The attached is the article on the Impact of “IMF and WB policies on the underdeveloped countries. To prepare this topic I researched several sources, Google NYT and other renowned economists. The consensus is not very encouraging and most are skeptics.
I will be addressing their mission and polices as implemented over the past several decades in the underdeveloped countries.
The Impact of IMF, World Bank Polices on the Underdeveloped Countries
The World Bank and IMF both collectively known as Bretton Woods Institutions were founded in New Hampshire USA, by the delegates of 44 countries in July 1944. The goal of the conference was to establish a frame work for economic cooperation and development that would lead to more stable and prosperous global economy. This was central to both institutions; their work is constantly evolving in response to new economic developments and challenges.
The IMF mission is to promote international monetary cooperation and provide advice and technical assistance to help countries to maintain strong economics. IMF also makes loans and help countries to design policy programs to solve balance of payments problems with sufficient financing on affordable terms.
The International Monetary Fund (IMF) is an organization of 189 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world.
The World Bank Mission is to promote long-term economic development and poverty reduction by providing technical and financial support to help countries implement specific projects such as schools and health centers, providing water and electricity, fighting disease and protecting the environment. World Bank assistance is generally long term and funded by member countries contributions.
Globalization
Globalization is a process where the free flow of ideas, people, goods, services and capital leads to the integration of economics and financial institutions. IMF and World Bank institutions primary goal is to uplift underdeveloped countries out of economic stagnation and poverty. The IMF believes that economic growth is the only way to improve living standards in developing countries and is best achieved through globalization. The mission of globalization is altruistic but in some countries the outcome is not tangible, often mired in debt. Globalization is the free movement of goods, services and people across the world in a seamless and integrated manner.
Cooperation Framework
The IMF and World Bank work in concert with each other regularly and at many levels on several initiatives to ensure effective collaboration in areas of shared responsibilities.
Difference between IMF and World Bank
The process of Globalization is facilitated by three major organizations:
World Bank (WB)
World Trade Organization (WTO)
International Monetary Fund (IMF)
Data Collection, Reliability and Quality
The main source of data collection on which polices are based comes from the individual member countries, “Recognized Statistical data analysis techniques” are not effectively applied in gathering data especially in the undeveloped countries, which often resulted in faulty policies. Also there are some other problems in collecting economic, demographic and financial data from these countries, the lack of established institutions, or so poorly organized that data is often fudged to obtain funds. The most critical problems IMF and WB are facing in the UDC lack of democratic institutions, political participation and periodical elections. These countries are governed by military generals, dictators and corrupt politician. Funds are often misappropriated and squandered in useless programs. To some extent that was the main reason often IMF and WB polices are criticized, of lack of accountability.
The other main problem is that countries receive funds and allow IMF and WB to frame polices for them which are not conducive to their cultural patterns, traditions and socio political structure. The Western standards are often at variance with their culture. In some cases policies destroyed cottage industries by implementing or introducing new technologies that create more income disparities. Polices designed often resulted in creating a new elite class with money concentrated in a few hands.
Criticism of IMF Polices
Lack of transparency and involvement
The IMF has been criticized for imposing policy with little or no consultation with affected countries.
The IMF allows wealthy countries to dominate decision-making process.
IMF policies promote corporate welfare. Members of affected countries do not participate in designing loan packages.
IMF Polices hurt the environment. It has least concern for environmental impacts on lending policies and environmental ministries of and groups are included in policy making.
IMF pushes countries to deregulate financial systems.
Structural Adjustment—a Major Cause of Poverty
Structural Adjustment Policies (SAPs) have been imposed to ensure debt repayment and economic restructuring. But the way it has happened has required poor countries to reduce spending on things like health, education and development, while debt repayment and other economic policies have been made the priority…
Economist Joseph Stieglitz has criticized the IMF in recent years. He argues it is failing to take the best policy to improve the welfare of developing countries saying the IMF “was not participating in a conspiracy, but it was reflecting the interests and ideology of the Western financial community.”
For example, when there is an oil discovery in a certain developing country
(that owes the World Bank) and the leader of that country is not ready to
cooperate (for an easy manipulation and take over by western corporations),
it will be decided that that government or country need to quickly get rid
of, most of the time through rebellion or war. A case in point is Iraq,
Libya, Sudan, etc.
(that owes the World Bank) and the leader of that country is not ready to
cooperate (for an easy manipulation and take over by western corporations),
it will be decided that that government or country need to quickly get rid
of, most of the time through rebellion or war. A case in point is Iraq,
Libya, Sudan, etc.
Jeffrey Sachs, the head of the Harvard Institute for International Development said:
“In Korea the IMF insisted that all presidential candidates immediately “endorse” an agreement which they had no part in drafting or negotiating, and no time to understand. The situation is out of hand…It defies logic to believe the small group of 1,000 economists on 19th Street in Washington should dictate the economic conditions of life to 75 developing countries with around 1.4 billion people. “Source
Thank you
Imtiaz
9/20/2016