In 1945, following the end of World War Two, the IMF and World Bank
were created. In today’s age of globalization, systems like the IMF and
World Bank have become extremely powerful institutions. The World Bank focuses
on financing and investing in developing nations while the IMF improves global
economic cooperation by stabilizing nation’s economies. This is done primarily through
making loans available to developing nations during an unforeseen economic troubles.
But in order to obtain these loans, a country must agree to many austerity cuts
and shifts in it’s political and economic system. The IMF and World Bank’s demands
of struggling nations are called “structural adjustment.” These usually include,
a major reduction in government spending, privatization of industry, and a deregulation
of the economy. Unfortunately, many states depend on the IMF’s loans and are
thus beholden to their wishes over the wishes of their own people. The IMF’s
calls for privatization and liberalization of the economic sector are part of
the “Washington Consensus.” It’s a belief held by many policymakers that austerity
and privatization are necessary for economic growth in developing nations. Instead
of improving the lives of people in the developing world, the policies called
for by the “Washington Consensus” have caused standards of living for people
with fixed income to decline. Many skilled workers and unions have found that
once the IMF’s policies have been enacted, employment and high wages are harder
to find. Though many have suffered due to the policies of the IMF, the “Washington
Consensus” has not changed. In fact, many believe that their failures were
result of them not going far enough.
I agree with your argument that WTO/IMF/WB neoliberalism has been antithetical to progress in a number of developing nations. I highly recommend you look at the work of Naomi Klein, especially her book, The Shock Doctrine, which chronicles the failures of Western-backed structural adjustment in Latin America. Moreover, Paul Collier has extensively studied the impact World Bank projects have on displacement, and he estimates that more than a million people in developing countries have been forcibly displaced from their homes as a result of (basically) eminent domain by governments that partner with the World Bank and IMF. Why is it, do you think, that living standards have declined in countries where Washington Consensus policies have been implemented?
ReplyDeleteI think it depends. The IMF definitely takes advantage of developing nations, but the standards of living in many nations have drastically improved in the past 25 years.
ReplyDeleteThis comment has been removed by the author.
ReplyDelete