The Principal Components Approach to Quota Formulation at the IMF: 2011 Economic Size and Quota Formula Update

This paper updates economic size rankings and quota formulas derived from the principal components approach to quota formulation at the IMF developed by Nguéma-Affane (2008). Using available annual sets of quota data up to 2011, the paper shows that the top 10 countries remained broadly stable in 2009-2011, with one notable development: China is now the largest economy since 2009 followed by the United States, Japan and Germany. Quota shares mirror this development, notably the downward trend of the quota shares of advanced economies. China is incontestably experiencing the highest gain in quota shares consistent with its continuous economic dynamism. The paper also explores the impact of removing openness and/or variability from the dataset used for the purpose of the PCAp. It shows that the variables openness and variability play the same role as they reinforce the size dimension through their strong correlation with GDP. However they contribute very little to the significance of the economic size indicator.