IMF and World Bank Criticisms Flashcards
criticisms of the IMF and World Bank
SAPs
dominated by the USA
tools of Western neoliberalism
harm the poor rather than help them
SAPs
by far the biggest criticism that can be made of both the IMF and World Bank is their use of SAPs
both have received backlash from anti-globalisation and anti-capitalist movements who argue that they encourage poverty and inequality rather than resolving it
for example, the 1988 annual meetings of the IMF and World Bank were met with huge protests in West Berlin that attracted international support
these movements point to the Structural Adjustment Programmes (SAPs) given out by the IMF and the World Bank, which are loans with conditions attached
such loans require developing countries to undertake policy objectives such as privatisation, deregulation and opening up their markets to the world
however, rather than encouraging economic growth, anti-globalisation movements argue that these loans create a poverty cycle by encouraging developing economies to open up their markets to exploitation by much larger economies and TNCs, leading local businesses and infant industries to be at best side-lined and at worst completely destroyed
this can be seen in the way in which Ghanaian rice farmers, the Jamaican peasantry and the Senegal groundnut industry have all been ruined by cheap foreign imports
they also encourage developing countries to produce cash-crops such as coffee and cocoa, which leaves them vulnerable to exploitation by TNCs who control the production, manufacturing and distribution of such products
cash crop production also reduces the amount of land under cultivation to meet domestic food needs, which can lead to a continuing cycle of famine and poverty
in this respect, the IMF and World Bank seem to relegate countries to peripheral status so that they never achieve a proto-industrial stage of development, which reinforces the North-South divide
dominated by the USA
another major criticism is that both the IMF and World Bank are dominated by the USA
the USA was the World Bank and IMF’s leading architect and heavily influenced decisions about its role and functions
the capital of the US is home to the IMF’s headquarters, which facilitates US government influence, and because the US is the world’s largest economy and contributes the largest quota, it enjoys the largest proportion of votes at 16.53%
as decisions require majorities of 85% and the US has nearly 17% of the total vote, it effectively exercises veto power and can heavily influence and dominate the IMF with ease
similarly, it is often claimed that the US has too much influence over the World Bank and its policies
the influence of the US seems to have led to the World Bank being overly keen on deregulation, privatisation and the promotion of free trade (i.e. the economic orthodoxy practised by the US), while the rest of the developed world has subscribed to neoliberal economic policy
the role that the US has in the appointment of the World Bank’s president is also criticised
an open system of appointment would be fairer and more transparent and it would be more appropriate to have a head from the developing world who is familiar with the challenges facing these countries
tools of Western neoliberalism
as a result of this domination by the US, both the IMF and World Bank are often seen as tools of Western neoliberalism
they seem to primarily serve the interests of the West and have not adapted to the new realities of the distribution of global power or allowed emerging states to have an adequate say
in particular, the IMF allows disparate levels of influence because member nations that invest more money in the IMF receive more voting rights
consequently, the US has nearly 1/5 of all available votes because they are the largest contributor
this appears to strengthen the voice of the already wealthy and privileged Western states rather than allowing all states to have a fair amount of influence and power within the organisation
harms the poor rather than helps them
many also suggest that the World Bank hurts the poor rather than helps them
according to a 2015 investigative report, nearly 3.5 million people have been displaced over the last decade to make room for World Bank-funded projects
in the event of such projects, the World Bank has rules to ensure that families are not forced from their homes without warning and that they are safely resettled elsewhere
however, on many occasions, the World Bank has reportedly failed to live up to the standards
for instance, in 2007, the World Bank loaned nearly $17 million to Kenya’s National Forest Service for a conservation project, but Kenyan authorities reportedly used the money to forcefully evict thousands of indigenous people who had been living in the project area
between 2007 and 2014 up to 1000 indigenous homes had been ransacked or burned
furthermore, the Bank encourages unsustainable development
marshland has been drained, hillsides terraced and trees felled to grow crops for export, lowering biodiversity and increasing the risk of landslides and flooding which can be especially hard for developing countries to deal with
the World Bank acknowledges these problems but has yet to make any changes so continues to face severe criticism
