Efficiency and Legitimacy: Trade-Offs in IMF Governance

Author/Editor:

Carlo Cottarelli

Publication Date:

June 1, 2005

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

Designing appropriate governance structures for an international financial institution such as the IMF is difficult, because steps to enhance the legitimacy of such an institution through constraints on its decision-making process may affect its operational efficiency. Potential trade-offs between legitimacy and efficiency exist for any public institution but are arguably more severe for an international one, because delegating power to it politically controversial and, thus, likely to imply tighter constraints. The paper also underscores that the trade-offs are not absolute, however: they depend on the specific ways in which legitimacy is pursued-that is, on the specific constraints that are set. Strategic reforms should, thus, aim at improving the terms of the trade-off by exploring steps that are Pareto-improving in the dimensions of legitimacy and efficiency.

Series:

Working Paper No. 2005/107

Subject:

Exchange rate arrangements External debt Human capital International organization Labor

English

Publication Date:

June 1, 2005

ISBN/ISSN:

9781451861266/1018-5941

Stock No:

WPIEA2005107

Pages:

32

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