Sri Mulyani Indrawati

On the MICs Shifting Relationship with the World Bank: “These middle income countries are quite important to...the World Bank, and they are shifting more toward being bank shareholder[s]..., away from the traditional...role of these middle income countr[ies] and developing countr[ies] as just being a borrower or our clients.”

On Who is Driving Global Economic Growth: “In recent year[s], middle income countries have been the engine of global growth. This decade has been a profound shift in growth with the rise of China, and India, as well as the growth of many middle income countries. BRIC GDP—in terms of growth—was 8.9 percent in 2010. If you compare with OECD, which is only 2.9 percent, that’s definitely a very big [difference].”

On New Challenges for Middle Income Countries: “[T]oday middle income countries face both admiration, but actually at the same time they are also facing new challenges. One can argue that rapidly developing middle income countries are now victims of their own success. With development comes new challenge[s]. Problem[s] that were not issues for countr[ies] at lower levels of development now emerge as binding constraints for middle income countr[ies]. As middle income countries and BRICs have succeed[ed] in recent year[s], the issue of development [is] still very, very real.”

On Reaching a High Income Status: “What other challenges face middle income countries? To reach a high income status, BRICS and other MICs must address [the] economy, geographic [and] social transformation, and—also equally important—accept the responsibility of their new status.”

On Shifting Emerging Economies into Manufacturing: “Economically, countries such as my own, Indonesia, will need to move away from agriculture to labor intensive growth. But you can see that the dynamic among middle income countr[ies] presents a new opportunity. For example, with growth rate as well as wage rate in China rising, many middle income countries, including Indonesia, could increasingly move into manufacturing. [...] Also, middle income countries need to move into higher-value adding manufacturing and services sectors—just as...Brazil has moved into aeronautical and India into I.T. sectors.”

On Increasing Urbanization and the Need for Addressing Inequality: “Urbanization has taken off in recent year[s] in almost every middle income countr[y]. [...] In China, [the] urban population is foreseen to increase from about one-half now to two-thirds by 2013. This is by the amount of more than one Tokyo a year. Urbanization brings with it [its] own challenge[s]. [...] Chinese social and economic inequality [is] largely coming from rural urban differences, especially because of differences in access of job[s], services, as well as social protection. Middle income countr[ies] must act to reverse this inequality. To further exploit—if not just copy—urbanization, middle income countries need to focus on investing in urban infrastructure, including road[s], water, and sanitation [and] electricity. And cit[ies] must be made livable.”

On the Benefits, and Problems, of a Growing Middle Class: “A middle class can help middle income countr[ies] by providing a market for sophisticated good[s]. In Brazil, China, and Indonesia, this has actually provid[ed] an opportunity for domestic industry to develop. It can also attract foreign direct investment. [...] A new middle class can also spur democracy, spending on social services, market liberalization, and better governance. But [the] middle class can also hinder middle income countr[ies’] growth, especially through [...] ‘successions of the successful.’ This is when [the] new middle class link with the upper class and isolate themselves from the poor. If they rely on private utilities, schools, and hospitals instead of demanding for the public facilit[ies], they stop identifying with the state, and lose interest in reform or good governance."

On the Need for Strong Civil Service Structures in Developing Countries: “Needed institutional enhancements include functional public financial management system[s] so that state[s]—or the role of state[s] or the function of state[s]—[are] more accountable. Middle income countries need strong civil service structures. They need a civil service structure that is accountable, and they also need to have an effective accountable local government, which should lead to a better service delivery and regional development.”

On the Importance of BRICS in Actively Influencing the Global Economy: “It is important for these countries, especially middle income countr[ies] and BRICS, to accept the responsibility of their new status by playing a more proactive role internationally. [...] It’s time for many middle income countries have to play a more active role in actively shaping the global norm.”