Food aid has not only met emergency food needs, but has also been a useful market development tool. Most rich countries do this. Even notebooks and pens were flown in from Washington rather than purchased locally. Throughout the period of structural adjustment from the 80s, various people have called for more accountability and reform of these institutions, to no avail.
External assistance plays a larger role in Africa's growth story than in any other part of the The third set of essays looks at questions arising from commodity price shocks especially from Africa development essays;. Washington, DC: World Bank. The first set of. However, as Oxfam noted, some of the reform suggestions may not be the way to go and may do even more harm than good. In their own words:. While some of the reform proposals now being debated are sensible, the thrust of the reform agenda is a source of concern for the following reasons:. On the one hand it seems appropriate to demand an end to the IMF.
However, such an abrupt course of action may itself lead to a gaping hole in international financial policies without an effective alternative. And that is another topic in itself! Into , and the global financial crisis has been so severe that rich countries have been affected. Calls for reform have therefore increased, even from within some of these institutions themselves.
These calls have included more transparency and accountability as well as specifics such as creating a more stable financial system, and cracking down on tax havens. This time, however, developing countries are demanding more voice, and have more power that in past years to try and affect this. Historically democracy and power have not gone well together, and as journalist John Vandaele has found,.
The most powerful international institutions tend to have the worst democratic credentials: If change is to be effective, these fundamental issues will need resolving. Powerful countries may try to reshape things only in so far as they can get themselves out of trouble and if they can avoid it, they will try to limit how much power they concede to others. And perhaps a sad reality of geopolitics will be that any emerging nations that become truly influential and powerful in this area will one day try to do the same. For now, however, developing countries generally have a common agenda of more voice and will therefore champion common principles of better democracy and accountability.
Recently, we have heard members of the World Bank and IMF entertain the possibility that maybe their structural adjustment policies did have some negative effects. For example, the Bretton Woods Project revealed that in , an internal World Bank report has concluded that the poor are better off without structural adjustment. Requires a PDF reader. Instead it speculates that they may be ill-placed to take advantage of new opportunities created by structural adjustment reforms because, as the Bretton Woods Project insinuates, the report implies that the poor have neither the skills or financial resources to benefit from high-technology jobs and cheaper imports.
When structural adjustments have required cut backs in health, education and so on, then what would one expect? In March , the IMF itself admitted in a paper that globalization may actually increase the risk of financial crisis in the developing world. Globalization has heightened these risks since cross-country financial linkages amplify the effects of various shocks and transmit them more quickly across national borders the IMF notes and adds that, The evidence presented in this paper suggests that financial integration should be approached cautiously, with good institutions and macroeconomic frameworks viewed as important.
In addition, they admit that it is hard to provide a clear road-map on how this should be achieved, and instead it should be done on a case by case basis. This would sound like a move slightly away from a one size fits all style of prescription that the IMF has been long criticized for. As mentioned further above, and as many critics have said for a long time, opening up poorer countries in an aggressive manner can leave them vulnerable to large capital volatility and outflows. Reuters , reporting on the IMF report also noted that the IMF sounded more like its critics when making this admission.
In theory there may indeed be merit to various arguments supporting global integration and cooperation. But politics, corruption, geopolitics, as well as numerous other factors need to be added to economic models, which could prove very difficult. As suggested in various parts of this site, because economics is sometimes separated from politics and other major issues, theory can indeed be far from reality. Sitglitz, the former World Bank chief economist, is worth quoting a bit more to give an insight into the power that the IMF has, and why accusations of it and its policies being colonial-like are perhaps not too far off:.
A picture can be worth a thousand words, and a single picture snapped in , shown throughout the world, has engraved itself in the minds of millions, particularly those in the former colonies. The hapless president was being forced, in effect, to turn over economic sovereignty of his country to the IMF in return for the aid his country needed. Defenders of Camdessus claim the photograph was unfair, that he did not realize that it was being taken and that it was viewed out of context.
But that is the point—in day-to-day interactions, away from cameras and reporters, this is precisely the stance that the IMF bureaucrats take, from the leader of the organization on down. To those in the developing countries, the picture raised a very disturbing question: Had things really changed since the official ending of colonialism a half century ago? When I saw the pictures, images of other signings of agreements came to mind.
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It is surprising and also quite illuminating to get the insider image of the workings of some large institutions in this way. One of the authors of a paper from the IMF concedes the failure of IFI policies for the poorest countries saying that Much of sub-Saharan Africa has been under IMF and World Bank programmes during the last three decades, and while a modicum of macroeconomic stability has been achieved, progress has been spotty at best.
Another working paper from the IMF suggests that trade liberalization has crippled some governments of poorer countries, and that prospects for further trade liberalization in poor countries may be troubling. However, the effect is still the same as the preceding disastrous structural adjustment policies, as the World Development Movement reported. Many civil society organizations are increasing their critique of the PSRPs. It is not delivering poverty-focused development plans and it has failed to involve civil society and parliamentarians in economic policy discussions. But the IMF in its own papers stresses that this is in addition to everything that was required in the past; none of the old Washington consensus policies have been removed.
In a paper for a meeting of African finance ministers, January , to explain the new PRGF, 40 the IMF stresses that it will demand of all countries a more rapid privatisation process and a faster pace of trade liberalization —the conditions criticized by Joseph Stiglitz when he was chief economist of the World Bank.
The theory is fine, but the practice distorts the meaning of these words.
Africa at a turning point? Growth, aid, and external shocks (English) | The World Bank
Countries are in the driving seat only as the chauffeur of the Washington Consensus limousine. And as Angela Woods and Matthew Lockwood comment, all too often ownership relates to persuading the public that reforms are necessary and good in order to minimize political opposition to them. But Wood and Lockwood note that not only does the Bank define a good policy environment very narrowly, the consensus on what defines good policies is subject to change. What may have been regarded as a good policy yesterday may not be today. And it must be remembered that these are being imposed in the names of good governance , sound policies and poverty reduction.
Stiglitz notes that had the US followed IMF policy it would have not achieved its remarkable expansion.
Africa at a Turning Point?: Growth, Aid, and External Shocks (World Bank Development Essays)
Additionally, as this book reports see pages of the PDF online version , [A] senior [World] Bank official described the PRSP-PRGF as a compulsory programme, so that those with the money can tell those without the money what they need in order to get the money. It would be worth additionally noting the cruel irony that nations that are those with the money today have largely accumulated it through plunder via imperialism and colonialism upon those very nations who today are without the money.
Prescribing how to get the money, in that context, is dubious indeed. Through its policies it encourages export-driven, capital and resource-intensive development, just like the other international financial institutions. The largest financing and influence of the bank comes from Japan and the United States. The escalating dependence of developing countries in the [Asia] region on debt-financed development has a number of negative consequences.
Also, as with the IMF and World bank, and mentioned in the above link, governments are using the rubric of poverty reduction to channel taxpayer funds to their private sector companies via the ADB. This is occurring with little or no pubic scrutiny although government representatives will, if necessary, appeal to commercial self-interest to justify continued contributions to the ADB and other multilateral development banks.
In essence then, tax payers from the lending countries will bail out the IMF and ADB if there are problems in their policies.
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The ADB has mentioned its desires to promote good governance. However, Aziz Choudry is highly critical in terms of whom this governance would actually be good for:. It is a euphemism for a limited state designed to service the market and undermine popular mandates.
A second set of essays looks at the role of donor flows. External assistance plays a larger role in Africa's growth story than in any other part of the developing world. As a result, the economic management of external assistance is a major public policy challenge, and donor behavior is a significant source of external risk. The third set of essays looks at questions arising from commodity price shocks especially from changes in the price of oil.
Relative to factors such as policy failures, conflicts, and natural disasters, how important are commodity price shocks in explaining output variability in African countries?
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Compared to the oil price shocks in the s, why have recent higher oil prices apparently had less impact on Africa's growth? Oil is also now an important source of revenue for several oil exporting countries in Africa; what are the economic challenges faced by those countries?
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How should one analyze the macroeconomic and distributional impact of external and oil price shocks? As the essays in this volume show, laying the policy and institutional basis for longer-term growth, managing volatile commodity prices and aid flows, and turning growth in average incomes into growth in all incomes remain formidable but manageable challenges if Africa is to reach its turning point.
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