Development without Neoliberalism:
An Alternatives Assessment of Structural Adjustment
Structural Adjustment Programs are the new form of colonialism that has allowed powerful world leaders to exploit and degrade “developing” countries. International Institutions funded by the West give conditional loans to developing countries that eventually lead to the country becoming indebted to these insitions. The conditional loans require the implementation of free-market reform policies in order to make the country more competitive in the global economy. However, these loans usually fail and the policy reforms lead to an increase in poverty, inequalities and environmental harm. Structural adjustment in only one way to develop and more successful alternatives are available and being implemented. SINCE THE BRETTON WOODS AGREEMENT IN 1944, THE WESTERN WORLD HAVE USED THE WORLD BANK AND THE INTERNATIONAL MONETARY FUND TO PROMOTE STRUCTURAL ADJUSTMENT PROGRAMS IN ORDER TO DEVELOP THE WORLD IN A WAY THAT BEST SUITS THEIR NEOLIBERAL AGENDA WHICH HAS CONTRIBUTED TO ENVIRONMENTAL DEGRADATION.
The Bretton Woods Agreement is a way to monetary management system of the global economy. After World War II ended the value of money greatly decreased through hyperinflation and countries were looking to rebuild their infrastructure and economy. The Bretton Woods Agreement aimed at maintaining international financial stability and to finance development projects. The two main products of the agreement are the International Monetary Fund (IMF) and the World Bank (WB). The IMF enforces the Bretton Woods Agreement through having fixed economics centered around the US dollar and, fixed exchange rates and lending to member countries. (Amadeo) After World War II the WB aimed at lending money to countries devastated by the war but not lends money to “emerging market” countries through economic development projects. In the 1950’s the IMF and WB began concentrating on “developing” countries’ macroeconomics and Structural Adjustment Programs (SAPs) became the method to achieve these development goals.
The IMF and the World Bank started lending money through economic reform policies, called Structural Adjustment Programs (SAPs) beginning in the 1950s. They are often referred to as Free Market Reforms. The goal of these loans to help developing countries that are undergoing an economic crisis and poverty adjust their economy in order to boost the economy and have long term growth through foreign direct investment. They are conditional loans that focus on neoliberal principles and therefore free market. Free market economies consist of deregulation and unrestricted competition within the private sector. (Halton) Loans are dependent on countries implementing a combination of free-market policies that can include reducing trade barriers, deregulating order to attract foreign companies, increase production and trade, privatize state-owned enterprises, devalue their own currency, and cut public sector jobs and funding. (Whirled Bank) SAPs intentions are to increase private investment from international corporations and make the recipient country more competitive in the macro worldwide economy. (Bretton Woods Projects) SAPs are policies that allow the recipient country to receive conventional loans that have stipulations if not paid back to the IMF and WB.
Structural Adjustment Programs have rarely ever delivered on their promises and oftentimes end up exacerbating the difficulties in “developing” countries. The Journal of Black Studies published an article that focused on the negatives of SAPs on the people of the country they are attempting to help. Maclean Geo-Jaja and Garth Mangum published the article and discussed the undesirable outcomes of SAPs as, “ Even worse, the available evidence suggests that they (SAPs) have accentuated the deterioration in the human condition and further compounded the already poor economic conditions.”. One of the primary negatives of SAPs comes from the policies that focus on cutting public spending and programs. By decreasing the funding of the public sector and programs the people of the country are harmed, loose jobs, worse healthcare, less equality and so much more. Paying back the loans takes priority over the wellbeing of the pole. This usually leads to an increase in poverty and a decrease in wellbeing. UNICEF’s Adjustment with a Human Face study found that in countries that received Structural Adjustment Loans from the IMF and WB have suffered in health, education, and nutrition. There was also a study in the Biomedical Central Journal that produced findings that SAPs negatively affected vulnerable populations, especially through maternal and child health. Another major concern with SAPs is that conditional loans are often viewed as a tool to promote neocolonialism. The recipient countries must develop in a way that benefits “developed” western powers and they are usually unable to pay back their loans and therefore indebted to these countries. This debt is a form of debt-trap diplomacy. This power dynamic harkens back to colonialism and overall benefits those in power.
There are many negative side effects of Structural Adjustment Programs and many critics believe that these effects are the goals of these loans from the IMF and WB. John Perkins is the author of Confessions of an Economic Hitman. This a semi-autobiographical book that focuses on predatory capitalism and corporate and how SAPs are related. Perkins discusses the system of SAPs that begins with conditional loans being offered to “developing” countries. They must implement policies that benefit the wealthiest countries. The money from the loans goes back into the United States through US corporation being hired as the contractors for the development. However, as mentioned before, the policies inevitable do not grow the economy enough and therefore they default on their loans. This leaves the recipient country indebted to the United States and other powerful countries through the IMF and WB. The recipient country to pay back their debt, often allow access to their natural resources for cheap, land for military bases, corporations are allowed to operate within the country. The Western Countries have political influence within the country and voting support in international institutions. In his book, Confessions of an Economic Hitman Perkins discusses in detail the similarity between SAPs and colonialism, this quote illustrates the vast similarities, “In my opinion, the difference between the crusaders and us was a matter of degree. Europe's medieval Catholics claimed their goal was to save Muslims from purgatory; we claimed that we wanted to help the Saudis modernize. ” Perkins believes that the countries that the IMF and WB decide to help develop are ones in which they have identified resources that they hope to obtain.
According to the book Dark Victory: The US, Structural Adjustment, and Global Poverty, over 70 countries have undergone structural adjustment programs through 566 IMF and WB programs. Most of the countries reside in the global South. Ghana is used as an example by the IMF and WB as a success story, however, conditions have gotten worse in the country. There has been development in the country and economic growth but this does not mean that wellbeing in the country has increased. The primary goal through SAPs was to eradicate poverty. This has failed because poverty has increased since the policies have been implemented. The minimum wage has increased but because prices are indicated by the market the costs of goods and services increased as well, essentially canceling out the minimum wage. The distribution of money in Ghana continued to be fragmented due to geographical isolation. There was also an increase in unemployment because of the loss of jobs in government and public services. (Eboe Hutchful) The cut in funding of public services and the privatization of goods and services led to a decrease in wellbeing. Ghanaians now have to pay for healthcare and water due to the IMF’s priority of privatization. (Kiguel and Jones) Water being privatized led to the lack of access to clean drinking water due to cost which has led to major health concerns in the country. There is also the major environmental degradation that has taken place due to the extraction of natural resources, unsustainable development, and growth in industry. Ghana has not benefited from SAPs and there has been a major decrease in wellbeing.
Structural Adjustment Programs are not the most effective option to fund the development of countries through loans. Risk assessments are not developed to understand how unsafe and risky a certain activity is. “Instead, they are developed primarily to estimate how much of a hazardous substance or activity does not pose a risk for living organisms out in the real world.” (O’Brien) SAPs are being implemented because supposedly the benefits outweigh the costs. Risk assessments are able to be manipulated because of those who want them implemented to fund the assessment. They are very easy to manipulate and can provide whatever the desired outcome is. Alternatives assessment examines what is the best option for the problem at hand by reviewing all of the alternatives and allowing public participation. By allowing and promoting alternatives assessment the best form of developing environmentally and socioeconomically will be implemented versus finding out how bad SAPs are.
Kenya was one of the first countries to undergo Structural Adjustment Programs in 1981. During the time of SAPs being implemented in the country, much like Ghana, the country did not thrive and overall well being decreased. In 2007, Kenya ended these programs and sought an alternative. The country adopted in 2007, free-market policy reform. The country began implemented policies that allowed the domestic sector to protected and to flourish in order to become domestically competitive. This was through funding the domestic sector and protecting from international competition through import taxes and trade restrictions. The focus was on the agriculture sector because 75% of Kenyans were employed in the agriculture sector. During when SAPs were taking place, there was a major loss in jobs and production agriculture because the programs favored “developed” countries imported food. Kenya, post-2007, policies focused on protecting and promoting small farms. This led to an increase in food security and the standard of living in the country. The primary alternative ways instead of trying to develop and become competitive by opening up markets to the global economy, Kenya focused on becoming domestically competitive by investing in themselves and then eventually opening the market to the global economy once already competitive. Kenya found an alternative to SAPs that has greatly benefitted them much more so than they had been previously.
Kenya found an alternative to Structural Adjustment Programs and through alternatives assessment, many other countries could find ways in which to develop that best suits them. The first step of alternatives assessment is identifying that not all countries can and should have to develop in the same way. SAPs have primarily one way in which all countries must develop. Another alternative would be making sure that the loans are not conditional and hold countries beholden to the IMF and WB. Programs that help countries develop should aim at benefiting the countries that are developing not the “developed” powerful countries. The way in which countries develop should be holistic and focus on the environment, social and economic factors not just macroeconomics. The United Nations’ Sustainable Development Goals offer seventeen goals that are potential policies that could be implemented within a country. There should be insitions other than the IMF and WB that lend money to countries to develop but without the focus on neoliberal principles. Alternatives assessments allow for the best option to be implemented and SAPs are not the best solution to development and should be evaluated for better alternatives.
Structural Adjustment Programs were created through neoliberal principles through the Bretton Woods “twins” the International Monetary Fund and the World Bank. SAPs are conditional loans that in the end benefit the powerful “developed” countries while decreasing the wellbeing in the recipient country. This can be seen in Kenya, Ghana and the 70 other countries who have undergone Structural Adjustment Reform. SAPs are not the best option for development and at its core exploits “developing” countries. Through alternatives assessment, the best solution would be found that would address the roots of the issue through just distribution, efficient allocation and sustainable development. Structural Adjustment Programs cause economic instability, decrease in well being and environmental degradation and therefore alternatives must be examined and implemented.
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