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Thursday, September 28, 2006

Our Reader Is Right; (Almost) Everyone Gets It Wrong!

Commenting on one of our earlier posts, a reader opined that English newspapers too get the facts wrong. We of course agree with that. To prove that our reader is right, we will provide you an example.

Here is Saubhik Chakrabarti's column from the Indian Express dated September 18th. It is about the recently concluded IMF meeting in Singapore. Mr.Chakrabarty is not too happy about the current power structure of IMF. (We agree with his sentiments, by the way.)

This structure -- based on a quota system -- was established in 1940s when the economies of US and Western European nations were much bigger than most Asian and African economies. Now, of course, things have changed. The Chinese, South Korean, Indian economies have grown tremendously overtaking the economies of many Western countries. Yet, the IMF quotas do not reflect this changed reality.

Commenting about this, Mr.Chakrabarty writes (emphasis is ours):

The original, horrendously complicated formula for fixing quotas was drawn up on the basis of three things: the size of a member-country’s economy, the quantum of its foreign exchange reserves and the economy’s propensity to volatility. It made sense in 1944 that China’s quota was less than that of the Netherlands or Belgium. But does it make sense in 2006? China’s economy is now twice the size of the Belgian and Dutch economies combined. But both Belgium and the Netherlands still have larger IMF quotas than China. What about us? India’s economy is now twice the size of Belgium’s. Belgium has a larger quota.

The question is, Is Mr.Chakrabarty Right? when he writes "But both Belgium and the Netherlands still have larger IMF quotas than China.". If you are a regular reader of our blog, you know the answer: NO!

Here are the numbers from IMF's website:

(Note: Mr.Chakrabarty's article was written before the quotas got revised. China's number increased from 2.98% to 3.72%. The numbers cited above are also from that time.)

Now that we know Mr.Chakrabarty has problems with elementary mathematics or has not bothered to check the numbers before he wrote what he wrote, if you are like us, you would be wondering why in the whole world (or, rather Europe), did he pick Belgium and Netherlands to compare with China? Why not, say Germany and Italy, which really have higher IMF quota numbers but lower GDPs than China?

Then you start noticing that the same comparison and similar error is made by many news sources including the venerable BBC and CNN (citing Reuters).

This from BBC:
China currently has fewer votes than either Belgium or the Netherlands, even though its economy is twice the size of the two combined.

This is from CNN:
The overhaul aims to correct the under-representation of countries such as China, which has fewer votes than Belgium or the Netherlands even though its economy, the world's fourth-largest, is twice their combined size.
However, the much despised (in US) Aljazeera gets it right when it says:
Despite its growing economy, China has less voting power than Belgium and the Netherlands combined.


Blogger Shiv said...

Looks like Aljazeera does better homework than CNN/BBC !!!

Nov 4, 2006, 12:58:00 PM  

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