IMF: 'we are walking-the-talk'

International Monetary Fund

The IMF has responded to an article by Evatt executive members, social historian Christopher Sheil and political economist Frank Stilwell, which queried its sincerity on reducing inequality, published by the Conversation. The article was largely based on new research by British political economists, Alex Nunn and Paul White, titled 'The IMF and a new global politics of inequality', published in the current Journal of Australian Political Economy. Irrespective of whether the IMF has satisfactorily addressed the issues raised in the article, the response supplies a useful summary of the Fund's research and related activity on inequality.

Your article claims that we do not 'walk-the-talk' on inequality. This is incorrect. It is true that, over the last six years or so, IMF staff have carried out an increasing amount of research on issues related to inequality and inclusive growth. Researchers have discovered, for instance, that:

  • Reducing inequality can help to support durable growth, while well-designed redistributive policies do not hamper but can even support growth if appropriately designed .

  • Increasing the income share of the poorest can boost growth, but raising the income share of the richest can actually harm growth. Moreover, annual economic growth in sub-Saharan African countries could be 1 percentage point higher if inequality was reduced to levels observed in ASEAN countries.

  • Boosting the proportion of women in the formal labor market not only boosts growth, but also reduces income inequality and supports economic diversification.

But inclusion is more than a research agenda for the IMF—it also falls under our mandate to promote domestic and global economic stability. So we are making a concerted effort to pay more attention to these issues in the course of our practical work with member countries.

A good example of this is our increased emphasis on supporting the vulnerable in our programs with low-income country members: