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Notes on Structural Adjustment Programmes

Notes on Structural Adjustment Programmes

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NOTES ON STRUCTURAL ADJUSTMENT PROGRAMMES

(Róbinson Rojas)(1997)

Since the late 1950s the International Monetary Fund have been imposing monetarism (neo-classical economic theory based economic policies) as a condition for lending money to less developed societies facing problems with their balance of payments. What makes of monetarist strategies a main issue for developing societies during the 1980s and the 1990s, is that the World Bank adopted as its main policy imposing monetarist economic policies on less developed countries. Therefore, since the late 1970s-1980s until today, not only the IMF but also the World Bank have been the champions for creating deregulated markets all over planet earth. Thus, poor countries had to apply the above policies if they needed to finance deficit on balance of payments and/or finance new projects for further economic and/or social development. They have to accept the "Washington Consensus", as this neo-liberal perspective is called. Structural Adjustment Programmes is the name for this comprehensive economic policies imposed on or accepted by the ruling elites in less developed societies. The main aim of structural adjustment programmes is to transform all the economies in the world into capitalist economies inserted in one system under the management of international capital. If we look at the main five measures imposed by adjustment programmes it appears very clear that they tend to facilitate an economic environment favourable to the activities of globalized production as controlled by transnational corporations: 1.- promotion of outward-oriented growth; 2.- expansion of the private sector's role as the growth process's driving force; 3.- removal of barriers to international capital flows; 4.- diminishing economic role of the state; and 5.- deregulation and restructuring of domestic labour markets. During the 1950s, 1960s and 1970s, "structuralism" was the established orthodoxy for development theory and policy for African, Asian and Latin American developing countries. The basic tenets of structuralism were as follows: 1.- in poor countries, the economies were structurally different from advanced industrial economies (capitalist center of the world economy). This structural difference was an outcome of colonization by Western European imperialist nations) Because of the above: 2.- Advanced industrial economies needed economic policies as theorized by Keynes (the management of aggregate demand -national demand), while 3.- poor countries economies, being disarticulated ("fragmented" economies, "fractured" economies), were a "special case" of Keynesian economics: development economics. 4.- development economics was about the state-government playing the main role in social and economic "modernization", and planning economic development, in partnership with private capital -both national and foreign- passing through stages of import-substitution leading to export-led strategies. All the above shaped a school of thought based on the idea that the market economies in the world were divided in a "dual" system: modern

the followers of "mono-economics" argue that: 1.-a central assumption is the primacy of macroeconomic stabilization for both the external sector (balance of payments). being the traditional economies in need of becoming modern through "development economics". but also in the evolution of policy thinking within the World Bank. and human development both in industrialized areas and rural areas of the world. and B) structural adjustment. because the capitalist system had defeated-destroyed all alternative attempts to economic development. 2.-The free-market structure delivers economic growth. the concept of "mono-economics" began to develop.1 goods market (agriculture and industry) . based on the notion of final victory.-Structural adjustment was necessary for advanced industrial economies and less developed economies.1 fiscal policy A. and b) market liberalization/deregulation plus public sector reform as the environment for free-markets. with the aim of unchained those economies from Keynesian constraints and "development economics" constraints. end of history. the origin of structural adjustment policies has to be sought not merely in the deteriorating international economic environment of the 1970s. which is just another label for "neo-classicals".2 B. the arrival of the final stage in human development. Structural adjustment policy is composed of: A) Stabilization. et al) concept allowed to argue that the dynamics of the free-market was good for both "advanced industrial economies and poor economies".4 resource mobilization public sector allocation market liberalization institutional reform B.economies and traditional economies.3 devaluation B) is composed of B. the latter evolving from the evolution of economic thinking within the elite groups in the US and the UK. Von Hayek.-to support the above notions. -international capital is the most efficient capital available for poor economies in their quest for economic take-off. the following political assumptions were necessary: -the state is always enemy of economic growth. Of course.-Structural adjustment has two main components: a) stabilization of prices through balanced budgets. A) is composed of A.2 monetary policy A.3 B. 3.3) market liberalization is composed of: B. -international financial institutions are more prepared to lead structural adjustment than domestic financial institutions. Calling themselves "neo-liberals".3. and the domestic sector (inflation under control mainly through controlling the level of wages) 5. This "mono-economics" (Friedman.1 B. 4. During the last stage of the period of the Cold War. full employment.

Perspectives on adjustment and economic reform in Africa". "The alleviation of poverty under structural adjustment".8 B.8. EarthScan. and improving the incentive to save. Oxfam.3 privatization of services (contracting out) B.7 B. improving the productivity of public investment (charging for services. 1997 (press release 2) R. World Bank. abolishing subsidies. 1996 R. more incentive to export). Action for Recovery".3. Reed (ed. "Structural Adjustment. Oxfam. "Embracing the Future. Issues and Experience". 1994 Oxfam. 1987. "Structural Adjustment and Income Distribution". etc) (Some basic literature: J.3.Rojas: Notes on economics: about obscenities.3.4 B.3. 1995 D.1 divestiture (leaner civil service. Avoiding the Challenge of World Poverty". Oxfam. Demery and T.). Make or Break. improving efficiency of public enterprises (emphasis on profits). 'structural' adjustment will liberalize the trade regime (reduction/abolition of restriction on imports. etc). "Stabilization and Adjustment. UN. the Environment.8) promotion of private sector operations is composed of: B. 1993 Oxfam.Rojas: 15 years of monetarism in Latin America: time to scream UNCTAD: The Trade and Development Report. Oxfam. Addison.B. ILO. 1997) By and large.3. 1993 UNDP. restructuring the tax system (through indirect taxes). housing.3. "The Oxfam Poverty Report".3. education. 1997 (press release 1) UNCTAD: The Trade and Development Report.3 B.Toye. liberalizing prices (especially price of labour. World Bank. Rahman Khan. etc) B.3. poverty and inequality World Development Report 1997. any adjustment programme will 'stabilize' the internal economy through adjusting the exchange rate.3.4 exposure to competition from the private sector (prisons. schools.8.2 B.3. labour markets will be the main target here).3.2 closure (transferring state firms to the private sector) B. SOME FINDINGS . and Sustainable Development". "Africa. ILO.3. 1991 L. "Structural Adjustment. contraction in the money supply.3.8.6 B. liberalizing the allocation of credit. 1995 A. and.8. reducing any fiscal deficit (reducing public expenditure and/or increasing taxes).9 current account (exports and imports) domestic financial markets (banking system) capital markets (treatment to foreign capital) internal factor markets (capital and labour) return to market-determined price removal of qualitative restrictions promotion of private sector operations limitations on the role of government B. hospitals. health.5 B.

"Project interventions often continue to cause unacceptable -and unacceptably violent... as one country after another in the South was afflicted by a lethal combination of high interest rates and falling commodity prices. Oxfam (1994) summarizes that "structural adjustment programmes (SAPs). Potentially competitive labour intensive industries and rural employment have been undermined by declining public investment in social and economic infrastructures. the Bretton Woods agencies should have demanded large-scale debt reduction to release development resources". the imposition of an 'export-led growth' strategy for resolving the debt crisis has carried the seeds of its own destruction." Focusing on structural adjustment programmes. The Bretton Woods system was created to avoid such pressures. liberalising imports. In particular.Oxfam (1994) assessed World Bank practice as follows: "Structural adjustment programmes are undermining recovery prospects. credit shortages and import constraints." And.out of the region. The World Bank itself estimates that nearly one third of the region's population was living in poverty by 1990.. and promoting exports. as we argue below. Over . especially in the world's poorest countries. the World Bank is itself unaccountable to citizens and governments in the developing world. Inevitably. up from 27% a decade earlier. deregulating internal markets. these adjustment policies were in large measure responsible for the 'lost decade' of the 1980s. when most developing countries experienced steep declines in human welfare. and far more could have been done to develop alternatives.is the imposition of the type of extreme deflationary measures associated with structural adjustment. More recently. The danger now is that structural adjustment policies will consign large swathes of the developing world to another 'lost decade' of deepening poverty. Moreover. undermining the position of women. deflation on this scale increased social misery.. compounding inequalities. "Instead. and an estimated 10 million children are suffering from malnutrition. during the decade. with the costs of adjustment passed disproportionately to the poor.. designed by the World Bank and the IMF. "While endorsing 'good governance' in the South. the World Bank and the IMF have claimed that SAPs constitute and integral part of a poverty-reduction strategy geared towards 'employment intensive' growth. as governments transferred a massive stream of wealth -totalling over $200bn. or some 6% of GDP. "The Bank has failed to develop a coherent debt-reduction strategy for the world's poorest countries. proliferated in the early 1980s. then says that "what is unacceptable.. and failing to protect access to health and education services. the IMF has imposed a monetarist strait-jacket on much of the South.human displacement and environmental damage. These required government compliance with targets for residing budget deficits. Along with the balance-ofpayments loans came conditions. slow growth and mass unemployment".. The stated objective has been to support export-led recovery.."In Oxfam's view. Increased commodity exports have contributed to the most protracted and deepest depression in world markets since the 1930s. The following was Oxfam's overview of the 'lost decade': ---In Latin America per capita incomes dropped by 10 per cent and investment fell from 23 per cent to 16 per cent of national income during the 1980s. rising inequality. Import activity dropped sharply.

The IMF now concedes that worsening terms of trade have undermined its adjustment programmes. the poorest 20% of the region's population saw their share of income fall to less than 4%.8 0. Today.3 1.0 0." An empirical illustration of Oxfam's argument is the following: Diverging prices for commodities and manufactured goods in the international market during the process of globalization: UNIT VALUE INDEX of manufactures OIL All exported by groups food agric. average incomes fell by 20% during the 1980s.1 0.3 -1. materials metals and United States 1960 100 100 100 100 100 100 1965 108 102 98 98 78 115 1970 117 95 108 103 70 148 1975 221 251 132 164 56 91 1980 329 556 102 106 74 108 1985 275 503 81 83 64 83 1990 446 230 63 61 53 76 1996 504 184 63 62 55 69 2006 529 570 81 59 52 169 ---annual growth 1960-80 (%) 6. and the region's share of world markets fell by half to 2%. France.have been depressed by oversupply.1 9.7 Source: From UNCTAD Handbook of Statistics (2007) database at: http://stats. Unfortunately. United Kingdom. The Inter-American Development Bank has identified inequality as one of the major obstacles to recovery in the region.unctad. cocoa and tea -Africa's major primary commodity exports.4 1980-06 (%) 1. Germany. ---In Africa. Róbinson Rojas.the 1980s. ________________________________________________________________________ SUMMARY FOR FREE MARKET ECONOMIES WITH NEGATIVE NET FACTOR INCOME FROM ABROAD ($ MILLION -1992 PRICES) -----------------------------------------------------------------1960-1992 1960-1975 1976-1992 . where more than thirty countries have embraced structural adjustment. the Bank has remained oblivious to the connections between these trends and its own adjustment policies. sub-Saharan Africa is the only developing region in which poverty is increasing and human welfare is worsening. Africa recovery prospects have suffered in acute form from the emphasis placed by SAPs on export-led recovery. West African cocoa producers almost doubled their production. During the second half of the 1980s. only to see their foreign-exchange earnings fall.9 -2. raw ores. As one country after another expanded production of primary commodities for stagnant world markets. minerals. and the World Bank's most recent GLOBAL ECONOMIC PROSPECTS report acknowledges that world prices for coffee. investment fell to levels which were lower than in 1970. open unemployment quadrupled to 100 million.5 0. Japan.org/Handbook/TableViewer/ (data processed by Dr.2 -1.1 -0. they contributed to the worst international price slump since the 1930s.

and by 1991 it was insufficient to purchase twenty day's worth of goods.52 -4. the average minimum wage was below even the minimum food basket by 1988.39 LATIN AMERICA/per hour -3.90 ASIA/per hour -1. the average citizen will not cross the poverty line for another half-century. one of Latin America's model adjusters. "In Tanzania." Oxfam(1994) listed the following assessment of structural adjustment programme's effect on employment: 1) In Zambia.50 -2392990. private investments in Ghana remains insufficient to replace existing capital stock.79 -0. In Ghana. generating mass unemployment in urban centres. Japan. Moreover. "This has not prevented the IMF from lauding Zambia as a model to be followed by others for its achievements in lowering inflation." 4) "In Latin America.55 -5. average unemployment in countries such as Zambia.48 -115.98 -----------------------------------------------------------------Note: Six industrialized countries received more than 95% of the above flow (United States.01 -2.also confirmed that there is little prospect of economic growth making an impression on poverty in the foreseeable future. More than three-quarters of its textile factories have closed by 1993.11 -385.66 PER HOUR -10. open unemployment has risen to an average of over 10%.TOTAL -3065221. Luxembourg and France) ===Source: World Bank Tables 1995===processed by Robinson Rojas=== ________________________________________________________________________ Oxfam (1994) added that ". In Costa Rica. 2) In countries such as Mexico. Costa Rica and Bolivia..07 -----------------------------------------------------------------AFRICA/per hour -2.19 -672230. average wages have fallen by one third since 1980 -and they are still falling. after a decade of adjustment and aid transfers equivalent to 8% of national income. the star pupil of both the World Bank and the IMF. In Sub-Saharan Africa.21 -2.26 -1.80 -16. "This partly explains the increase of 38m to 69m in the number of urban-based people living in poverty in the region.35 -0. This has been welcomed by the World Bank and the IMF as a move towards market ..79 INDUSTR>/per hour -3.72 -2.70 PER Day -254. the proportion of the population unable to meet its basic needs increased from 21% to 28% between 1987 and 1991. and the country's debt has tripled to over $4bn." 3) According to the International Labour Organisation. fragile industries have been confronted with punitive interest rates and a surge in competition from cheap imports. and is considerably higher in countries such as Peru and Bolivia. Switzerland.. which now accounts for around two-thirds of employment in Africa. 5) "Rising unemployment and falling wages have been accompanied by a massive expansion of employment in the informal sector. Tanzania and Ghana is in excess of 20%... real wages in Africa have fallen by between 50% and 60% since the early 1980s in most countries. The World Bank ". Germany..".economic growth has yet to translate into a reduction of poverty and inequality.60 -4.

3 1. with devastating environmental consequences.4 increasing rural poverty Bolivia -2.8 0.6 4. 1993). In addition to the general increase in poverty noted earlier.5 increasing poverty Ghana -0. Mexico and the Philippines.5 2. Issues and experience". working long hours for low pay in the informal sector to maintain family income.3 3. Khan (1993) uses the following World Bank table to illustrate his statement: _______________________________________________________________________ The performance of the 19 highly intensively adjusting countries Country Annual per Annual GDP growth Trend in poverty/ capita GDP rate (%) inequality growth rate (%) 1980-90 1965-80 1980-90 _______________________________________________________________________ Argentina -1. which in 1993 accounted for 60% of the total. official adjustment programmes under the auspices of the World Bank and the IMF have performed well.4 6. However.8 4.3 1. Over the same period. that 'flexibility' reflects the deepening impoverishment of women. Their plight has been worsened by a steep decline in informal sector wages. adjustment policies have dramatically changed the "poverty profile in most countries." ( see C.4 -0.1 increasing poverty Cote d'Ivoire -3. who have been forced to take on multiple jobs.0 2.9 increasing rural poverty Mauritania -1. Rojas. not only by the conventional standards of promoting adjustment and preserving growth but also in terms of protecting the poor.2 6. on average. which have fallen by almost 60% in Latin America since 1980s. 8) In Latin America.5 1. Schneider.6 not known Kenya 0." A.7 3. the underside of the miracle". widely cited as a model adjuster by the World Bank and the IMF.4 not known Mexico -1. and R. In 1990. Chile under the regime of General Pinochet is most extreme example. "Chile. concludes that "the claim that.7 4. Flexible labour markets are now the main cause of poverty in Chile. Rahman Khan ("Structural adjustment and income distribution. But the right to collective action in defence of wages has also been seriously curtailed in Ghana. the number of people living in extreme poverty increased from 62m to 93m between 1980 and 1990. income inequalities have widened dramatically.4 1. minimum wages were 20% lower than in 1980. Meanwhile." 9) "In the Philippines.4 -0. Time to scream") 7) Trade union rights "have been severely eroded in a number of adjusting countries.'flexibility'.0 6. falling wages and rising unemployment increased the urban poor population.2 increasing rural poverty Malawi -0. "15 years of monetarism in Latin America. the mass unemployment and impoverishment caused by stabilisation and structural adjustment forced millions of destitute families to migrate to marginal upland forests and coastal areas for a subsistence livelihood.4 5.0 increasing rural poverty Jamaica 0.0 declining rural poverty .1 1.5 5." 6) "In Chile. Zimbabwe. is very hard to substantiate convincingly". the income share of the poorest 20% of the population fell by a fifth between 1980 and 1990.0 increasing rural poverty Morocco 1. ILO.

Jamaica.. Guinea. Yemen AR.6 not known Tunisia 1. Togo. Nigeria. Pakistan.Average undernutrition rate: . Guatemala. Syrian Arab Republic. Yemen PDR. Hungary. Khan compares the performance of adjusting countries and non-adjusting countries during the period 1980-1989. Malaysia.Public expenditure in social sectors: Adjusting countries: Sectoral expenditure as % of total public expenditure in 11 intensely adjusting countries: Year Education Health Total (social sectors) 1980 14..1 not known Uganda 0.2 5.5 32. Haiti. Senegal.7 1986 12.3 rising inequality Philippines -1. Madagascar. Kenya.2 1986 12. Sudan. 4. Mozambique. Rwanda. The adjusting countries were 55: Burkina Faso.8 6.5 3. Uganda. Non-adjusting countries: 16 of the 31 had negative rates of growth.1 5. Gabon.0 2. Ghana.7 Non-adjusting countries: Sectoral expenditure as % of total public expenditure in 12 countries: Year Education Health Total (social sectors) 1980 10. Congo. Liberia.7% and during 1982-87 was 12.5 25. Thailand. Jordan. Zimbabwe. Gambia. Mali.8 4.6 declining rural poverty Turkey 2. Papua New Guinea. Nicaragua. Myanmar (Burma).7 0. Sierra Leone.5 5. Burundi.7 3. Costa Rica. Niger. Nepal.6%. The non-adjusting countries were 31: Benin.3 0. Indonesia.2 6. Somalia. El Salvador. Cote d'Ivoire. Chile. Tanzania. data gathered in 1992. India.6 3.3 3. Malawi.3 1. Philippines. Portugal. Turkey. Zambia. South Korea.3 6. Egypt. Honduras. Ecuador. Bangladesh. 2. Sri Lanka.9 increasing poverty Senegal 0.. Argentina.6 36. Trinidad and Tobago and Venezuela.0 5. Guyana. Mexico.0 0. Paraguay. Algeria.7 28. Peru. Yugoslavia. Panama and Uruguay..0 not known Togo -1. Central African Republic.Growth in per capita GDP between 1980 and 1990: Adjusting countries: 27 of the 55 had negative rates of growth. Oman. Botswana. Bolivia. Zaire.8 increasing poverty ________________________________________________________________________ source: World Bank. Morocco.8 declining poverty Venezuela -1. Chad.0% and during 1982-87 was 11. ________________________________________________________________________ In the same work. China. Non-adjusting countries: In 29 countries the rate of decline during 1977-82 was 13. Poland.Pakistan 3. Colombia. Cameroon.0 increasing poverty Zambia -2.Infant mortality rate: Adjusting countries: In 23 intensely adjusting countries the of decline during 1977-82 was 12.8 2.7 1. Tunisia. Guinea-Bissau. Dominican Republic. Mauritania. Lesotho.2%. Ethiopia.0 4.6 2.6 6. The following were the main findings: 1.1 4.

in the absence of redistributive reforms and effective state intervention in support of the poor. ________________________________________________________________________ About the rural poor. Independent research suggests this reflects the erosion of extension services and infrastructural support caused by expenditure cuts.1% in 1985." 4) "Agricultural production is growing more slowly in Sub-Saharan African countries adhering most closely to World Bank-IMF adjustment policies than in other countries. Oxfam (1994) said that "Oxfam's experience is that." The following examples in Oxfam(1994) documented the above: 1) In Ghana.81% in 1980 and 8. Non-adjusting countries: For 33 countries 86." 5) "In Nicaragua." 3) "In the Sahel region of Africa.. 2) "In Zambia. Non-adjusting countries: For 32 countries 2. have remained a major disincentive to increased investment. the liberalisation of agricultural marketing has had adverse consequences for many of the poorest producers. and they leave the market place with rewards which reflect those relations. These increases in costs were not compensated by increases in process of crops and livestock. Mali and Niger. In Zimbabwe.31% in 1986. that people operate in markets governed by power relations.44% in 1986. credit and marketing infrastructure. the prime beneficiaries have been monopolistic private sector traders. but relatively modest improvements for smallholders. "the withdrawal of parastatal agencies from the agricultural sector resulted in increases in farmgate prices for inputs. . which the World Bank and the IMF continue to ignore. higher prices have not 'trickled down' to the poor.2% in 1980 and 90. Tanzania and Mozambique. tax and pricing reforms under adjustment have brought windfall gains for commercial farmers. who are well placed to exploit the poorest producers and most marginal areas. Oxfam works with smallholders livestock farmers who have seen their livelihoods undermined by restrictions on access to credit following the introduction of an IMF stabilisation programme." The report goes on to note that low prices. research by the International Fund for Agricultural Development (IFAD) suggests that the benefits of pricing reforms have gone mainly to cocoa farmers.Adjusting countries: For 24 intensily adjusting countries 7.54% in 1980 and 4.1% in 1985. along with the collapse of public investment on extension services. Instead. The evidence across the developing world is that narrowly-defined price and marketing reforms are an insufficient mechanism for achieving poverty reduction. 5.Primary school enrollment rate: Adjusting countries: For 25 intensely adjusting countries 94. This confirms the broader lesson. According to a World Bank technical working paper on Senegal. most of whom are excluded from effective participation in markets by inadequate access to land.0% in 1980 and 91. where Oxfam works with smallholders producers. the benefits of increased prices tend to flow towards powerful traders and intermediaries. rather than to the staple food producers who account for the bulk of the country's poor. due to the cessation of credit schemes.

As a result. The state also has a vital role to play in supporting investment in smallhoder agriculture. because of the collapse of state-supported infrastructure and transport provision.As a result of tough new conditions and high interest rates. These imports have undermined the livelihoods of peasant producers and driven down rural wages and the household incomes of the poor. adherence to IMF stabilisation guidelines resulted in a reduction of price support and credit provision for smallholder maize farmers. mainly farming ecologically fragile hillsides." As Oxfam (1994) concludes "what these cases illustrate is that the state has a vital role to play in developing agricultural production and food security. It has also resulted in additional demands on female labour to support cash-crop production. Oxfam project partners have been unable to market their cotton crop. why what is good for rich countries' farmers is 'inefficient' for poor countries' farmers. adding to the labour burden of women. The answer is straight forward: the IMF and the World Bank impose structural adjustment programmes in poor countries to protect the interests of rich countries' . The question is. In Costa Rica. As a recent World Bank report acknowledges. rather than for staple food crops controlled by women. producers have lost household income and the country has lost desperately-needed foreign exchange. import liberalisation has encouraged a sharp increase in imports of rice. and protecting local food systems from cheap imports. Because of their urgent need for post-harvest cash and inability to market their crops following the withdrawal of state purchasing agencies. agricultural credit to small-scale farmers was cut by half during the second half of the 1980s. providing credit and extension services to smallholder producers. and the United States government with their farmers. This includes acting as a buyer of last resort to maintain prices. will be displaced by US maize exports. smallholder maize sector in Mexico remains uncertain in the face of moves towards trade liberalisation under NAFTA." 10) "Adjustment policies typically increase prices for commercial crops. In the Andean countries of Latin America. corn and other food staples." 9) "In Mexico." 6) "In Zambia. Oxfam works with poor women farmers. while the country's SAP reoriented resources towards the commercial export sector. This compounded rural poverty resulted in increased male migration to urban centres. This has had important implications for the distribution of power and income within the household." 7) "In Tanzania. these women have been forced to sell to private traders at extremely low prices." 8) "In the Philippines. where marketing is controlled by men. The future of the rainfed. with heavily subsidised US grain exports destroying local livelihoods. Oxfam has witnessed a similar process. the amount of credit taken up by smallholders fell by two-thirds in the year following the introduction of the 1991 stabilisation programme. smallholders across the country have been seriously affected by an IMF-imposed credit squeeze. Some estimates suggest that as many as 6 million producers." The above is exactly what Western European governments have been doing in wealthy Europe since the late 1950s until today with the Common Agriculture Policy.

per capita spending on health and education has fallen by one third since the introduction of an adjustment programme in 1990". in 1987. Meanwhile. IMF and World Bank-imposed cut backs on social expenditure as a an 'efficient' measure to implement structural adjustment programmes have been burdening the poor sectors of less developed societies. infant mortality rates are increasing. However. 255261. inequalities existing at the national level in Third World countries mean that when GDP declines. on the world trade and financial systems."It is clear that the crux of the development crisis rests on the unequal distribution of resources and economic power at both the international and national levels. The fall in terms of trade alone is causing the Third World to lose US$100 billion a year which are transferred to the rich countries in the form of cheaper imports and profits from exports". in WORLD DEVELOPMENT REPORT. the poor suffer most in terms of retrenchment and unemployment. on an unequal basis. models of development which have brought countries into greater dependence. the Department of Rural Development cut its social expenditure budget in the first year of the country's stabilisation programme. and increased consumer prices due to devaluation and elimination of subsidies. following a dramatic decline during the 1990s". real per capita spending on health was lower in 1992 than in 1982. Ten years ago. This basic inequality is reinforced by outward-looking development models (dependence on primary commodity exports. pp. sharply lower incomes due to the collapse of primary commodity prices. over-dependence upon non-essential imports) that increasingly suck resources from the Third World. after declining steadily for more than a decade... Supplement. the United Nations/NGO Workshop on "Debt." (from "Final Statement of the UN/NGO Workshop on "Debt. In the post-colonial period. concluded: "The economic crisis has exposed the unsustainability of the development models adopted by the elites of the Third World and supported by policymakers of the North and the international community.. This was followed in 1992-1993 by a 46% cut in the rural sanitation budget and a 39% cut in rural water-supply spending -areas of social expenditure of vital importance to poverty reduction. that took place in Oxford. Oxfam (1994) found that "in the Philippines. government cutbacks on subsidies. per capita social spending is back to the level of the mid-1970s. the expansion of cost-recovery has undermined the access of the poor to health provision".4% in the early 1980s to 2% for the period 1990-1993." "In Zimbabwe. many Third World countries have continued to be dependent on the export of primary commodities as the main engine of economic growth.. 1987).capitalist ruling class. Moreover. the share of health spending in the total budget fell from 3. foreign investment and foreign loans. health and education."Meanwhile. 15. "In India. Adjustment and the Needs of the Poor". .. Vol. reduced access to welfare. the prices of primary commodities have plunged 'vis-a-vis' prices of manufactured goods due to reduced demand from the North and oversupply in the South (partly caused by the World Bank's encouragement to Third World countries to expand primary commodity exports and over-optimistic price projections)." "In Nicaragua. At the same time. IMF and World Bank claims that they are 'helping poor countries' to modernise and develop are utterly dishonest.. Adjustment and the Needs of the Poor". Thus.

with maternal mortality rates have increased sharply. -Ruthless growth -the rich get richer.. -Rootless growth -cultural identity is submerged or deliberately outlawed by central government. degrading fertile soil. The five types were: -Jobless growth -the overall economy grows. but democracy/empowerment of the majority of the population fails to keep pace. diphteria and tuberculosis -diseases which have re-emerged as major killers across the country. water pollution. identified five types of bad economic growth that were most common in the world after the triumph of "globalization". wrote a "Summary of the Environmental Impacts of External/Internal Adjustments. with maternal mortality rates among women from Harare attending the city's main hospital doubling between 1991 and 1992. the collapse of water and sanitation services." "Evidence from many developing countries have shown that economic pressures and the introduction of user-fees in education result in disproportionately higher drop-out rates among young girls. ". -Futureless growth -the present generation squanders resources needed by future generations. as in some of the states of former Yugoslavia or the Kurdish areas of Iraq and Turkey. the Environment." United Nation's "Human Development Report 1996". In the health sector. Reed (ed. both in the countryside and the urban areas through survival activities. About the last type of growth. has forced women to compensate by increasing their unpaid work-burden. Increased poverty.in. and the erosion of primary health acre provision has brought with it an increase in incidence of poverty-related diseases -such as measles... cholera and malaria.Both devaluation and trade liberalization".. and Sustainable Development". D." "Oxfam's experience across Africa.). "Structural Adjustment.1% of the total budget.."the countries . and the poor get nothing. where the World Bank pledged to protect social expenditure. -Voiceless growth -the economy grows. -activities of poor people."Infant and maternal mortality rates have increased sharply. yet it initially supported their introduction. 1996.. Asia and Latin America is that the curtailment of social services.4% in 1985. whooping cough. which is equivalent to structural adjustment programmes in less developed societies. but fails to expand job opportunities. These fees have had a detrimental impact on the provision of immunisation for measles. compared with 13. creating atmospheric pollution. the 1992 education budget accounted for 9. and making million of smallholders landless." "In Zambia. agribusiness and mining sectors. the World Bank itself has acknowledged that the introduction of user-fees is perceived by village women as a serious threat to their health status. two major forces contribute to increase environmental damage when structural adjustment programmes are implemented: -activities of transnational corporations in the manufacturing. Earthscan.and in the amount of time spent by women caring for the family.

accelerated the most intractable environmental problem facing many .."Loss of credit for agricultural inputs. coupled with expanded transport systems relying on poorly maintained used equipment." "The extractive sectors. intensifying production. the small farmers' priority is to ensure their families' food security. such as hybrid seeds and fertilizer.. raised farm incomes for some producers. They are also able to absorb the rising costs of agricultural inputs without major difficulty." ". the impacts fall decisively on the poor.. Over time." "Small farmers and rural workers with little or no land cannot absorb the increased costs of agricultural inputs. have responded quickly to the new economic incentives. and although some are already visible. Given their precarious situation. the studies suggest that the long-term impacts may be more serious. often by extensifying food production. the reduction of agricultural extension services to encourage intensification of production. They often result from disregard for the effects of price changes on the environment and from the lack of complementary policy reforms prior to or during the economic restructuring process." "One of the key points raised in the foregoing conclusions is that the environmental impacts of the external adjustments are determined largely by the farmers' status in the adjusting countries. including forestry and mining.. Commercial producers are able to respond to new price incentives from international markets by diversifying crops.As regards reductions in agricultural extension activities and social services. Expansion in these sectors created environmental problems. the growth impacts are clearly positive. with all the attendant environmental problems. such as seed and fertilizer. The full impact of the emerging economic changes on small farmers and rural populations will become more evident when the impacts of internal adjustment.included in this study". will lower the quality of urban environments through rising air pollution levels.. nor have they been able to respond as effectively to the new price incentives offered by trade liberalization. In short.. in the process. the changing ratio of inputs to producer prices has either remained favourable to commercial farmers or their expanded production has overridden the negative effects of relative price changes. are taken into account. and thereby encouraged on-farm investments. for example. There are indications that the small farmers' situation has opened opportunities for commercial farmers to expand their commercial land holdings. thereby increasing their benefits from the emerging economic system."have had important and immediate effects on their extractive and agricultural economies. Local employment may increase as new hotels and facilities are built. but environmental problems are already in evidence and are expected to intensify. Expanded industrial production. new agricultural incentives have stimulated expansion and diversification of tradeable crops and shifts to nontraditional commodities. This point also applies to the tourist sector. as easily. In some cases. and the disruption of marketing systems caused by privatization are among the most direct effects of internal economic adjustments on rural populations. and continuing to introduce new technological improvements. These changes generated downward pressure on the living standards of the poor and. The environmental impacts of those shifts are positive in that they have improved relative returns to the agricultural sector. and most directly on the rural poor and women". These environmental costs are not immutable features of the adjustment programs implemented in the nine countries. including fiscal policy reform. these improvements may also encourage the introduction of new technologies and reduce povertyinduced environmental damage.

the 'informalization of the economy'. Cutbacks in social services have weakened the survival systems of the most vulnerable. weakened control over natural resource management. Jamaica. the direction of migration varies: in some African countries. Those who remain survive through agricultural extensification.countries -that is. intensified use of marginal lands. they move to urban areas. The poor respond to their falling standards of living by migrating and by increasing their reliance on natural resources." ". the poor tend to move back to the land. and Venezuela. and they may have long-term consequences. particularly among the rural poor.Poverty has deepened in seven of the nine countries." "Depending on conditions in each country. In these countries. an increasing population pressures have converged to lower living standards. Jamaicans often emigrate from the island to the United States and Canada." "The decline in living standards has been accompanied by a weakening of institutions of both the government and civil society involved in managing and protecting the environment. and it continues to be pervasive in El Salvador. and a wide range of informal productive activities ranging from brewing home beer to catching animal species for export. diminishing access to agricultural inputs and technical advice. in El Salvador. the social and institutional impacts of adjustment measures transmitted to the environment are profound. poverty-induced environmental degradation. and increased extraction of natural capital.. The institutional decline resulted in the loss of resource rents.. declining agricultural productivity in many areas. deforestation. In short. .

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