Failure of IMF Structural Adjustment Policies in Africa: Nigeria and Zambia Cases
Dynamics of globalization and strengthening of economic and political ties between different countries lead to growing interdependence between national economies and markets. Undoubtedly, these processes cannot have only positive outcomes: global market tend to draw clear distinction lines between “leaders” and “outsiders”. Such division is obvious for the realistic paradigm of international relations that suggests a state of permanent “war of all against all”; however, it is not as obvious as Hobbes may have seen it since all the countries try to implement their national interests using means other than war. Still, war in any forms means that there are winners and losers. Consequently, powerful countries strive to retain their position by preserving economic inequality of countries so that there would always benefit from the market situation. Marxists (and new-Marxists) tend to absolutize such vision, arguing that developed capitalist countries oppress weaker economies so that to support their inferior position. Undoubtedly, they may have captured the view right, but that’s only the part of the picture since, for example, liberal paradigm and consequent liberal policies are designed to help the developing countries, uniting efforts of the global political and economic community via various international institutions, such as International Monetary Fund or World Bank.
These organization serve as certain accumulators of capital – financial, political, economic – so that to use them for the proper organization of the global economic development and avoidance of severe problems. Surely, IMF or World Bank do not have political capacities to dictate the policies to the global community or define the path of national economies, but still they are capable of acting in local cases – with certain countries dealing with concrete issues. Due to the capacities, get through the investments by the members of global community, these organizations have modeled policy recipes for solving different kinds of problems concerning economic development of a country. One of the most famous of them is known as “Washington consensus” suggesting that there are ten specific economic policy practices, that should be implemented in developing countries, suffering from severe crisis. These prescriptions were used by both International Monetary Fund and World Bank. These “ten commandments” of international economic institutions included discipline of fiscal policy (so that there were no large deficits), direction of public spending towards development of services (like health care, education, etc.), market determination of interest rates and exchange rates, trade liberalization (especially of imports), stimulation of foreign direct investments, sale of state enterprises, cancellation of regulations that block market development, introduce strong legal guaranties for property rights (Williamson, 1989). These principles also lie within the structural adjustment policies implemented by the International Monetary Fund to introduce “free market” and corresponding political agenda.
Nevertheless, structural adjustment policies are not panacea, meaning that they cannot solve all the problems in the country’s economy, as well as they can even fail to achieve anything. Primarily, the very nature of this approach is ambiguous since it forces a targeted country …
Posted by: Audrie Durrell