Simon Johnson, Columnist

The Case for a Non-European IMF Leader

May 24, 2011 at 6:42 PM UTC

Simon Johnson is a professor of entrepreneurship at the Massachusetts Institute of Technology's Sloan School of Management. He is co-author of "Jump-Starting America: How Breakthrough Science Can Revive Economic Growth and the American Dream."

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The debate over choosing the next managing director of the International Monetary Fund is ostensibly about whether its succession process is transparent and merit-based. But this is code for a more important issue -– whether the time has come for Western Europe to give up control of the IMF. There is a valid economic case that the next chief should come not from Europe, as tradition dictates, but from one of the emerging markets. India, South Africa, China, Mexico and Brazil all have strong candidates.

One reason to make the shift now is that the IMF needs to rebuild its legitimacy in the emerging economies, particularly in Asia. The fund was criticized for causing severe damage in its handling of the 1997-98 Asian financial crisis. Not all the critiques were fair, but Asian leaders correctly feel they received far less favorable deals than Greece, Ireland and Portugal recently got. The IMF initially lent Greece, for example, almost twice what Korea was able to borrow in 1997, relative to each country’s size.