The Policy Instruments And The International Monetary Fund

An example of the IMF’s ability to promote strong, stable economies is the case of Jordan. In the 1980s the declining oil prices and the related recessions in the Middle Eastern oil exporting countries was disadvantageous to Jordan. In 1989 Jordan had a 30-35 percent unemployment rate and was having a hard time due to their external debt. This led the authorities to request the country’s first arrangement with the IMF. Economic reforms were a part of the agreement between Jordan and the IMF. Jordan agreed to a series of five year reforms financed by the IMF, therefore the government took on huge reforms prioritizing foreign investment and easier trade policies. They were ultimately able to reduce the overall debt payment up to a manageable level. Jordan is currently regarded as a country by which the effectiveness of the IMF assistance is assessed.

The report examines two major economic consensus frameworks that is closely related to economic growth in the world. They are namely the Washington Consensus and the Beijing Consensus. The former is looking at industries in the western context whereas the latter is looking the Asian context mainly China. The later part of the report will discuss and compare the two consensus such as identifying their differences as well as pros and cons of using each model. The last part of the report will discuss weather is Beijing consensus dominating the once popular Washington consensus.

WORLD BANK: governments play an important role in development, but there is no simple set of rules telling them what to do.

Within the Global Political economic, there have been a number of considerations about whether or not the Washington consensus and the “Post-Washington Consensus” (Stiglitz, 1998; 2004) approach to development are fundamentally different. Critics within the International Monitory Fund (IMF) and World Bank suggest that both approaches are one in the same it is thus variously labelled as the

The argument can be made that economic freedom is a necessary precondition to political freedom, yet the unilateral focus of these reforms begs the question whether during the writing of the Washington Consensus, economic liberalization was solely a means to international development, or an end in itself. The historical support is for the latter, as John Williamson later reflects that there was, “a widespread attempt to tighten fiscal policy, extensive financial and trade liberalization, virtually universal elimination of restrictions on inward foreign direct investment, a lot of privatization, and quite a bit of deregulation. [But] the things that got most widely neglected were reforming public expenditure priorities, maintaining a competitive exchange rate, and extending property rights to the informal sector”

In Encountering Development by Arturo Escobar, Escobar critiques the Development Project, a multi pronged initiative of socioeconomic management of the Third World, specifically Latin America, Asia, and Africa, via the First World powers, in question specifically the United States. The critique entails how industrialization and modernization of the Third World could be seen as the mode through which modernization could be achieved and this was enabled by bureaucratic entities, like the World Bank, whom subjected Third World economies to a heavy handed management via the modernization process which denied autonomy for Third World self sufficiency. The Development process thus denied any legitimate conceptualization of how to properly develop economic prosperity. The rapid “consolidation of power” into the hands of the capitalist First World Elite created a paradigm through which the support of cyclical poverty ensured a need for industrialization in order to fix defunct socioeconomic issues. By creating bureaucratic agencies, like the World Bank, which provided specific subscriptor projects, like DRI, allowed for the First World entities to to create and sustain an ongoing unequal distribution of power between the Global North and the Global South.

Within the last 60 years, Third World development has been a global priority, at the top of virtually every Western agenda. And with the rise of the global population and poverty levels continuing to rise along with it, it is very easy to see why human development is becoming such a topic of focus and discussion among members of the academia. But one question that everyone wants the answer too is, how does Third World development fit into Globalization? Despite apparent compatibility, when closely examined it is clear to see that Globalization actually contradicts Third World development due to the conflict of agendas. Both Globalization and Development hold views concerning market reform, social structure and regulation, which are

The international economic institutions refer to the Bretton Woods institutions which are the IMF and World Bank which were created after World War 2 and GATT was also created after the war and later became the WTO. I agree with the statement, due to the disproportionate amount of power held by Western countries compared to the rest of the world and the fact that these institutions attempt to press or force western neo-Liberal values on the rest of the world. In this essay I will go through each individual economic institution explaining how they serve western interests and how recent reforms have attempted to curb western powers within

This trend was popular in colonial times and has survived due to help from international organizations such as the IMF and the World Bank. One such way this that has been encouraged is through the Washington Consensus. The IMF and World Bank implemented the Washington Consensus, a set of fixed ideas about international trade and economic development, through structural adjustment programs which were mandatory for countries if they wished to borrow money from either of the organizations (Nederveen, 2004, p. 11). In conjunction with structural adjustments to continue the dependency theory, the United States uses both the IMF and the World Bank as tools to further their foreign policy and to support US aims and polices (Finnegan, 2003, p. 43). These programs were supposed to reduce poverty and facilitate growth but really just ended up screwing over many countries. Additionally, they were really just ways for America to assert their control under the guise of an international organization providing support to developing countries’ economies (Finnegan, 2003, p. 42). Ultimately structural adjustments were used to implement policies that the United States thinks is best for the world and promote American values (Manzo, 1999, p. 112). The World Bank and the IMF listen to the rich countries and implement policies that they believe are best for those countries that are in development while creating a situation that contributes to the continuation of a cycle of dependency (Manzo, 1999, p. 110). Ultimately neoliberalism has created a global regime that promotes dependency on the United States and allows them to decide what is best for countries that are still developing (Nederveen, 2004, p. 7). In the end, the fact that neoliberalism has many of the same contradictions that

Despite the march towards globalization, many people in South America and Sub-Saharan Africa are still mired in poverty. According to Thomas L. Friedman, author of The World is Flat, suggests that the world went into a period of globalization in the 1970’s. In this era of globalization, countries such as China, Russia, Mexico, Brazil, and India initiated what Friedman calls “reform wholesale.” This reform wholesale refers to the focus of the emerging countries on “adopting more market-friendly macroeconomic reform.” Along with the five countries above, many countries in Sub-Saharan Africa and South America also attempted reform wholesale. Rather than becoming major world powers, most countries in these continents failed. Countries need to

Over the past several decades, the adoption of neoliberalism in the global economy has created instability within developing countries while first nations benefit from this organizing principle. Neoliberalism is defined as the practice of “freeing” the market through deregulation and limited government intervention (Smith). National and international governments implement neoliberal policies, often have underlying detrimental effects in the long run. Regulations enforced by international and intergovernmental organizations like the International Monetary Fund (IMF) and the World Trade Organization (WTO) allow for the privatization of markets to occur, keeping third world countries less economically developed. Neoliberal policies reinforce unequal power relationships among developed and developing countries that have been in existence since colonialism. Governments use economic mechanisms such as land reform, multilateral trade agreements, and structural adjustment programs (SAPs), which benefit the global elite. These unequal power relationships came from a legacy of colonial power throughout Latin America, Africa, and Southeast Asia, driven by the extraction of wealth and control of resources.

This would not be an issue if all nations were to start on the same playing field. However, it is some of the same developed nations that benefited from the oppression of indigenous people and races that are imposing this ideal of development on developing nations. As such, these global institutions reinforce this narrative of the value of society being in its economic output and growth. In that respect, some developing nations in pursuit of those goals borrowed extensive money from the IMF that eventually resulted in heavy debt due to these countries not having sufficient resources to develop their economy. What makes it worse is that developing nations would then have to prioritize paying back their loans and not necessarily in developing their industries in the first place.

In the past two decades, the Washington Consensus approach codified by John Williamson (1990) has been one of the most popular terms in the field of development. Consisting lists of reform agenda, Washington Consensus used to be or at least believed as a ‘rule of thumb’ policy to improve economic growth in developing countries. However, due to the undesired result, now the Washington Consensus have reached its fallacy.

1.The international financial institutions (IFIs) are central pillars and the architects of the global economy. The world bank and IMF were founded and funded by the United states after the second world war to build shattered world economy after the war and great depression of the 1930s (socialist alternative,). The creation of the IFIs was to bring about a global economy after the “isolation economy” which some argue brought about the Second World War. The IFIs were to help the economy of the less developing countries (LDCs) to bring about growth and development, a phenomenon known as globalization.

“If you owe your bank a hundred pounds, you have a problem; but if you owe it a million, it has.(1)”