Gita Gopinath of the IMF speaks at Trinity

Gita Gopinath, the First Deputy Managing Director of the International Monetary Fund (IMF), participated in the latest Grattan Talk in the Trinity Long Room Hub yesterday. The event was moderated by Saloni Khosla and Mark Heanue, the outgoing Editor and Deputy Editor of the Student Economic Review. The Talk was hosted by the Department of Economics (School of Social Sciences and Philosophy) and opened by Head of Department Agustín Bénétrix. 

During the talk, Ms Gopinath spoke about why she is here in Ireland: “One of the main reasons why I’m here in Ireland is to give the Whitaker Lecture this season; a lecture that the Central Bank of Ireland has every couple of years. It is to honour Kenneth Whitaker ... a notable Irishman of the twentieth century, a phenomenal public servant, Central Bank governor, a senator. He was known for basically transforming Ireland’s fortune. He was one of the people in 1950s and 1960s moved Ireland away from protectionism and opened it open to foreign direct investment.”  

Ms Gopinath also spoke about her initial interest in economics:  

“I grew up in India and I studied in the University of Delhi. I cannot say that I was wild about economics, but it seemed like a reasonable thing to do. In 1991, India had its economic crisis. A classic economic crisis that the IMF would deal with; it didn’t have the foreign currency to pay for its imports ... And so, the IMF came in and in addition to the money, it was also a time of huge change for the Indian economy ... previously there was lots of state intervention and red tape and bureaucracy. Working with the government and the IMF together, they came up with a programme to basically open the economy. I was a student at the time watching this and then I went on and did my PhD and went into academia.” 

“One of the good things from having gone from academia to public policy – and I’ve been doing this now for almost 6 years – is I didn’t appreciate how useful economics was until I got the job in public policy ... It’s [economics] extremely useful and the world is changing so much, for example there is a huge change in terms of countries rethinking how they integrate with the rest of the world. We went through the 1990s all the way up until now and it was pretty much agreed that it was good to trade with each other and keep open economies. And I would say, since the start of 2018, or I think now, it has changed dramatically. Now we are in the space where countries are questioning the gains from all of that ‘openness’ - some of it legitimately: the pandemic, Russia’s invasion of Ukraine ... there are big questions relating to national security. So, we are in this space where I don’t think we are going back at all to the level of openness that countries had. But we are moving to a very different kind where countries are picking their friends; which sectors do you want to keep open – which sectors do you want to close? ... It’s a super exciting time for economists to think through how this will affect the world.  

Ms Gopinath was then asked about the threat of Artificial Intelligence to global economies. 

“There is tremendous uncertainty ... I think we should keep in mind that nobody really knows. This is very difficult to gauge. Beside the fear, there is the opportunity. One of the big problems that the world is struggling with is that there is not enough productivity growth. So, hey, if this technology can raise productivity growth, this would be wonderful ... There is also the promise of solving disease, including cancer and so on ... The question that you would hope we would try to get an answer to is how soon will all of this get done? What we’ve seen in the past with other general purpose technologies is that it takes a long time – twenty years – before you really see the economy being transformed. If this takes twenty years, you have a long time to figure out how to adapt ... I think the fear right now is that all of this might happen much faster. And if does happen much faster then I think we are generally not as prepared but we just don’t know ... It’s still early days.   

What is the potential impact of AI on jobs? “Take Ireland for example. Our estimates think that 60% of occupations will be impacted by AI in Ireland. 60% is not all bad; 30% is good in the sense that AI complements the worker in that occupation; and the other 30% is not that good in that it substitutes the worker in that occupation. These are big numbers if it is indeed the case that this much change will happen. The question is how long will it take? And that we don’t know.”  

Saloni asked the final question of the session - “What are your projections for how climate change will impact the world economy in say, the next 20 or 50 years? And what kind of measures do you think the IMF will take in the future to protect countries against climate change?”  

“What we are doing in the IMF, we created a new facility called the Resilience and Sustainability Trust. We set it up in 2022. We lend to countries, mainly low-income and middle-income that are very vulnerable to climate change. We lend out on a long-term basis at concessional rates. We have about 20 countries that avail of that facility; the amount of money that has been committed is about 9 billion. We have another 30 countries that still want access to that facility ...  

The biggest bulk of climate financing will have to be done by the private sector. We need to send very clear signals to the private sector that this is the transformation that we are on. We incentivize them, carbon pricing, for example.” 

The moderated question & answer was followed by a Q&A session with the audience.  

The event concluded with Professor Agustín Bénétrix thanking Ms Gopinath for her time and Ms Khosla and Mr Heanue for their engaging choice of questions.