Publications /
Policy Brief

Back
Reforming International Financial Institutions: Why Good Policies Matter More for Developing Countries
March 20, 2025

This paper (see pages: 152-164), included in the report 'The Reckoning Regression or Renaissance?' was originally published on orfonline.org

 

Calls for reforms of the International Financial Architecture (IFA) are foregrounded by the growing financing needs of developing countries, driven by mounting climate-related challenges; conflict and violence; rising numbers of internally displaced persons (IDPs); and macroeconomic imbalances, including crippling debt service and debt distress. Debates on IFA reforms have particularly centred on International Financial Institutions (IFIs), including the two Bretton Woods Institutions (BWIs)—the International Monetary Fund (IMF) and the World Bank Group (WBG)—as well as other Multilateral Development Banks (MDBs).1 There are proposals to expand the financial firepower and lending capacity of these institutions through a combination of financial engineering, aimed at optimising MDB balance sheets, and increased capital commitments from developed nations. However, in the current global political landscape, these efforts face massive obstacles. Geopolitical competition may divert resources away from international cooperation, as advanced economies prioritise military spending and investments in infrastructure, manufacturing, and research, development, and innovation (RD&I) in biomedical, digital, and green technologies. Great-power rivalries could weaken multilateral institutions and governance mechanisms by reducing the willingness to compromise and negotiate. This essay argues that IFI resources are unlikely to increase remarkably in the short to medium term, even as the financial needs of developing countries continue to grow. Developing nations must therefore mobilise alternative resources beyond traditional official development assistance (ODA), including international private capital and domestic savings. In this context, IFIs play an increasingly vital role. Over the years, they have accumulated unparalleled knowledge of the policy environments and institutional frameworks necessary for success. This expertise, derived from deep and practical experience across diverse economies, offers developing countries valuable, impartial insights. Developing nations can leverage this expertise to strengthen domestic capabilities, frameworks, institutions, policies, and projects that attract international private investment, enhance the effectiveness of public spending, and mobilise…

RELATED CONTENT

  • May 13, 2025
    تتناول هذه الحلقة موضوع تعويم نظام الصرف في المغرب وتأثيراته الاقتصادية، حيث نعرض تاريخ نظام الصرف في البلاد والأسباب التي تدفع نحو تبني هذا الخيار في 2026. نناقش تأثير التعويم على الواردات والصادرات وعلى القدرة الشرائية للمواطنين، مع التركيز على التحديات التي قد يواجهها الاقتصاد المغرب...
  • Authors
    Sérgio R. R. de Queiroz
    Nicholas S. Vonortas
    May 9, 2025
    This paper aims to demonstrate how certain transformations in the international economy since the 1980s¾notably the globalization of firms and industries¾combined with a set of domestic challenges, disrupted the path of industrial and technological development that Brazil had pursued since the 1930s. In essence, growth strategies based on the scale of the domestic market ceased to be effective. The innovation and economic challenges the country now faces cannot be addressed without ...
  • Authors
    Zakaria Elouaourti
    May 6, 2025
    This paper was originaly published on sciencedirect.com   This paper introduces a novel empirical approach, combining sigma convergence and sigma counterfactual statistics, to examine the dynamics of structural transformation in Morocco from 1990 to 2018. The findings reveal that Morocco experienced structural transformation driven by labor productivity reallocation across sectors during specific sub-periods (1991–1993, 1996–1997, and 1998–2003). However, this process ca ...
  • April 04, 2025
    In this episode, we discuss with an economist how digital technologies like AI, blockchain, and autonomous ships are reshaping global trade and logistics. These innovations improve effici ...
  • Authors
    March 21, 2025
    MENA faces a severe water crisis, with 12 of the world’s 17 most water-stressed countries. Climate change, population growth, inefficient water management, and weak governance drive this challenge. Water production, treatment, and distribution require high energy inputs, while energy generation depends on water for cooling and refining. The region must integrate renewable energy, especially solar power, into water solutions like desalination. Inaction could shrink GDP by up to 14% ...
  • March 20, 2025
    This paper (see pages: 152-164), included in the report 'The Reckoning Regression or Renaissance?' was originally published on orfonline.org   Calls for reforms of the International Financial Architecture (IFA) are foregrounded by the growing financing needs of developing countries, driven by mounting climate-related challenges; conflict and violence; rising numbers of internally displaced persons (IDPs); and macroeconomic imbalances, including crippling debt service and ...
  • January 03, 2025
    تتناول هذه الحلقة من سلسلة بودكاست مركز السياسات من أجل الجنوب الجديد مفهوم المرونة الاقتصادية بوصفه أداة أساسية لفهم ديناميات الاقتصاد المصري في مواجهة الصدمات المتكررة والتحديات الهيكلي ...
  • December 2, 2024
    This blog was originaly published on orfonline.org.   The maritime industry is the lifeblood of global trade, with ships carrying over 90 percent of all merchandise trade, and the global logistics market accounting for 8-12 percent of global gross domestic product (GDP). The smooth functioning of maritime trade and supply chain logistics is integral to economic development and critical to food security and the distribution of ...
  • Authors
    Zakaria Elouaourti
    November 14, 2024
    This paper was originaly published on tandfonline.com   Our study provides an in-depth examination of the relationship between financial development and economic growth in Morocco, revealing key threshold effects through a nonlinear smooth transition model (STAR). Analysis of Moroccan banking and stock market development indexes reveals that the stock market was significantly impacted by the 2008 global financial crisis, showing a decline, while the banking system contin ...