IMF should be like a family doctor and not a surgeon for emergency..

IMF’s new Asia head Changyong Rhee has this nice short interview. He was earlier with ADB..

He sees IMF’s role changing to a family doctor who is by the side with the member whenever in need.  The econs fascination to connect the profession with medicine continues after the famous Keynes comparison with the dentist:

IMF Survey: What will be your main goals as head of the IMF’s Asia and Pacific Department?

I have three main priorities. First, I want to contribute toward enhancing the IMF’s reputation in Asia. Relations between Asia and the IMF have improved greatly since the 1997 Asian financial crisis. Many policymakers in the region appreciate the Fund’s policy advice and technical expertise.

But there are still some in Asia who regard the IMF as an emergency doctor aiding a patient only during a crisis. I would prefer the Fund to be seen as a family doctor who provides ongoing care and candid advice based on a deep understanding of the patient’s history.

Second, I want to increase our efforts on technical training and capacity building. Asia and the Pacific is a very diverse region that includes many low-income and middle-income countries. From the IMF’s point of view, macroeconomic and financial stability are major goals. Of course, those aims are important, but for low- and middle-income countries the real question is: how to grow and develop in a sustained manner?

In this regard, I believe capacity building should be targeted at those government officers who will be in charge of implementing policies.

I also feel the IMF is uniquely placed to exchange expertise and information across economies at different stages of development. We can learn a great deal from local economists and government agencies across the Asia-Pacific region.  Many Asian economies have recently experienced the transition to middle- and high-income status. There is living memory of the process in the region, unlike in advanced economies that underwent this transition a hundred or more years ago.

I think we could be even more open to listening to the views from Asia and the Pacific, and to bringing their voices into our work with other emerging economies just embarking on the process of catch-up.

The third priority I want to emphasize is that the financial sector in many Asian countries is less developed than the real economy. So, I want to enhance our focus on financial infrastructure issues—interbank markets; the need to develop new capital markets; settlement issues; and clearing issues. This infrastructure will be critical to ensure that Asia’s financial systems provide effective support for the growth of the real economy in the decades ahead.

Hmm…Some comments..

On the first, as a a family doctor it also needs to avoid giving someone else’s prescription to someone else. As it becomes a family doctor to many members, it should know the structure of that member economy really well. It should know that what works for X may not work for Y.

IMF has done this all the years and tried to fit the countries based on certain standard toolkit. If you have tick marks against those toolkit boxes, you are on the path to development otherwise you are doomed. Even now, if one reads the various IMF reports on the different countries you get a similar picture of seeing the developing world from developed world lens. As long as an emerging market policymaker does things based on IMF toolkit it gets praises otherwise brickbats.

Infact in Asia, economies and society structure is very different which needs to be appreciated. Just like much of today’s economics these contexts are abstracted. Development and growth challenges in Asia is vastly different from the other parts of the world

On the second agenda, it is much similar to world bank’s. There is clearly overlap in the agenda of WB and IMF on this front. Recently quite a few IMF papers could be written by WB research staff as well.

On the third I am not too sure. Much of Asia is underdeveloped on real economy front as well. It is lack of real economic opportunities which is a bigger problem than the financial system. People need to have businesses and jobs first before we could think of things like financial infrastructure etc. This point again suggests how far IMF is from becoming a family doctor….

Another point which Rhee does not touch is the huge groupthink at IMF. At the end much of the guys at IMF are people trained in the same kind of universities and have similar kinds of backgrounds. They may come from different countries but become similar after getting trained in same kinds of universities. This leads to huge groupthinking on critical matters.

So for instance at its Asia division it should employ econs/researchers from Asian schools as well. This will help develop a regional perspective better and also encourage scholars in the region.

IMF is way too elitist at this moment. It needs to change many a things. You cannot have a family doctor which has no connection with the patient whatsoever. ..