Macro Research for Development: An IMF-FCDO Collaboration

While many low-income countries (LICs) have built good momentum since 2000, they still face numerous macroeconomic challenges and vulnerabilities. For instance, LICs are currently facing a crisis like no other-COVID-19, which requires careful policy making to save lives and livelihoods in LICs, informed by policy debate and thoughtful research tailored to the COVID-19 situation. Moving beyond the COVID-19 crisis, modernizing monetary frameworks, strengthening fiscal positions, managing natural resource wealth, expanding links to the global financial system, and encouraging diversification and structural transformation are important components that will help to promote sustainable and inclusive growth in LICs.

The IMF has partnered with the UK's Foreign, Commonwealth and Development Office (FCDO) to study these critical LIC macroeconomic policy issues. The project will focus on the following topics:

1. Modeling policy choices (monetary & fiscal policies; structural policies)
2. Understanding macro-financial linkages (credit cycles; macro-prudential policies; balancing financial deepening and financial stability)
3. Building resilience (natural disasters; climate change; migration; conflict)
4. Promoting structural change and institutional development (diversification, particularly away from commodities; structural and institutional reforms; governance)
5. Enhancing inclusion (inequality; gender)

To secure maximum policy impact, the team will collaborate closely with policymakers within and outside the IMF and outside academics, particularly those in developing country policy institutions.

For a list of products that have been produced under each of the four phases of the FCDO-IMF partnership, see the box on outputs on the left-hand side.

With the support of FCDO, the IMF's Development Macroeconomic (DM) division of the Research Department and the Development Issues Unit (DU) of the Strategy, Policy, and Review Department have scaled up their operations. The project started in March 2012 and will run until March 2025, using the new resources to hire researchers, organize conferences, and work with country authorities on applying the frameworks and tools. The project is governed by the following four goals:

1. Generate high-quality applied research on macroeconomic issues in low-income countries;
2. Ensure research uptake by collaborating closely with policymakers within and outside the IMF in research design, execution, and applications;
3. Use the IMF's pulling power to expand the network of researchers working on macroeconomic issues in LICs; and
4. Achieve this as cost effectively as possible.