| BUSINESSWEEK ONLINE : JANUARY 24, 2000 ISSUE | ||||||||
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| INTERNATIONAL -- EUROPEAN BUSINESS
Jacob A. Frenkel: The Man Who Opened Israel's Economy (int'l edition) Jacob A. Frenkel--Jake to his friends--is no stranger to career changes. A University of Chicago economist with 15 books to his credit, Frenkel left academe in 1987 to become head of research at the International Monetary Fund. Now, following his nine-year tenure at the Bank of Israel, Frenkel is moving to the private sector as chairman of Merrill Lynch's Sovereign Advisory Group and Global Financial Institutions Group. From New York, he spoke with European Regional Editor John Rossant: On Mideast peace: It is our historic destiny [to have] a more peaceful region, where everybody stands to gain from the peace process. Even if there are some detours along the way, this thing is now irreversible. A few years ago, I wouldn't have made that forecast. Our comparative advantage in Israel is knowledge creation and high tech, and human capital will continue to spearhead our growth. We will have flourishing high-tech and tourist industries, and we will probably end up being a natural financial center for the entire region. On reform of the IMF: The world economy and the global financial system have changed dramatically in the past few years, and we recognize the central role of financial markets in determining the fate of nations. These new realities have to be reflected in multilateral relationships. And I think the IMF people themselves are the first to recognize the changes and modifications that are needed. [U.S. Treasury Secretary Lawrence H.] Summers' proposals to reform the IMF have to be seriously considered. But I actually think the IMF has received greater criticism than it has deserved recently. Yes, a lot of improvements are needed, but one has to recognize the fact that the Asian crisis and much that was threatening the world financial system is behind us. On the New Economy: In Israel, as in the U.S., we are not anymore in a trade-off between growth, inflation, and unemployment. One of the aspects of open markets and fast communication is that ''long term'' and ''short term'' have no meaning anymore, since the markets immediately reward good policies and penalize bad ones. It means politicians can be more courageous and not worry about the short-term political costs of policies. On doing business in the Arab world as an Israeli: That question was raised in 1987 when [then IMF chief] Jacques de la Rosiere hired me, and we crossed the bridge without any difficulty. In fact, I was the one who developed the IMF's approach to Islamic banking, and I have good relations even with Iranians. It's a nonissue. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP |
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RELATED ITEMS A Fiscal Reformer's Last Hurrah (int'l edition) CHART: Frenkel's Good Fight Jacob A. Frenkel: The Man Who Opened Israel's Economy (int'l edition) INTERACT E-Mail to Business Week Online | |||
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