More handpicked essays just for you.
The relationship between imf and world bank
2. What is the IMF, and what role does it play
The relationship between the global financial crisis and the imf
Don’t take our word for it - see why 10 million students trust us with their essay needs.
Recommended: The relationship between imf and world bank
In his book “Tyranny of Experts” William Easterly makes a strong case that the technocratic approach to development forgoes poor people’s rights. Rich countries provide aid to poor countries through outsider experts who do not know enough about local realities. The author targets international financial institutions as the main promoters of this approach. Having worked at the World Bank for sixteen years , Easterly uses his firsthand experience to inform his arguments.
Easterly criticizes development experts that practice a technocratic approach to fight poverty. He argues that such strategies do not work well, because “the technocratic illusion is that poverty results from a shortage of expertise, whereas poverty is really about a shortage of rights.” The technocratic, top-down approach in development is not concerned with political, economic or civil freedoms; it simultaneously undermines the rights of the poor and development.
To outline the opposing approaches, the author alludes to the debate that never occurred between the two Nobel prize winners of economics of 1974, Friedrich Hayek and Gunnar Myrdal. Hayek
…show more content…
The policies dictated by the IMF during the 80s and 90s, which were influential in destroying the economies of many developing countries, offer one example of the technocratic approach going awry. Today the realities of the developing world vary from country to country, but experts continue to be obsessed with setting goals and expecting that governments will reach them, without taking into account the likely impact on the local
With the collapse of communism in Eastern Europe at the time, some economic consultants had considered Hayek’s currency system as a replacement for fixed-rate currencies. Even at the age of 89, Hayek was still publishing. In his book The Fatal Conceit, he laid out some profound insights to explain the intellectual’s attraction to socialism and then chose to refute the basis for their beliefs.
In David Brooks’ op-ed “The Undying Tragedy,” he discusses four main hypotheses regarding poverty and aid in Haiti. His ideas about poverty, as viewed through the modernization, dependency/world-systems, and post-structural theoretical perspectives lead to three different conclusions. Specifically, as viewed though a modernizations lens, the “truths” Brooks puts forth seem fairly in accordance with the perspective, with some minor addendums needed. The dependency and world systems theories again agree with some of Brook’s hypotheses, but would disagree with some of the assumptions he makes in regards to culture and paternalism. Finally, the post-structural theory would find the most problems with Brooks’ claims, likely disagreeing with his assumptions about the effects of culture on poverty and his view of the development process.
The impact of the Structural Adjustment Programs imposed by International Financial Intuitions (IFIs) such as the World Bank and the International Monetary Fund on the developing countries of Africa has led to the destruction of Africa’s social sectors and has handicapped Africa in its fight with poverty, the AIDS pandemic, and keeping children in school.
In chapter three Isbister explains that social scientists wrestled to justify conditions in the third world, as a result, a mixture of indefinite theories developed. A point often overlooked, by social scientists is that the struggle and growth of Asia, Africa, and Latin America cannot be measured “in statistics, nor in treatises of social scientists and historians.” After reading the chapter, an obvious conclusion stood out poverty is tangible for most of the world’s people and nations. Why is this and who is to blame? Are the poor people to be blamed for their own poverty? The answers are arranged into three different groups: mod¬ernization, dependency, and Marxism.
Keynes and Hayek represent different options. Should we steer markets or set them free? “Which way should we choose, More bottom up or more top down?” (Fight of the Century). These questions reflect the opposite ways Keynes and Hayek address the economy. Keynes wants to “steer” the economy from the “top down.” From his understanding of the economy, Keynes theorizes that the market can be directed by those with the power to do so to accomplish goals leading to a prosperous economy. This is the basis in his approach to dealing with recessions where the government or central bank manipulates the economy. The other side is a free market from the “bottom up” on which Hayek stakes his claim. Instead of steering the economy, Hayek proposes to leave it alone. Do not try to control it, but let the market determine the interest rate and price level, as it eventually will, through supply and demand. In this way, control is not exerted downward, but reality is expressed from basic economic forces. Fundamentally, Keynes’s model focuses more on the spending and consumption aspects of GDP, and Hayek’s approach focuses more on the investing aspect which flows from saving. These are the options from which to choose. Keynes vs. Hayek, Short run vs. long run, controlled vs. free, top down vs. bottom up, each possibility has its negatives and positives. This debate is not wrapped up
middle of paper ... ... 06 Nov.2011 Cochran, J. P., and F. R. Glahe. “The Keynes-Hayek Debate: Lessons for Contemporary Business Cycle Theorists.” History of Political Economy 26.1. (1994): 69-94.
Most people of the society still blame the poor for their own predicament. They believe that "if there is a will there is a way". However, they do not think about their government that might had made bad decisions and policies that could actually harm successful development. This causes of poverty and inequality are usually less discussed and often neglected. We must recognize the effects poverty could have on the society and seek ways to create better understanding and resolve the issue before it is too late.
The neoliberal policies have benefited some people in generating great wealth for them, but controversially, the policies have failed to benefit the people who live in extreme poverty and those people are the most in need for financial support (Makwana, 2006). In the last 2 to 3 decades, the wealth disparity between nations as well as within nations has increased. Currently, one out of every 5 children in the United States is in a state of poverty, continual hunger, insecurity and lack of health care (MIT, 2000). This situation is becoming even more desperate. Between 1960 and 1980, the developing countries’ economic growth was 3.2 percent. Then it dropped significantly to 0.7 percent between 1980 and 2000, and this is the period when neolibe...
Paul Collier’s book is about the future of the world. Most of the world is on the positive trajectory set by growth and prosperity. The 21st Century is the age of the middle class. For most of the world, things are looking up. However, Collier is concerned with a group of countries that are not part of this trajectory. Collier is concerned with approximately 58 countries that constitute about one billion people, or 20 percent of the earth’s population (Collier 7). This “bottom billion” group belongs to countries that are not progressing with the rest of the world’s pace; in fact, they seem to be diverging and falling apart when everyone else around them are growing. The purpose of the book is to show these countries are, in fact, diverging. He shows them caught in four different “traps.” After proving this, Collier has the challenge of making the case for reform and what can be done to fix these countries and put them on the course towards growth and prosperity. Finally, Collier has to show why the western world should care about supporting these countries and reversing their decline and how their current poor trajectory represents a drain on the global economy and security environment. The Bottom Billion is written for a broad audience; essentially all citizens of democratic countries. Collier encourages action by all levels but recommendations are made for policymakers in G8 countries that are responsible and interested in achieving improvement for impoverished countries.
My research of Classical Economics and Keynesian Economics has given me the opportunity to form an opinion on this greatly debated topic in economics. After researching this topic in great lengths, I have determined the Keynesian Economics far exceeds greatness for America compared to that of Classical Economics. I will begin my paper by first addressing my understanding of both economic theories, I will then compare and contrast both theories, and end my paper with my opinions on why I believe Keynesian Economics is what is best for America.
Firstly, there is a need to understand what is meant by development. It is defined as “the continuous and positive change in the economic, social, political and cultural dimensions of the human condition, guided by the principle of freedom of choice and the limited capacity of the environment to sustain such change.” (Sharpley, 2003: 8-7). Sharpley (2000) explains how theories of development have progressed; Firstly the ‘Modernisation Theory’ (1950s- 1960s), in which societies are seen to switch from traditional to modern only through economic growth. Next is the ‘Dependency Theory’ (late 1960s), this takes into account the historical and economic structures of developing countries, distribution of benefits, social players such as local elites, state interests and private companies, and situations in which an economy and development of a country can be conditioned by a more dominant country (Santos, 1970). The ‘Neo Classical Counter Revolution theory’ (1980s) was made to fit in with global events such as the economic depression, and development policies that build upon dependence on free market. Finally, ‘Sustainable development’ (late 1980s) is the theory that creates the encouragement for development of many developing countries. This theory aided by government policies of backings, tax breaks, and incentives. These theories have developed through growing knowledge of evolving processes, and dismissal of past theories (Sharpley, 2000).
In the face of media campaigns and political sanctions, the question about whether we owe the global poor assistance and rectification is an appropriate one. Despite television advertisements displaying the condition of the poor and news articles explaining it, the reality is the majority of us, especially in the Western world, are far removed from the poverty that still affects a lot of lives. The debate between Thomas Pogge and Mathias Risse regarding our obligation to the poor questions the very institution we live in. Pogge created a new framework in which the debate developed. He introduced a focus on the design of the institutional global order, and the role it plays in inflicting or at least continuing the severe poverty people are exposed to. Whilst both Mathias Risse and Thomas Pogge believe that the “global order is imperfectly developed. It needs reform rather than revolutionary overthrow”, they differ on whether or not it is just and entitles the global poor to assistance. Pogge believes that the global order is unjust as it “helps to perpetuate extreme poverty, violating our negative duty not to harm others unduly”. Risse believes that the institution is only incompletely just and can be credited to improving lives of the global poor. According to him, these improvements contribute to its justifiability and negate any further obligation we have to the poor. Through assessing their debate, it seems that one’s obligation to the poor depends on one’s conception of duty, their unit of analysis, and whether improvement rectifies injustice. On balance, it seems that we do indeed owe the poor, only we may lack the means to settle it.
The IMF was not designed to be an aid agency but its role in economic
“…increasing international trade and financial flows since the Second World War have fostered sustained economic growth over the long term in the world’s high-income states. Some with idle incomes have prospered as well, but low-income economies generally have not made significant gains. The growing world economy has not produced balanced, healthy economic growth in the poorer states. Instead, the cycle of underdevelopment more aptly describes their plight. In the context of weak economies, the negative effects of international trade and foreign investments have been devastating. Issues of trade and currency values preoccupy the economic policies of states with low-income economies even more than those with high incomes because the downturns are far more debilitating.1”
Extractive institutions are used throughout this book to explain that the upper class extracts resources and goods from the lower class. They don’t allow growth or competition, but rather they just exploit the rest of society into doing their labour. It’s used to please a few, rather than the majority, and can still be seen in most places in the world. Whereas, inclusive institutions are the ideal way nations should be run, allowing for fair economical systems, property ownership, educational facilities and allowing all citizens to participate in the growth of the economy. Acemoglu and Robinson argue that this is the main factor in distinguishing the rich countries from the poor and, moreover, how they treat their citizens. This system is relatively used in North America and Western Europe.