Global Policy Forum

Michael Massing

As the chief economist of the World Bank in the late 1990s, Joseph Stiglitz got a firsthand look at how policy was made at its sister institution, the International Monetary Fund, and he was dismayed. Decisions, he said, were made on the basis of ideology rather than sound economic reasoning.

Now Stiglitz has set up the Initiative for Policy Dialogue at Columbia University's School for International and Public Affairs, where he is a professor. It is bringing together economists, political scientists and policy analysts from around the world to re-examine the prevailing wisdom about development and to come up with alternative strategies.

"There's not a Brookings or an American Enterprise Institute for the developing world," said Stiglitz, co-recipient of the 2001 Nobel Memorial Prize in Economic Science.

It is an ambitious and controversial undertaking. Stiglitz is the IMF's most visible critic, and the Fund has made little secret of its disdain for him. Undeterred, Stiglitz is taking aim at the so-called Washington consensus, a package of free-market, free-trade policies that critics say the IMF and World Bank have imposed on Third World countries.

"We disagree with the World Bank-IMF idea that there's one approach that's right for all countries," Stiglitz said. Rather, he said, there is a range of policies that must be selected based on conditions in each country.

Stiglitz's effort to rewrite the textbook on development is being conducted through 14 committees that are re-evaluating such critical issues as bankruptcy, poverty, privatization and trade. For each, a dozen or so specialists from the Northern and Southern hemispheres are meeting to compare the experiences of different countries and ponder what policies have worked where. The goal of each group is to produce a series of papers that will provide a fresh look at the components of growth.

Stiglitz hopes his institute will be more than a paper exercise. The goal is expand the policy debate beyond the usual elite of government officials and business executives to include civic leaders, activists, academics and journalists. So far, forums have been held in Ethiopia, Moldova, Nigeria, the Philippines, Serbia and Vietnam. At the Nigeria session, a key theme was the need to raise living standards in the countryside, where most Nigerians live. Soon after, Stiglitz recalled, Nigeria's agricultural minister obtained an increase in money for agriculture.

Still, his approach causes concern among some critics, such as Jagdish Bhagwati, a colleague of Stiglitz's at Columbia, that the institute is not including people "who really have alternative points of view." Its committee on trade, for example, "has none of the big trade people," including himself, Bhagwati said.

"The Initiative for Policy Dialogue," he said, "is in danger of turning into the Initiative for Policy Monologue."

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