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Towards a More Rational IMF Quota Structure: Suggestions for the Creation of a New International Financial Architecture

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  • Raghbendra Jha
  • Mridul Saggar

Abstract

The authors of this article argue that, in the absence of a well‐founded quota formula, the very basis of the creation of the IMF as an institution at the centre of international financial arrangements was flawed; that there is no clear rationale for the determinants of quota structures and their weighting scheme; and that the quota allocation as an instrument seeks to target too many objectives. As a result, large and arbitrary cross‐country variations exist in the relative impact of different determinants on the quota shares of different countries. The quota formulas therefore need to be reviewed and an alternative approach evolved, in which emphasis is placed on the size of the economy rather than its openness, along with efficiency parameters. The authors suggest some principles which might underpin redefined quota structures in support of a new financial architecture. They provide illustrative calculations using India as a case study, and trace the impact of the redefined quota structures against the backdrop of the impact of the Eleventh General Review on India’s quota position.

Suggested Citation

  • Raghbendra Jha & Mridul Saggar, 2000. "Towards a More Rational IMF Quota Structure: Suggestions for the Creation of a New International Financial Architecture," Development and Change, International Institute of Social Studies, vol. 31(3), pages 579-604, June.
    • Handle: RePEc:bla:devchg:v:31:y:2000:i:3:p:579-604
    DOI: 10.1111/1467-7660.00168
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