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Dear MARIA, In today's edition, we highlight: F&D March issue: how talent fuels growth Managing Director Georgieva on Asia's next growth frontier Nigel Clarke on stability, growth, and macroeconomic balance Oren Cass on "the invisible hand," and more F&D MAGAZINE How Talent Fuels Growth (Credit: Yasmine Gateau) Every great leap in human progress—from the printing press to the steam engine to the semiconductor—has been driven by ideas. But ideas do not emerge in a vacuum; they come from people. And among them, it is often the most talented minds that push the boundaries of what is possible, writes the IMF’s Gita Bhatt in a new blog. “This makes talent one of the world’s most valuable resources that can drive innovation and growth. Countries that develop the best minds gain a competitive edge. Those that fail to do so don’t just slow their own progress—the world loses, too,” Bhatt says. “Every untapped genius is a discovery that never happens, a technology that never emerges, a field that never takes off. The next transformative idea—a cure for a disease, a revolutionary technology—could come from anywhere. But only if the right minds are given an opportunity to reach their full potential. The newest issue of Finance & Development explores the economics of talent.” The economics of talent is an emerging field, but one thing is clear, notes Bhatt: Smart policies that help people realize their potential can change the game for entire societies. “We hope the articles in this issue will spark new thinking among policymakers and leaders. By shining a light on talent, we aim to inspire real progress where it matters most: expanding human ingenuity to solve the defining challenges of our time,” she concludes. Read the Blog Subscribe for a free print copy here. ECONOMIC GROWTH Georgieva on Asia’s Next Growth Frontier (Credit: IMF Photo) Across Asia, openness and deepening economic ties have been crucial to countries’ success, said IMF Managing Director Kristalina Georgieva at a conference on Asia and the IMF: Resilience through Cooperation in Tokyo this week. But the world is changing, she said: Many countries face weaker growth prospects and are saddled with high public debt. The COVID-19 pandemic and recent geopolitical developments have brought into focus the importance of security of supplies. Trade is no longer the engine of global growth it used to be. And massive transformations are underway, from rapid advances in AI to changing patterns of capital flows and trade.  “How should countries in Asia adapt? Let me highlight three opportunities,” said Georgieva, who connected virtually to the conference. “First, the shift toward services-led growth. While trade in goods has flattened, service flows are surging. In fact, services have already drawn about half of the region’s workers, up from just 22 percent in 1990….second, digitalization and AI - the demand for digital products and services in the region has accelerated quickly and is on track to continue growing faster than the region’s GDP…third, greater regional cooperation and trade.”   To harness these opportunities, the region will need to carefully navigate domestic developments and global changes, noted Georgieva, and the IMF can help. “We strive to be trusted partners to our member countries, provide country-specific advice and safeguard the stability of the global economy. We know from experience that reforms are hard, but we also know they can steer countries towards stronger and durable growth and can achieve a more stable and prosperous global economy,” she concluded. Read the Speech GLOBAL ECONOMY Clarke on Stability, Growth, & Macroeconomic Balance (Credit: IMF Photo) At a time of great flux for the world economy, with many countries reassessing their approaches, including in the face of structural transformations related to technology, demographics, and energy, the IMF can help steady the ship as the world navigates choppy waters, said the Fund’s Deputy Managing Director Nigel Clarke in a keynote speech at a Symposium on the Future of International Cooperation on the 80th Anniversary of the End of World War II in Tokyo this week. He cited four areas where the IMF’s work is crucial: stability, growth, macroeconomic balance, and agility. “In a tightly interconnected world, stability matters to everybody,” said Clarke. “Our mandate to promote international monetary cooperation sits at the heart of what we do, and has never mattered more than now, after 80 years of ever-closer integration. Like a fireman who douses a fire in one house and thus saves the neighborhood, when the IMF helps stabilize one country, it helps all others—we know how easily something small can become something big.” He noted that growth requires stability and stability requires growth, and that stability also requires global macroeconomic balance. “As the global system reconfigures, agility will be key,” Clarke continued. “Already in recent years, as geoeconomic fragmentation set in, many countries coalesced into groupings of common interest. Now, the trend continues, with an increasing emphasis on regional trade and regional financing arrangements. In a variable-geometry world, the IMF will respond as needed, flexibly, including to serve regional needs and explore ways to strengthen the global financial safety net for the good of all.” Read the Speech Modern economics was built on ideas spelled out by Adam Smith in his 18th-century The Wealth of Nations. But while he used the term only once in that economic treatise, Smith is most remembered for “the invisible hand,” a metaphor Oren Cass says has wrongly been associated with the idea that the pursuit of profit is always socially beneficial and that markets are somehow magically guided by that principle. Cass is the founder and chief economist at American Compass. In this podcast, he says the contortion of Smith’s idea led to a blind faith in markets, whereas “the invisible hand” was about ensuring the alignment between private profit and the public interest.  Weekly Roundup STAFF PAPER Not all Housing Cycles are Created Equal: Macroeconomic Consequences of Housing Booms A new IMF staff paper by the Fund's Bruno Albuquerque, Eugenio M Cerutti, Yosuke Kido, and Richard Varghese shows that economic downturns are significantly deeper and longer when housing contractions are preceded by a housing boom. The severity of the contraction depends on the intensity of the preceding housing boom and whether there was a credit boom as well. To be sure, housing booms spur stronger economic growth during the expansion phase. But their sharp reversals lead to severe housing contractions, resulting in significant net negative effects on the real economy. Thank you again very much 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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