries, the regulations governing pension systems, hiring procedures, and job contracts differ between the public and private sectors. Public sector employees tend to have longer tenures and higher wages compared to workers in the private sector. As such, social security reforms can affect both retirement decisions and sectoral choices. This new IMF staff paper explores the effects of social security reforms on retirement and sectoral behavior in an economy with multiple pension systems. Thank you again for your interest in the Weekend Read! Be sure to let us know what issues and trends we should have on our radar. Miriam Van Dyck Editor IMF Weekend Read mvandyck@IMF.org

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