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IMF's next leader: Don't rush this choice

The quality and openness of the selection process for a new International Monetary Fund leader matters as much as the outcome. It will be key not only to the future legitimacy of that institution but to the very notion of cooperative global economic management.

By Michael Spence / June 1, 2011

Milan, Italy

The departure of Dominique Strauss-Kahn as head of the International Monetary Fund has presented the G20 group of advanced and emerging economies with an opportunity and a challenge as they vie to select a new leader.

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It is a critical moment of transition because the emerging economies that have been in the shadows during most of the IMF’s existence will be dominant in the not-too-distant future. Thus, the openness of the selection process for a new IMF leader will be key not only to the future legitimacy of that institution but to the very notion of cooperative global economic management.

The IMF has always had tremendous analytic depth. It has gained strength under the gifted leadership of Strauss-Kahn as a better capitalized, motivated, and high-performance institution. In the post-crisis period its functions have expanded to include greater “surveillance” of the economic health of systemically important countries. Crucially, it has evolved into an expert secretariat serving the G20 as the latter strives to coordinate policy in pursuit of stability, growth, and sustainability in a world where national interests still reign.

There are a number of candidates from advanced and emerging countries with excellent qualifications and experience in both the technical and political/leadership dimensions of the post. Emerging-economy macro-management has not only improved over time; it is flat out excellent. Superior positioning prior to the recent financial crisis, the effective mid-crisis response, and post-crisis control of fiscal deficits and sovereign debt, not to mention restoring growth, support this view. The resilience of the emerging economies in the wake of the global financial meltdown of 2008-2009 is the envy of the advanced countries.

A top-flight leader can come from this pool if international negotiations do not produce compromises that trade away merit, as has happened in the past in other contexts. This should be avoided.

Why process matters

But there is much more at stake than ending up with one of the several superbly capable candidates. The process itself is critically important. The advanced countries need the emerging economies as partners in managing the global economy now, not just in a few years’ time when roles will be reversed. Good governance now will carry over by example.

Preempting an open process of considering all highly qualified candidates will send the wrong – and indeed destructive – signal to a group of large, high-growth developing countries whose systemic importance is high and rising.

Specifically, Europe should not assert its traditional prerogative “one more time,” because the sovereign debt issue is a significant risk factor for the European Union and the global economy. Nor should the field be restricted to emerging-economy candidates simply because “they are now systemically important” or because “perhaps belatedly, it is their turn.” Neither of these paths sends the right message. Both fail to advance building the capacity to cooperatively manage global economic balance, growth, and equity.


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