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Structural Adjustment Programmes of the IMF (IMF) and World Bank (WB) were impact of SAPs on social service sectors, particularly the public health sector. . of the impersonal market forces, and promoting the growth of the private sector.
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Combined with the liberalization of capital flows, the measure forced the overvaluation of US currency and redirected international liquidity to the US. American public bonds soon became the principal liquid asset of the global economy. At the same time, Latin American economies continued to have elevated external debts. In , the convergence of the second oil crisis with the radical change in US monetary policy and the sharp fall in the price of raw material significantly increased the cost of the external debt of Latin American states.
Following this, the liberal-conservative turn of the Thatcher and Reagan governments drastically altered international economic policy. For this New Right in power, the recovery of economic growth and private profit passed through the demolition of the Welfare State and the liberalization of national economies 11 , In this context, the World Bank sought to sediment the structural adjustment as an inescapable means for the adaptation of indebted countries to the new conditions of international economic policy.
The expression designated a new modality of loan that began in , a rapid disbursement aimed at policies and not projects. The authorization of this type of operation was dependent on the prior agreement of borrowers with the IMF to carry out monetary stabilization programs. It is interesting to highlight that at the beginning the Reagan administration treated the World Bank and the other multilateral organizations with suspicion and hostility, preaching the reduction of support for them and the strengthening of bilateral programs.
Openly against any type of loan to the public sector, the discourse was that the state and multilateral institutions should not substitute what the private sector could do more effectively However, in , the Treasury clearly stated that the World Bank was an efficient instrument at the service of American interests In fact — as would be seen later during the administration of George H.
Bush —, the move of the republican right from Congress to the Executive moderated the discourse about the political and financial burden of the Bank and other multilateral organizations for the US, based on the recognition that these organization were actually instruments for the defense of long term American interests that were too useful to be weakened or even dismantled 1. In the case of Latin America, the liberalizing pressure of the US increased after the external debt crisis, whose administration was converted into a mechanism to discipline the economic policies of debtor countries, in accordance with the emerging neoliberal creed.
Between , structural adjustment programs propelled the liberalization of trade, the alignment of prices in the international market, currency devaluation, the stimulation of the attraction of foreign investment, productive specialization, and the expansion of primary exports. At the same time, in the sphere of social policies and state administration, the adjustment prescribed as a target the reduction of the public deficit through the cutting of expenditure on personnel and the cost of the administrative machine, the drastic reduction of subsidies for popular consumption, the reduction of the per capita cost of programs, the reorientation of social policy to primary health care and basic education as social minimums, and the focusing of expenditure on groups in extreme poverty.
It is worth highlighting that at the end of the s, health and education entered the agenda of the Bank through a confluence of factors. First, the emergence of the debate about basic human needs launched by the International Labour Organization in the middle of that decade, in relation to which the Bank sought to position itself, constructing its own version of which needs were really basic.
The second was the incorporation of primary health and basic education as raw materials that were indispensable for the increase in the productivity of the poor in the Third World and the formation of human capital, pushed as new priorities by the governments of the US and the United Kingdom. At the end of the , a Department of Population, Health, and Nutrition was created in the Bank, which allowed the authorization of loans exclusively for health, opening a very broad field of action for the institution in the following decades Keynesians and development economists in general were replaced by exponents of neoclassical monoeconomics.
Anti-poverty programs were abandoned in the name of radical liberalization and the massive privatization of public companies 1 , As socially regressive effects resulting from austerity measures exploded, the concern with governability was imposed. In , following the orientations of the Treasury and the Federal Reserve, the Bank authorized loans dependent on commercial opening and broad financial deregulation. In the same year, the conductors of economic liberalization in the region the Treasury, the IMF, World Bank, Inter-American Development Bank, think-tanks, and members of the US congress evaluated the results obtained and agreed on the ten most important economic reforms in the coming decade.
Known as the Washington Consensus 15 , this prescription expressed the convergence between the neoclassical mainstream, the US government, and the financial interests expressed in Wall Street. Constructed on the rubble of the Cold War, the consensus was soon converted into a transnational political paradigm 16 , centered on liberalization and privatization as universal panaceas. In Latin America, new coalitions of power made feasible the election of governments committed to the neoliberal agenda in countries such as Mexico, Venezuela, Colombia, Peru, Argentina, and Brazil.
The implementation of the neoliberal adjustment occurred unequally in different countries and went through adaptations during the s. The first was concerned with the internalization of the fight against poverty in the dominant agenda. The conflict over the production and appropriation of wealth was ignored, which allowed the Bank propose that poverty relief depended only on the distribution of part of the results of growth.
The fight against poverty was thus adjusted to economic liberalization.
Structural Adjustment Program
The second change consisted of the revision of the role of the state in the economy. In turn, fulfilling these functions required maintaining the fiscal adjustment and redirecting public expenditure to priority areas the export of commodities and human capital , privatizing public companies, outsourcing public services to companies and NGOs, and liberalizing the capital account.
Although the role of functions was minimum, there now appeared the idea that the state and the institutions were important for the construction of market economies. The state versus market economy, typical of the hyper-market focus of the s, gave way to a more complementary vision. In the middle of the s, faced with the effects of the adjustment in Latin America the high volatility of economies, low economic growth, increase in poverty and social tensions, high level of popular rejection of neoliberal governments , the Bank advocated a second, slower and more complex, stage of structural reforms, at whose core was to be the state 19 - At the same time, the thesis of complementarity between state and market gained clearer contours.
A reform was prescribed which adjusted the functions of the state to its capacity, which implied defining its legitimate role of actions: guaranteeing macroeconomic stability, eliminating any form of economic nationalism price controls, subsidies, protectionism, etc. The term appeared in in a report about the implementation of the structural adjustment in Sub-Saharan Africa and designated the balance between government and governed Very quickly the Bank came to affirm that the efficiency of public administration depended on good governance between state agencies, companies, multilateral institutions, and civil society organizations However, civil society was taken as synonym of voluntary associations and NGOs.
In fact, the more the NGO field became permeable to the international development aid industry, the more the fiscal adjustment and neoliberalization of social policies advanced, expanding opportunities for NGOs to assume functions ripped from states. In this way, governance came to be the general slogan which agglutinated policies, techniques, and knowledge necessary to propel and direct indirectly social change within states It is revealing that, at the same time, the discourse of the same powers became identical.
For the Bank, the handling of economic liberalization and privatization needed to be the responsibility of a technical team politically and judicially protected against pressures from trade unions, political parties, and corporatist protectionist demands of the domestic business class. In the sphere of social policies, the Bank preached collaboration between the state, the private sector, NGOs, and multilateral institutions. Far from rupturing with the neoliberal program, the WDR consisted of an important instrument for its updating and expansion.
In effect, the neoliberal reforms had never required minimization, but rather a profound reconfiguration of state action in favor of new interests and objectives, which resulted in extraordinary gains for the more globalized financial agents, the privatization and denationalization of economies, and the expropriation of social and labor rights in favor of capital 10 - The financial crises opened opportunities for the Bank to significantly increase the adjustment loans, thereby leveraging the induction of the second generation of reforms.
However, the handling of the reforms had to follow the principle of ownership: the population had to identify with the adjustment measures, engaging in its defense. In international policy it served to hide the expansion of conditions, which had to be internalized through their adaptation to local circumstances through the selective instrumentalization of social participation.
During the s, with the deregulation of the economy, the asymmetric commercial opening, financial deregulation, and the privatization of a large part of the productive state sector, Latin American states abandoned in practice the promotion of the social mobility of the population as a whole. To institutionalize the relations of power which commanded the neoliberal adjustment, state action was directed to the definition of new winners and losers. Subordinated to the macroeconomic adjustment, the reconfiguration of social policy went through three principal changes. In first place, social policy stopped being seen as a necessary input for private investment or as a structural dimension of capitalist accumulation and came to be seen as strictly expenditure.
As a consequence, the concepts of development and social integration ceded place to that of social compensation. In second place, instead of incorporating the most pauperized strata of the population in satisfactory conditions of employment and income, the new social policy aimed to prevent a still greater deterioration of their living condition, with a assistentialist profile.
The degrees and modalities of this reconfiguration varied from country to country in Latin America, and in the case of the health sector in general gave rise to hybrid systems 32 , The limitation of social policies to the fight against poverty, was guided by a strict approach, concerned with increasingly focusing the target public, counting the poor and individualizing beneficiaries, separate from any serious consideration of how national wealth is produced and appropriated, in an unequal manner, by social classes and groups, in an increasingly more globalized world.
For the health sector, the World Bank reform agenda followed the general lines defined above: colonization of the public administration of the sector by the economy and business models; increased mathematization of poverty and the focalization of social policies on the poorest; formatting of public health as a package of social minimums; systemic market orientation and the diffusion of the commodity form in new dominions of health; diversification of providers of health beyond the state; elimination of sectorial restrictions to full competition between national and foreign private actors; weak regulation of business responsibilities and strong regulation of the rights of capital; and, more recently, privatization within the state through various modes of public-private partnerships PPPs 36 - More than seventy years since its creation, the World Bank had shown itself to be capable of adapting to ongoing changes in international economic policy and to continue to promote economic liberalization and the privatization of social life.
In this sense, loans functioned as leverage for the reorientation of public expenditure and induction of new priorities and objectives for governments. From the hyper-market orientation of the s, based on blaming the state and unrestricted confidence in economic growth and the trickledown effect, the Bank inclined, in the following decades, to an agenda which relied more on the active role of the state in the construction of competitive and globalized market economies.
Thus the discussion did not extend to a questioning of the macro-economic policies underpinning SAPs. The anti-SAP lobby gained ground as the s - 'SAP decade' - came to a close and it became clear that even the macro-economic policies were in dispute. Since the lates, the view that SAPs are based on wrong assumptions about Africa and are inimical to the continent's long-term development have gained ground as has the position that SAPs have either created or worsened poverty levels or at the very least, have ignored the adverse effects of the programme on the poor. The IFIs and their supporters continue to insist that SAPs are the only way forward and without them, Africa would have been worse off.
In between these two positions for and against SAPs, are a range of positions which question the validity of specific policies which make up SAPs and insist on the consideration of macro-economic policies together with policy at other levels including their distributional effects. Critics have challenged the basis and assumptions of SAPs. They have also pointed to the fact that the process of designing them is undemocratic and is usually dominated by officials of the IFIs yielding a product 'not owned' by the implementing country.
These have been underlined by the expectations raised by the programmes' advocates at their inception not materialising. The modesty of the macro-economic gains of SAPs has been compared to the programmes' profound socio-economic and political effects, with the lop-sided distribution of limited gains and extensive hardships raising questions of social justice.
A number of analysts and activists assert that SAPs have failed in Africa because they have been based on an assumption that a uniform set of principles can yield successful policies for all countries irrespective of their differences.
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This overlooking of important differences, it is said, has led to policies which ignore the differences between Africa and other continents and the differences within Africa itself. In all countries significant increases in private investment were expected once economies embraced deregulation and monetary and fiscal measures.
Local private investment in manufacturing, which has never been significant in most of Africa, has not been able to respond because of SAP policies such as high interest rates and the deregulation of imports among others, while in some countries, foreign private investment has been disappointing except in the area of mining. Even if foreign capital could be attracted to Africa, not all countries would be able to benefit from such a strategy. Thus the expectations of job creation, foreign exchange earnings and expanded markets which were to wean the economy from aid and expand industrialisation according to the bank, have not been realised.
SAP also disabled African economies from fundamentally changing their character as primary commodity producers, a situation which is the source of the crisis of Africa's economies.
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This is particularly important because many of the SAP policies are designed on the basis of a questionable 'comparative advantage' in that they aim to strengthen the ability of African economies to produce what they were already producing, primary commodities. The total trade liberalisation, high interest rates and the full removal of subsidies have threatened both agriculture and domestic industries.
Agriculture, especially food production, has also been adversely affected by interest rates and the high prices of inputs. There is consensus that low commodity prices have not brought the economic returns expected from the promotion of export agriculture. Also, SAPs have a negative impact on the environment. Export promotion has increased extractive activities, such as logging and mining, leading to deforestation and mining pollution and the reduction in and degradation of land which can be used for the livelihood of ordinary people.
Hand in Hand with Dictators In political terms, it has been demonstrated that SAPs were predicated on authoritarian governments. The WB and the IMF comfortably negotiated SAPs with many such governments for years and the good governance conditionalities instituted in the late s did not amount to support for democracy.
The distributional effects of SAPs have been criticised as undemocratic in that they support accumulation by the trading and propertied classes at the expense of poor peasants, workers and the urban poor, the majority of whom are women. The ownership of SAPs has been another area of widespread concern. SAPs are essentially seen as an imposition by the IFIs on developing countries which have no part in their design.
This perception is fuelled by the lack of information about SAPs negotiations and decisions in adjusting countries. The SAPs debate has also been dominated by foreign academics with better access to research and publishing sources than African scholars.