IMF Chief Calls for New Approach to Globalization

Global recovery unbalanced between and within countries

Benefits of growth must be more broadly shared

Strengthened international cooperation key to post-crisis world

“We need a new form of globalization, a fairer form of globalization, a globalization with a more human face,” Strauss-Kahn told a crowded audience of students at George Washington University in Washington D.C.

Speaking ahead of the Spring Meetings of the International Monetary Fund, organized jointly with the World Bank April 15-17, he singled out three areas for improvement: a new approach to macroeconomic and financial sector policies, a new approach to social cohesion, and a new approach to cooperation and multilateralism.

Fragile outlook clouded by uncertainty

Prospects for the global economy remain very uncertain, he said, with difficulties in Japan, Europe, the Middle East, and Africa weighing down the outlook. While the global economy continued to recover, growth was uneven both between countries and within them. “Numerous black swans are now swimming in the global economic lake.” The IMF will publish its next forecast for the global economy on April 11.

He pointed in particular to the Middle East, noting that it is going through an “historic transformation” as “citizens are seeking greater freedom, and a fairer distribution of economic opportunities and resources.” The immediate challenge for the Middle East, he stated, was “to preserve social cohesion without undermining macroeconomic stability.”

Growth in advanced economies, what he termed the “ground zero of the financial crisis,” was still too low and unemployment still too high. At the same time, the emerging market economies—especially in Asia and Latin America—were powering ahead, and dealing with overheating. The low-income countries had proved remarkably resilient, but were now being hit by high food and fuel prices.

Rethinking macroeconomic policy

Strauss-Kahn said the global crisis had forced a fundamental rethink of macroeconomic policy. “As you all know, the global financial crisis devastated the global economy and caused incalculable hardship and suffering all over the world. But it did more than this—it also devastated the intellectual foundations of the global economic order of the last quarter century.”

The IMF has recently held a high-level conference, involving a number of major economists, to rethink macroeconomic policy in the wake of the crisis.

“In designing a new macroeconomic...