The IMF has hypnotized Africa's Policymakers
A couple of weeks ago I attended the 2024 World Bank and IMF Spring Meetings which take place every year in Washington, DC at the beginning of spring season in the northern hemisphere. The meetings bring together, inter alia, finance ministers and central bank governors to, according to the IMF, “discuss issues of global concern, including the world economic outlook, poverty eradication, economic development, and aid effectiveness.” That’s the ostensible reason.
The purpose, however, as I observed is to recommit the world’s policymakers, especially those from the less prosperous global South, to maintaining the current global economic order. An order that ensures that the global south, and in particular Africa, is at the bottom and the global north (the US and Western Europe) are at the top.
In a way these meetings are akin to a religious pilgrimage where adherents renew their commitment to a gospel. In the case of the IMF and World Bank meetings that gospel is a straightjacketing of policy imagination.
Take the tweet below as an example of this. The tweet is taken from the IMF’s X account and the image is from a blog post written on 10th April. 10th April was a few days before the start of the Spring Meetings and, therefore, the policy implications of this image must have been widely proselytized at the meetings.
The message of this tweet, and the accompanying blog post, is that countries should not use industrial policy to attain economic development. Rather, they should use “fiscal policies that support innovation and technology diffusion...” Basically this is vague IMF speak calling for the subsidization of the private/corporate sector.
The issue here is that as a matter of the historical record, those countries that are now developed have used and continue to use industrial policy as a tool to stimulate industrial production and thereby attain and maintain their level of economic development. Industrial policy is the use of the full fire power of the state’s balance sheet to directly stimulate industrial production whether it be establishing new industries/sectors or taking non-trivial equity positions in those industries/sectors seen as strategic for a country’s economic development.
One of the most cogent articulations of the power of industrial policy has come from South Korean economist Ha-Joon Chang who has documented the role of industrial policy in the rise of the West (and even of his native South Korea).
Whatever the IMF may say, rich countries have always conducted industrial policy because they know that it works. And the IMF’s messaging, such as the one in the tweet above, is framed as though it were directed at all countries when in actual fact its target are poor countries. And for some reason (perhaps hypnosis?) our policymakers, especially in Africa, rush back home to implement the kind of policies that rich countries wouldn’t be caught dead implementing.