World Bank Structural Adjustment Programs Research Articles

Role and Impact of World Bank Structural Adjustment Programs in Developing Countries

Role and Impact of World Bank Structural Adjustment Programs in Developing Countries

‘No Business of the Rest of the World’: Milton Friedman and IMF Conditionality

This paper explores Milton Friedman’s views on conditional lending by the International Monetary Fund (IMF). Conditional lending by international financial institutions, which began with a few IMF stand-by arrangements in the 1950s and grew to include extensive World Bank structural adjustment programs, is considered a quintessential neoliberal policy tool. This paper shows that despite his reputation as a neoliberal, Friedman was a vocal opponent of conditional lending by the IMF. He saw conditionality as unacceptably undemocratic, even though in several cases he approved of the policy prescriptions embedded in IMF conditional lending agreements. Friedman opposed conditional lending both in public fora and privately with other neoliberals at Mont Pelerin Society meetings. This paper focuses on Friedman’s views on conditionality in the 1960s and 1970s, during the IMF’s initial turn away from unconditional lending. It also shows how Friedman’s rhetoric changed after the collapse of the Bretton Woods system of fixed exchange rates. By the 1980s Friedman moved past criticizing the undemocratic nature of IMF conditionality and instead argued that without a system of fixed exchange rates to manage the IMF should be abolished.

Foreign aid, workers’ remittances and economic growth in Jordan

PurposeThe purpose of this paper is to investigate the long-run impact of foreign aid and workers’ remittances on Jordanian economic growth using time series data for the period 1970–2014. Following the most recent literature, the author also assess whether economic policy enhances economic growth and whether aid effectiveness is conditional on levels of economic policy.Design/methodology/approachThe author employs unit root tests that allow for endogenously determined structural breaks (Perron, 1997) and properly utilize the autoregressive distributed lag (ARDL) or bounds testing approach to cointegration by applying both the F- and the t-test statistics (Pesaran et al., 2001). The analysis is applied to 12 different models that incorporates the various types and sources of foreign aid.FindingsEmpirical results suggest that aid and its various components, and workers’ remittances have had a positive and significant long-run impact on economic growth. Empirical results also show: no evidence supporting the hypothesis that aid is only or more effective in spurring economic growth during periods of “good” macroeconomic policy, i.e., when Jordan has undertaken World Bank Structural Adjustment Programs (SAPs); no robust evidence supporting the World Bank’s claim that SAPs are growth enhancing. Moreover, the author found strong empirical evidence suggesting that exports and human capital are also major determinants of long-run growth in Jordan.Research limitations/implicationsAlthough Jordan and the region at large have experienced periods of major political instability that may have had a varying impact on the economy, lack of a reliable and lengthy time series measure that accounts for political instability is not available to include in the study.Practical implicationsUsing cointegration analysis, our empirical evidence reveals that foreign aid, labor remittances, exports and human capital have had a robust positive long-run impact on economic growth. Hence, the Jordanian government should promote policies that encourage donor countries and agencies to further extend aid to Jordan. Moreover, policies that promote exports and facilitate labor mobility to neighboring countries should also be encouraged and promoted.Originality/valueDespite receiving a significant amount of foreign aid and labor remittances in the last 50 years, the author found no time series study that tested the long-run impact of these external financing sources on growth in Jordan. This study fills that gap and extends the analysis to test whether macroeconomic policy is growth enhancing and whether aid (and several of its components) are only effective or more effective in promoting growth during periods of “good” macroeconomic policy, i.e., when Jordan has undertaken a World Bank SAP.

O Banco Mundial e a construção política dos programas de ajustamento estrutural nos anos 1980

O artigo discute a gestação e operacionalização dos programas de ajustamento estrutural do Banco Mundial ao longo da década de 1980, situando o tema nos marcos das mudanças mais amplas em curso na economia política internacional. O trabalho problematiza a relação entre o Banco Mundial e o seu Estado-membro mais poderoso, os Estados Unidos, mostrando as tensões entre o Executivo e o Congresso em torno da definição da política norte-americana para a instituição. Evidencia-se um conjunto de pressões sobre o Banco que concorreram para delimitar o seu campo de atuação. Mostra-se como a pauta dos programas de ajustamento estrutural cresceu junto com a gestão da crise da dívida externa e a quais interesses a atuação do Banco Mundial serviu.

Uganda: a renewal campaign

ICTURINACTION□ UGANDA PROJECT Uganda: a renewal campaign PeterBarnacle,a visitinglecturer at Makarere University in Uganda, has used his timeinthe country to help ICTURand three Canadian unions supportan innovativetrade unionproject PETER BARNACLE isa Canadian lawyer and is Coordinator of ICTUR's Uganda project The is comprised the National principal of Union 169,000 labour ofTrade federation members Unions in in (NOTU) Uganda twenty is theprincipal labourfederation inUganda comprisedof 169,000membersin twenty tradeunionaffiliates. NOTUis thelabourcentral recognised bytheinternational labourcommunity and a member of the ICTU and the Organisationof AfricanTrade Union Unity (OATUU). NOTU affiliates are membersof ten GlobalUnionFederations. NOTU and its affiliates have gone through someverydifficult times, notsimply because of thecivilinstability thatcharacterised thecountry from independence in 1962through to 1986,the datethecurrent government tookpower, butalso as a resultof the implementation of IMF and World BankStructural Adjustment Programmes in the1990s.Privatisation ofstateenterprises was a particular sourceofjob lossas newprivate owners shed theirworkforce or asset-stripped the enterprise and disappeared- sometimeseven withoutpayingthe Government the purchase price.Budgetpressures also led to loss ofgovernment jobs. As a result, manyworkers were forced intotheinformal economyand stilltoday nearly 60 percent ofallworkers areintheinformaleconomy . Thelossofmembership hampered tradeunionactivity. However,in recentyearsprogresson labour issueshas indeedbeenmade.UndertheUganda Constitution, labour is considereda disadvantaged groupentitled to dedicatedseats in the National Parliament. FivelabourMP'sareelected and fourof theseare affiliated withNOTU. In 2006, Parliament completedratification of the eight ILO conventions underlying theDeclaration of Fundamental Principles and Rightsat Work (1998). Subsequently, new laws were passed to incorporate theseinternational commitments into domestic law. In 2007and 2008,I metwithNOTUofficials in Kampalato discussa potential partnership with ICTURto help NOTU develop capacityto supportitsaffiliates in a renewedrecruitment and organisation campaign. NOTUhasreceived international support fora number ofyearsfrom the Norwegian tradeunionfederation, LO-Norway, as wellas ITUC,ILO and otheragenciessuchas DANIDA.However,the conceptwe developed was nottoduplicate existing work, buttoengage ina project tohelpNOTUleaditsaffiliates inthis renewal campaign for trade union rightsin Uganda. We subsequently agreedto engage in a twophase projectfor which the contribution of ICTURwould be to provideinternational sponsorshipand exposureas well as administer project fundsotherwise raisedin the international labourcommunity. The first phase consistedof six initiatives to providethesupportforNOTU and affiliates forthesecondor campaignphase oftheProject. I ampleasedtoreport that through theassistance ofCanadiantradeunions,we are now intheprocessofwrapping up theactivities inthisinitial phase: ■ The Project financed theinstallation ofwirelessinternet attheNOTUoffices inKampala, as wellas committing topayment ofthequarterly service charges forthenextthree years. With thefinancial support provided from CanadabytheNational UnionofPublicand GeneralEmployees' (NUPGE),theold dial-up is goneandthenew internet service was put inplace inApril2009.Thishas significantly improved NOTU'scommunication and research capabilities. Wesubsequently wereable tosecurefunding formostoftheremaining first phaseinitiativesthrough thecontributions oftwo Canadiantradeunionfunds: theGlobal Justice fundoftheCanadianUnionofPublic Employees (CUPE) and theSocialJustice FundoftheCanadianAutoWorkers (CAW). I As a result, theProject financed thepreparationoffour research paperson significant labourissuesthat werepresented directly to His Excellency, President Museveni, bythe NOTUSecretariat ina meeting inOctober 2009.Thesecarefully researched paperscoveredtopicssuchas theneedforan employmentpolicytobreakthecycleofpoverty , a statutory minimum wage and socialsecurity improvements. The President has now requested a further meeting todiscussthe papers,butinthemeantime we understand thatan employment policyis nowbeingconsideredatcabinetlevelandthegovernment is actively considering theimplementation ofa minimum wage. II In November 2009,theProject funded a fourdayconference atwhichtheNOTUaffiliates participated ina strategic planning exercise. A consultant wasretained tofacilitate and assist inthedevelopment oftheresulting strategic plans,a processthatcontinues tothepresent. Wepresently havesixaffiliates inthethird andfinal completion stage,withsevenothers atseconddraft. In theupcoming second phaseoftheProject, we plantoassistindividual affiliates to canvasstheinternational labourcommunity through ICTUR'scommunicationsnetwork inorderto helpthemfind partnerships withother organisations that will assistintheimplementation ofthosestrategic plans. INTERNATIONAL union rights Page 20Volume 17Issue 1201 0 ICTURINACTIONH UGANDA PROJECT ■ Theremaining initiatives inthefirst phaseof theProject arealso nowbeingcompleted: funding forin-house research tosupport government lobbying and affiliate collective bargaining ; thedevelopment ofa NOTUwebsite; andinstallation ofa back-upsourceofpower atNOTU'soffices that willhelpNOTUcontinue tofunction inthemidst oftherather frequentpowerinterruptions thatoccurin Kampala. Recently, I metwiththeNOTU Secretariat and Central Governing Councilto takestockof our project to dateand discussthenextphase.As a result, one ofournextefforts willnow be makingthecallfor partnerships forthoseNOTUaffiliateswhowillhavecompleted thestrategic planning process.We are hopefulthatindividual tradeunionswillbe preparedto workwiththe NOTUtrade unionaffiliates who aredemonstrating theircommitment to improvethe lives of workers andtheir families inUganda. NOTU and its affiliates are now conducting aggressive organising campaigns andearly results are positive.For example,theHorticulture and Allied WorkersUnion has now negotiateda recognitionagreementwith the majorityof employers in theflower industry and is now in theprocessofnegotiating a collective bargaining agreementwith the employers' association. Progress has also recently been madeinorganisingin thehotelindustry and mediasector. The government seems to be interested in hearing whatNOTUhastosayon labourandsocialmattersand NOTUhas been invited toparticipate in a tripartite processwithgovernment andemployergroupson specific issues.Lobbying efforts...

Macroeconomic Policies for Structural Adjustment Programs

Abstract: This paper aims to explore the macroeconomic policies of IMF and World Bank structural adjustment programs. This paper also provides at first a simple analysis of the main reasons of LDC economic disequilibrium. Then it reviews the main components of the structural adjustment program which include several macroeconomic policies promoted to market-oriented reform in policies and institutions, with the goals of restoring a sustainable balance of payments, reducing Inflation, restore the viability of the current account and the budget and stimulate growth.

Situating Space in "Local" and "Global" Struggles

CAPITAL ACCUMULATION DEPENDS ON SPACE TO FIND NEW MARKETS, NEW CORPORATE locations, and new exploitable laborers. But is not neutral within consumer capitalism. Different spaces confer different privileges upon transnational corporations; different national governments provide different incentives for transnational investors, and different regions value the labor of their workforces differentially. Capital accumulation, thus, depends upon space to produce differentiated laborers and particular struggles within a globalized economy. Our current historical moment-of IMF and World Bank structural adjustment programs, economic free trade zones, deindustrialization, economic restructuring, and transnational corporations-demands that we begin to consider and reconsider the salient role of space in capital accumulation. The exploration of space, as an analytical category, has

Options for Regional Integration in Southern Africa

Windhoek Treaty of 1992 changed the basis of economic co-operation to allow for 'efficiency, economy and competitiveness'. This shift led to the 1996 SADC Protocol on Trade Co-operation for the creation of a Free Trade Area (FTA). At the time of writing (autumn 2000), the implementation of the SADC FTA is almost complete. Successful regional associations usually require a strong political rationale for economic benefits to be realised.*(3) It remains to be seen whether or not the original unifying forces in Southern Africa are strong enough in the post apartheid era to enable SADC to build the institutions necessary for rule based economic integration and thus realise the potential economic benefits. In terms of economic conditions, the SADC countries are an extremely heterogeneous group. This can be seen from Table 1, which includes those SADC member countries included in this study. At the time of the Windhoek Treaty, the gross domestic product (GDP) per capita ranges roughly 20:1 from richest to poorest. In terms of economic size, the range is nearly 100:1. GDP growth performance over the last 20 years varied considerably, but some SADC countries had a surprisingly good record of economic management in terms of the average rate of inflation, poverty reduction and human development. An important characteristic of the SADC region is the historically high level of barriers to trade. Whilst there was a considerable lowering of protection in the SADC region in the 1990s, there are still significant barriers to trade. This is shown in columns 2 and 3 of Table 1. The fall in tariffs reflect the fact that several SADC countries underwent World Trade Organisation (WTO) tariff reform or World Bank Structural Adjustment Programmes (SAPs) during the

Stabilisation and Structural Adjustment in Developing Countries

This paper analyses and compares World Bank structural adjustment programmes and International Monetary Fund (IMF) stabilisation programmes in Malawi during the 1980s and Jordan during the 1990s. Both are small aid-dependant economies with a narrow export base making them vulnerable to exogenous shocks. The article pays particular attention to the political economy environment in which reform programmes are implemented and to the role of exogenous shocks, both adverse and favourable, in determining the outcome of the programmes. The sequencing of reforms is also assessed in both countries.

Sierra Leone: The political economy of civil war, 1991-98

This article looks at the causal factors for the May 1997 military intervention in Sierra Leone which unleashed complex political emergencies engulfing the entire country. The paper argues that the causal factors are historical, reflecting the political economy of underdevelopment in that country. Attention is drawn to the role played by personalised rule of the APC leadership, and structural factors such as deteriorating terms of trade and the irrationality of the post-colonial development strategy. Particular attention is drawn to the role played by IMF and World Bank Structural adjustment programmes in creating a corp of socially excluded intellectuals who could not find jobs either within the state or private sectors.

Effects of the IMF and World Bank on public expenditure accountability in Jamaica

This article analyses the positive and negative effects of IMF stabilization programmes and World Bank structural adjustment programmes on the accountability of public expenditure management in Jamaica in the period 1980–1992. Particular attention is given to the negative accountability effects of IMF budget deficit reduction targets imposed on a Government uncommitted to meeting such targets. Many of the arguments presented in this article relate to expenditure accountability problems more generally and it cannot be proved that IMF conditionality was the sole cause of these problems. It is argued, however, that IMF conditionality contributed. This argument is based on a large number of semi-structured interviews conducted in 1993 with Jamaican bureaucrats, politicians, donors, academics and private sector representatives, many of whom were involved in Jamaica's budget formulation process, and on analysis of the existing literature and data. The conclusion reached is that donor-guided reform programmes have complex and often conflicting impacts on the accountability of the Government's budgetary practices. A major question that arises is the relative importance that donors such as the IMF place on budget conditionality as against accountability. The conclusion based on the Jamaican experience is that the IMF placed greater emphasis on the former. © 1998 John Wiley & Sons, Ltd.

PRINCIPALS, AGENTS AND THE FAILINGS OF CONDITIONALITY

This article examines the effectiveness of policy conditionality by international and other aid donors. The subject is treated within a principal-agent framework and is based on evidence from a sample of 21 developing countries, mainly relating to experiences with World Bank structural adjustment programmes. The evidence provides strong support for the overall hypothesis that conditionality-applying donors (specifically the BWIs) are often unable to put in place a system of rewards and punishments sufficient to overcome the frequent perceived conflicts of interest between themselves and recipient governments. Difficulties which donors experience in punishing non-implementation of policy stipulations are among the chief reasons for this result. In the event of serious donor–recipient disagreements, domestic politics usually dominates. The use of donor financial leverage is not a substitute for weak domestic institutions or ‘political will’. We also find that the conditions necessary for conditionality to provide a ‘technology of precommitment’ are often not satisfied. The BWIs and other donors should recognize that their main contribution to policy reform in developing countries has been through influence on the contemporary intellectual climate, and persuasion of governments through regular contacts. © 1997 by John Wiley & Sons, Ltd.

The Political Economy of Economic Liberalization

Two of the major policy problems facing governments of developing countries in the 1 980s have been unsustainable external and internal disequilibria, and implementation of politically feasible stabilization cum liberalization programs which become necessary to correct these imbalances. This article discusses these crises and subsequent policy reform. The analysis suggests that balance of payments and fiscal deficits are frequently the result of use of an incorrect accounting system in a fixed exchange rate economy, and of public sector expansion beyond its economically feasible size; that governments usually seek to liberalize their economies during a crisis to regain control when the growth of the transfer State has led to generalized tax resistance, avoidance, or evasion; that reduction of the government role will be required to alleviate these crises; that sharp departures from past policies rather than gradual reform may be politically necessary; and that, contrary to the current technocratic opinion on this matter, the sequencing of a consistent and credible package of reforms which will most effectively reduce the costs of adjustment is initial liberalization of domestic capital markets simultaneous with cuts in the fiscal deficit, followed by floating the exchange rate and then commodity market liberalization. With the growing importance of Internal Monetary Fund (IMF) stabilization and World Bank structural adjustment programs, there has been concern about the proper sequencing of the standard stabilization cum liberalization measures contained in these packages. In particular, there is grave concern at the very mixed and in some cases disastrous effects of liberalization attempts on incomes and employment in the Southern Cone of Latin America in the late 1970s and early 1 980s. Much of the existing discussion of the order of liberalization is conducted within the traditional technocratic framework,' which seeks to determine the welfare-cost-minimizing deployment of policies in the standard stabilization and 1. This assumes a benevolent and well informed government maximizing a social welfare function