How international is the IMF?
- By Dan Steinbock
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E-mail China.org.cn, February 4, 2016
Asia's miniscule voice
How representative are these shares? Well, measured by the gross domestic product (GDP), the share of the U.S. in the world economy is 22% and that of other advanced economies is about the same; that is, 44% of the total or about the same as their combined IMF quotas.
In contrast, the share of the emerging BRIC economies is over a fifth of the world economy. Yet, their current share of the IMF quotas is barely half of that measure.
Measured by population, the discrepancy is far greater. While the major advanced economies account for a tenth of the world population, the share of the large emerging economies amounts to 41 percent of the total.
In this view, the bargaining power of the emerging economies is only a fourth of their demographic share, whereas that of the advanced economies is four times larger than their demographic role in the world.
Regionally, Asia's bargaining power in the IMF is a fraction of what it should be.
Historic discrepancies
Despite pledges for reforms, the IMF is dominated by major advanced nations, which account for one-tenth of the world population. Similar discrepancies prevail in the World Bank, the World Trade Organization and other international institutions, which remain dominated by American, European and Japanese interests, as reflected by their voting quotas, investment allocations and the nationalities of their leaders.
In the IMF's topsy-turvy world, Indonesia, with its 260 million people, has a voice that's about half that of Belgium, with its 11 million people. Similarly, Pakistan, with its 193 million people, has a voice that's half of that of Austria, with its 9 million people.
After more than seven decades of effective operations, the IMF is still not the international financial institution that it claims to be but a relic of former imperial powers and the victors of World War II in the post-colonial world.
Under the present conditions, the creation of the BRICS New Development Bank and the Asian Infrastructure Investment Bank cannot be seen as attempts to substitute current international institutions (which do not exist yet). Rather, they should be seen as efforts to complement the existing advanced-economy organizations with emerging-economy institutions that together better reflect the world's community.
If democratic human rights are defined as having a voice in the world community, we do not yet share a democratic world community or effective human rights. Instead, we have only a semblance of international democracy and a fa?ade of human rights.
Dr. Steinbock is the CEO of Difference Group and has served as research director at the India, China and America Institute (USA) and is a visiting fellow at the Shanghai Institute for International Studies (China) and the EU Centre (Singapore). For more, see www.differencegroup.net
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