Remarks at the Annual Meeting of the Boards of Governors of the International Monetary Fund and World Bank Group
Well, Mr. Chairman, Managing Director de Larosiere, President Conable, Governors of the International Monetary Fund, of the World Bank Group, and distinguished guests: Before I begin, I want to share with you an announcement that I made only an hour ago at the White House.
days ago, Soviet General Secretary Gorbachev proposed to me that we hold a
preliminary meeting to make concrete preparations for his coming visit to the
And now, for all the American people, I'm pleased to welcome you once more to the 41st annual meeting -- an honor to address you once again. Let me note at the outset that both the IMF and the World Bank are in the year of changes at the helm. At the IMF, Managing Director de Larosiere has announced his intention to resign after 8 years of service -- 8 of the most challenging years in the Fund's history, I might add. And he has met those challenges with strong leadership, a skillful negotiating style, and complete dedication to the mission of the institution he leads and serves. He has enhanced the prospects of the world economy for all of us, and we salute him for his service.
the World Bank, one of this century's most distinguished Members of the U.S.
House of Representatives, Barber Conable, has taken
the tiller. And in the
If this is a time of changes for the Fund and for the Bank, these are even more dramatic times for the world economy. These last 5 years, we have seen men and women begin to challenge old dogmas and rediscover timeless truths. We've seen that nations that have embraced the enduring principles of economic growth have become more prosperous and secure. And those that have not, have weakened, faltered, and fallen behind. We've heard many names given to these rediscovered economic insights -- names describing policies of taxation, regulation, government spending, monetary management, and trade. But all those names and the many theories with which they are associated come down in the end to one name, one theory, one word. The word is ``freedom,'' in this case economic freedom.
so many addresses to so many international forums during the past 5\1/2\ years,
I have repeated
so, in 1981
2 years ago when I last addressed this body, I suggested that the lessons of
freedom, the marketplace, and growth were ones that all nations could embrace.
I suggested that if the world economy were to grow as all of us hoped it would,
we needed to turn away from small-minded calculators in big state bureaus and
look, instead, to large-minded entrepreneurs in small private enterprises --
whether industrial, commercial, or agricultural -- for these people know
secrets more profound than those revealed in all the charts and analyses
produced by all the agencies and bureaus put together. Again, a statistic from
our own situation comes to mind. According to the MIT program on neighborhood
and regional change, between 1981 and 1985 businesses that were less than 5
years old, and businesses that had fewer than 20 employees, created more jobs
than America as a whole. And if we had had no entrepreneurs, we in
of us here today can take great satisfaction knowing that this message of
economic freedom is at last being heard and acted upon in
this progress has not been confined to the industrial world alone. Less
developed countries have also caught the spirit of freedom and enterprise. In
India we have seen -- within just a few harvests -- a country that imported
agricultural products turn into a food exporter -- this, after incentives were
introduced and controls removed. In
in all, we've made great progress toward a stronger world economy since I last
addressed you, and yet problems remain. I would like to turn now to some of
those problems and see what we can do to solve them. And let me look at them
from three vantage points: that of the
President of the
have other items of unfinished business in
come a long way since I last spoke to you. The Plaza agreement, concluded last
September among five industrial nations, was a beginning toward correcting the
excessive volatility in our exchange rates. Since then we have also coordinated
the reduction of interest rates. And at the economic summit in
As Secretary [of the Treasury James A.] Baker stressed in
presenting the Program for Sustained Growth in
IMF, of course, plays a central role in the drama of growth in debtor nations.
The future of world economic growth depends on choices made all over the world -- in industrial countries, in developing countries, in the IMF, and the World Bank. The question is: Will we turn toward uplands of freedom and growth or toward the swamp of state control and stagnation? This is the question every nation and every institution must ask itself. The world growth depends on our answers, and on something else closely related to those choices. This is the last area of problems I wish to discuss with you. This is the one area that can most easily jeopardize all we've achieved and hope to achieve. It might be said that since the end of the Second World War, we -- all the nations represented here -- have lived under an economic constitution. In the two decades before the adoption of that constitution, our people suffered the horrifying consequences of a collapse in international trade and monetary flows. And since its adoption, we've had 40 years of a prosperity more widely shared and more generous than the world has ever known. I call the postwar arrangement a constitution, but it has been in fact not one constitution, but three. I'm speaking of the collection of postwar international economic agreements that created the IMF, the World Bank, and, yes, the GATT.
each of those agreements and institutions has come to a turning point. Each is
grappling with new challenges such as debt restructuring, financial
instability, trade in new products and new industries, and the rise of
worldwide protectionist pressures. Collectively, these turning points represent
a culmination of the policies that the nations of the free world established
right after the war. Those nations -- our nations -- saw that the best way to
ensure a just and lasting peace, was to build an open, growing, and prosperous
world economy. The same era that produced the noble proposal of the United
Nations, has also produced the IMF, the World Bank, and GATT. And these
institutions gave us a growing and prosperous world economy, but many of the
arrangements originally incorporated into them presumed
These have been healthy developments and ones that reflect the success of our postwar vision. But they have led to strains in the postwar agreements, and these strains have given rise to a new round of significant questions about how the world economy should develop from here. Questions such as: How can we coordinate our policies to restore stability to exchange rates? How can we resist protectionist pressures as our nations become more nearly equal competitors and world trade grows? How can we manage our financial responsibilities without sacrificing growth? And how should we expand our international constitutions so that the hopes and opportunities of the last generation can also be the hopes and opportunities of the next?
The recent GATT ministerial was a good first step toward answering some of these questions. The ministers decided on comprehensive negotiations that would include trade and agriculture, services, investment, and intellectual property. But we needed more steps. First of all, we need to resolve that a further opening of the world economy is a goal worth working for. I know I believe it is. I lived through the Great Depression back in the thirties. I saw what so-called protectionism brought the world. Nothing was protected; everything was destroyed. And today the stakes are even higher. In my country, for example, up to 10 million jobs are tied to international trade, as is 20 percent of our gross national product, compared to 12 percent in 1929. The choice is simple: We can go forward or backward. I believe that we must move to a more open world economy.
And this is why I have vetoed protectionist legislation. It's why I have supported strong and growing roles for the IMF and the World Bank. It's why Secretary Baker presented his plan to strengthen our multilateral strategy for dealing with the debt crisis. And it's why we've pressed for a new GATT round. It is why, also, we have moved and will continue to move aggressively against unfair trading practices in other nations. No trading system among equals can survive if some feel they're being discriminated against, and if there are enormous imbalances in trade flows. The only ways to resolve the external imbalances are through increased growth abroad, a greater competitiveness for the U.S. dollar, or both -- coupled with the opening of markets.
My friends, I believe that the challenge before us is to develop a truly global economy, one that celebrates the diversity of our nations while it opens us to uninhibited trade and investment among our peoples. We've traveled a vast distance toward such a world in the last 40 years. We've come so far. And now, it's time for stock-taking, for planning with open minds the next leg of the journey, and for beginning it. Let us look with open minds at ways of promoting stable exchange rates and assuring sound money. Let us approach with open minds the next round of trade talks and push them as far as we can to our goal of eliminating all trade barriers.
We are, my friends, on a great journey of exploration. And as on all such journeys, from time to time we tire. But if we're strong and if we continue onward, I believe we will find that a more bountiful land lies before us. Let us all join together on this great journey. Let us reaffirm our commitment to the institutions that have brought us this far. And let us reaffirm our commitment to strengthening them for the adventure that lies ahead.
Thank you, and God bless you all.
Note: The President spoke at in the International Ballroom at the Sheraton-Washington Hotel at the meeting of the International Monetary Fund, the International Bank for Reconstruction and Development (World Bank), the International Development Association, and the International Finance Corporation.