University of Ottawa
Reading Report: Structural Adjustment Programs
Juan Camilo Sarmiento Jaramillo Masters in Globalization and International Development Understanding Globalization - MDG5121 B Student # 5840496
[email protected]
This report seeks to understand the historical and social theories that led to the conception and implementation of Structural adjustment programs (SAPs). To begin is important to provide a social theory context. The structural adjustment programs were designed under scope of the modernization theory. This theory is based on premise that development can be achieved through further development processes that were used by today's developed countries.1 This belief that development requires developed countries to help developing countries, by teaching them how to achieve progress. Within the modernization theory, some authors claim that this occurred during the second wave of modernization. This second wave takes place in the 1970's and 1980's. In this period, its developed what some call the cultural and economic imperialism and Western domination.2 Both the program for structural adjustment and the International Monetary Fund were created simultaneously. This happened during the Bretton Woods Conference in 1944. There both, the IMF and the World Bank, were created to deal with the imbalances -deficits or surpluses- of the national balance of payments, and in particular, the regime and limits of deficit funding. The Agreement gave rise to the IMF, which aligned with the White Plan. This plan considered that funding should be narrow and short-term and be subject to structural adjustment. As a result, the Bretton Woods conference established a system without sufficient breadth and flexibility to support the balance of payments and above all provide the necessary financial resources to sustain the development process of developing countries, many of which, then subjected to colonial rule, were not present at the conference.3 The IMF member countries with a balance of payments in deficit could have access to resources only through an agreement that promised to take adjustment measures aimed at easing the imbalance in a sustainable manner, which would be a matter of monitoring by IMF. The adjustment thus became one of the central aspects of the system, and in practice became the sole responsibility of the countries with a deficit and not those who had a surplus. During the seventies, however, many developing countries chose to approach the international capital market before the IMF, getting plenty of cheap credit. 1 Encyclopaedia Britannica, 2010 2 Schiller, 1976 3 Universidad Complutense de Madrid, 2009
In sum, in the late seventies, the IMF's role in financing the balance of payments deficit became increasingly irrelevant. The primacy of the market and the absence of a responsible international framework and under public control for the regulation of capital movements were some of the factors determining the birth of the "debt crisis" of 1982. In fact, "debt crisis" in the 80's, affected many developing countries, which were focused exclusively of restoring macroeconomic balances, in particular, the balance of payments, through short-term measures for fiscal discipline and monetary devaluation. The adjustment is limited to a stabilization program with the only principle to reduce, as soon as possible, the external deficit. However, it was soon recognized that stabilization is not an end in itself: it is not enough to reduce demand, it must also increase supply by improving resource allocation. Incentives by international organizations the stabilization measures have been complemented with structural adjustment measures such as: tariff reductions, deregulation of financial markets or the elimination of "distorting" agricultural prices.4 This distinction between stabilization and structural adjustment is politically decisive. Actually, the stabilization program is an important and necessary set of policies that involves numerous unpopular measures, mainly because they reduce drastically incomes and consumer spending by reducing the salaries of public servants, subsidies and employment in construction. However, structural adjustment measures can be phased over many years and every measure taken, while it produces winners and losers, so the government can build a coalition of beneficiaries to defend its policies. In this context, some of the problems of structural adjustment policies are due to its application in which national elites were mostly those who benefited. This increased the problem of inequitable distribution of the wealth produced. This coupled with the ambiguity of the policies and the limited control that the IMF developed large socioeconomic problems.5 Among these, there was the liberalization of local markets. This policy of openness allowed the entry of foreign products to local markets with few restrictions, creating in its wake problems of unemployment due to closure of local companies unable to compete with multinationals that had established in these countries. 4 Morrison, 1996 5 Cypher & Dietz, 2009
Local businesses were in no position to compete with multinationals. There was no adjustment period or preparation, neither any coordination with their governments. Further, it must be added the national interests of developed countries, which through adjustment programs, obliged emerging economies to open their markets in specific sectors for their own benefit and not benefit the recipient country. The case of Honduras, President Reina who announced in January 1994, a policy change for the poor, following the dramatic consequences of structural adjustment pursued by his predecessor. However, on the occasion of the visit of a mission of international financial organizations, in May that year, he was forced to adopt similar measures had initially fought. In fact, according to forecasts, the debt service absorbed in 1994, 35% of export earnings. The balance of payments deficit is 500 million dollars and unchecked inflation. Even so, the new austerity measures, including conditions that affect the poorest, were the condition for receiving a loan from the Inter-American Development Bank, the IMF and World Bank.6 Nonetheless, there have been countries that have had great success in implementing these measures, such as Chile and Costa Rica. These two countries have in common the fact that in the decades prior to structural adjustment had made greater investments in health and education of its population and its production plant. This explains how, some countries like Chile and Costa Rica were able to adapt to the new model more easily. Meanwhile Central America, the Caribbean and the Andean region, which also have implemented these programs, the growth has been lower. In conclusion, structural adjustment programs had been varying success results due to national circumstances, which were not taken into account at the time of its design and implementation. In addition, local elites redirected resources and accumulated wealth produced by the countries without an equitable distribution in their societies. This is clearly seen in those countries so models of economic reforms such as Chile and Costa Rica, where there was a greater redistribution and a positive social impact of reforms, actually resulted in the reduction in poverty. Nevertheless, the success or failure did not rely only in the SPA or the government, but it depended on the strategic implementation of policies of economic and social adjustment by the local society. 6 Centre Tricontinental, 1994
Bibliografía - Resumen de los libros – Análisis de los argumentos 1. Encyclopaedia
Britannica
Ultimate
Reference
Suite
(2010).
Economic
development. Chicago: Encyclopædia Britannica Este articulo analiza los diferentes y teorías de los sistemas socio-económicos de desarrollo. Dado que este reporte se centra en la teoría de la modernización, el artículo habla de autores como Walt Rostow y Organski. El artículo describe la teoría de la modernización establece que el desarrollo se puede lograr a través de seguir los procesos de desarrollo que fueron utilizadas por los países actualmente desarrollados. Así como que la Teoría de la modernización, en contraste con el liberalismo clásico, visto el Estado como
un
actor
central
en
la
modernización
de
"atrasados"
o
sociedades
"subdesarrolladas". Un factor clave en la teoría de la modernización es la creencia de que el desarrollo exige que los países desarrollados para ayudar a los países en desarrollo a aprender de sus propios progresos. 2. Morrisson, C. (1996). La Faisabilité politique de l'ajustement. Paris: Centre de développement de l'OCDE. Este reporte de la Organización para la Cooperación y el Desarrollo Económico (OCDE), elaboró un reporte en 1996 sobre los programas de ajuste estructural y las políticas de ajuste lo acompañaron. De manera concisa el reporte describe las políticas de estabilización económica y como el ajuste puede provocar disturbios sociales, incluso poner en peligro la estabilidad de un país. En este reporte se analiza las consecuencias políticas de tales programas. Al parecer, cinco estudios de caso detallados y dos grandes muestras de países de América Latina y África, los costos políticos en materia de huelgas, manifestaciones o disturbios son muy diferentes de una medida de estabilización a la otro. El calendario de las medidas, el sistema constitucional, las intervenciones dirigidas donantes también afectan a estos costos. Esta investigación ha permitido definir y precisar las características de un programa de estabilización que la política óptima para el resultado económico misma, minimizando los costos políticos.
3. Universidad Complutense de Madrid (Spain). (2009). Diccionario Crítico de Ciencias Sociales. Terminología Científico-Social. Madrid: Editorial Plaza y Valdés. Este artículo presenta el conjunto de los programas de ajuste estructural. Desde sus inicios, pasando por las reformas hechas en años posteriores y finalizando en el impacto en los países por parte del programa. En torno a 1980 la crisis de la deuda externa dio paso a la denominada "década perdida para el desarrollo". Caída de la producción y de la renta, desequilibrios macroeconómicos, asfixiante endeudamiento externo, inestabilidad política y social y empobrecimiento de las clases medias y los sectores populares han sido la realidad dominante durante la década. La vulnerabilidad producida por el endeudamiento obligó a muchos países a olvidar las estrategias nacionalistas de desarrollo y las reivindicaciones de un "Nuevo Orden Económico Internacional", y ponerse en manos del FMI y el Banco Mundial a fin de reprogramar la deuda y recuperar el crédito externo. 4. Centre Tricontinental. (1994). Alternatives Sud (Vol. 1). Louvain-la-Neuve, Belgique: Centre Tricontinental. El tema de este libro es enfocado en las repercusiones y el funcionamiento de los Programas de Ajuste Estructural. El libro presenta una serie de casos en diversos países y regiones alrededor del mundo, tales como África, en particular Zambia, Cuba y Vietnam. El libro presenta como cada uno de Programas de Ajuste Estructural (PAE) son una cirugía, probablemente dolorosa, pero esencial para la recuperación económica. Para otros, muestra los efectos inmediatos en la sociedad, la exclusión y la desaparición física prematura de millones de personas en el Sur, en última instancia, condenó as medidas tales como el fin no justifica los medios. Bajo este principio, el libro presenta las diferentes realideades, y como el PAE son mecanismos no solo económicos sino también social, político y cultural.
5. Cypher, J. M., & Dietz, J. L. (2009). The Process of Economic Development. New York: Routledge. El tratamiento dado por Cypher y Dietz incluye una breve introducción que comprende una descripción y un análisis de las motivaciones de los donantes. Esto incluye una discusión más amplia del FMI y el Banco Mundial. Algunos autores pueden solicitar que la ayuda international está muerta, después de haber sido suplantado por flujos extranjeros, pero para un número muy grande de los países más pobres del mundo, la ayuda extranjera sigue siendo la principal fuente de capital internacional y los fondos de inversión, el descuido del tema en las obras de el desarrollo económico es, pues, sorprendente. El capítulo sobre el Banco Mundial y el FMI en Cypher y Dietz tiene una discusión bastante amplia de las políticas de ajuste, incluidos los informes sobre los resultados de los estudios de los impactos de estas políticas (tal vez con un énfasis en la antítesis de puntos de vista del Banco, aunque esto es no así para la discusión del Fondo Monetario Internacional). Por otra parte, hay una extensa discusión del renacimiento neo-liberal y la sustitución importante debate entre la promoción de exportaciones. Cypher y Dietz tienen una amplia serie de ejemplos de una amplia gama de países en desarrollo de todo el mundo, incluyendo datos actualizados al día y los resultados de investigaciones recientes
