"Growth Strategies" and the IMF

In his famous journal article Growth Strategies, Dani Rodrik examines why there has been so much discrepancy between the growth of developed nations and developing nations. Contrary to what Robert Solow predicted, countries were not converging to the same growth levels and the gap between developed and developing nations is becoming bigger. After analyzing the different growth stories of East-Asian countries, Africa and Latin America, Rodrik finds that what set the East-Asian countries aside from the other developing countries was how they applied unorthodox, context specific growth policies. Whereas in Latin American, countries that throughout much of the 90s were the 'poster' child of the Washington Consensus failed at closing this gap.

Last Thursday (10/25/2012), Professor Smitka gave a lecture about the IMF, he introduced us to a case study about Brazil and Jamaica. During this presentation, I was shocked to find out the little consideration that the IMF seems to have toward the cultural and social characteristics of the country they are working with. This got me thinking, why would such an important institution as the IMF not take into account what economic evidence suggests regarding economic growth? Historically, policies implemented by the IMF (expansionary fiscal contraction) have not resulted in optimal outcomes, then again, why would the IMF not have research that allows them to implement context specific policies as Rodrik suggests and  the East-Asian countries did?

It is a well-known fact that there is "no silver bullet for economic development", then why does the IMF projects the image that austerity is that silver bullet? As I mentioned in one of my earlier posts, there is a serious need for an institutional reform within this organization. The more I read about it, the more skeptical I become about the true goal of the IMF and I ask myself if high dependance theory is an actual concern that we should have.

Finally, how would the reputation of the IMF change if the policies they implement become more context specific? What would happen if the IMF chooses a different policy set instead of austerity? Driving an economy to the ground is not the only way in which a country can increase its competitiveness.