Updated on
Summary IMF has warned that sustainable economic growth is hard to achieve without sound institutions.
The International Monetary Fund says the quality of these institutions hinges on the quality of the people running them their educational background and training, and the prevailing business culture and approach to policymaking.“Economic and political institutions are central in nations’ efforts to avoid stagnation and ensure sustained prosperity’ it said, adding this is because sustained prosperity is a dynamic process of constant innovation and a never-ending cycle of Schumpeterian creative destruction, which can only be supported by open, inclusive institutions.The IMF further said the current crisis in the eurozone also highlights the importance of coherent economic and political institutions at all levels of economic development. Weaknesses in national macroeconomic and statistical institutions in supposedly “advanced” countries were at the root of the crisis, especially in Greece.And the lack of supportive fiscal and regulatory institutions at the European level—which require making additional steps in political integration—is behind the markets’ continued anxiety surrounding the common European currency.
