In the 1980s, in order “rescue northern banks that had been overextended in the Third World†the World Bank and the International Monetary Fund launched Structural Adjustment Programs (SAPs) that would “further integrate southern countries into the North-dominated world economyâ€(Walden Bello). The programs provided structural adjustment loans to debtor countries under various conditions, such as removing restrictions on foreign investments, reorienting the economy toward export, reducing wages and social spending, reducing tariffs, devaluating local currency, privatizing enterprise, and undertaking a deregulation program ( “WB and IMF promotes TNCs†). As a result, the governments of debtor-countries lost the control of their economies. Years after their implementations, the impact of SAPs in developing counters is perceived differently.
World Bank Group President Mr. Zoellick justifies the programs by stating that they help to fight poverty (David Theis). Foreign investments in developing countries create jobs, develop infrastructure and safety nets, and increase voting power (David Theis). Moreover, the programs initiate human recourse and industrial development that the countries are lacking (“Would a $5-a-day Minimum Wage”). In addition, they shrink the size and role of government, rely on market forces to distribute resources and services, and integrate the “small capitalists†of poor countries into the global economy (PPP). Furthermore, the World Bank believes that “the productivity of U.S. farmers helps feed countries which cannot feed themselves†(“With Cheap Food Imports”).
However, the Haitian Committee on Justice recognizes Structural Adjustment Programs as factors for escalating poverty and inequality. Offering aid in exchange for open trade, the elimination of tariffs and agricultural subsidies has done little to stimulate economic growth (“World Bank Policies,†in lecture Mar. 14). For instance, Free Trade Zones in Haiti have deteriorated the environment, decreased wages and working standards, and increased exploitation of workers; thus, increased also instability in the country (Controversy over Haiti’s Development, video).
A peasant-based Haitian nongovernmental organization (NGO) argues that “Haitian farmers are some of the most politically disempowered, malnourished, and illiterate in the world†and the most victims of the SAPs in Haiti (“Aid in Haiti”). United States subsided foods is cheap and has been replacing the native diets of Haitians. It has been destroying native agriculture systems and food security, and accelerating urban migration (Noam Chomsky). Hunger and poverty displaced peasants from rural areas to can work in offshore U.S. industries for less than the minimum wage in Haiti (Noam Chomsky). Poor, undereducated and politically underrepresented, the peasants became objects of exploitation (“Controversy over Haiti’s Development”). In addition, a peasant-based Kenyan NGO emphasizes that struggles over scarce resource have escalated ethnic conflicts, stealing livestock, and arm conflicts, which further deepened the hunger in the rural areas. Furthermore, depending on imported food, developing countries are vulnerable to the food price speculations of the world traders. On top of that, the governments ignore people’s struggles ( “Horn of Africa Crisis”).
Contrary to the opinion of NGOs that the SAPs of the WB and the IMF forced developing counties to lose their sovereignty and lower the standard of living of their people (“Structural Adjustment – a Major Cause of povertyâ€), transitional corporations perceive the Program being beneficial for their businesses. The SAPs open up developing countries to foreign investors on terms most favorable to transnational corporations. Cheap labor and resources, and absence of restrictions help companies generate huge profits. For instance, SAPs allowed the Bechtel Corporation to obtain water rights in many developing countries.
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