It has been illustrated that the IMF was a tool or technology to spread liberalism and that the Washington Consensus formed the theoretical framework the IMF would aspire to work within. However another variable needs to be examined to understand this mode of power, that is the incentive for developing nations to succumb to this mode of power. One particular incentive implemented by the IMF was that of credit.
As Hoogvelt article discusses that credit as a means to acquire capital flows were added by the strategic implantation of nationalizing private debt. The nationalization of debt was legitimized through concepts of economic develop and national sovereignty (Hoogvelt 125). A further tactic used in debt control of the states that had been promoted by the IMF was the devaluation of the currency which effectively was a tax on the public that to alleviate a government domestic debt (Hoogvelt 125). Further compounding the problems of the developing nation were the neoliberal pressure as exerted through the IMF for states to sell off at barging prices their state owned enterprises (Hoogvelt 126). Thus we see the developing state’s role being reduced to that of legitimizing debt devaluing public assets.
Drawing off of Hoogvelt’s writings we can see some existing critiques of the IMF’s agenda of liberalization. He mentions how even IMF and World Banks economic standards, the policies prescribed and structural adjustment contracts have led to a decline in growth rates, and some states have experienced hyper inflation. Hoogvelt illustrates the risks of deregulation of financial markets by giving examples of corporate credit schemes that require have no regulation on reserve capital and how essential corporate bonds and repackaging...
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... developing may say a lot in itself. However this paper only begins to addresses the power relations of development and credit. To truly engage such a subject in an exploratory and critical manner would go well beyond the confines of this paper. As such this paper has been largely consuetude through secondary sources in the form of literature review to support arguments. A more in detail study would should continue on with an even greater breadth for the literature review but should also focus on primarily sources more, empirical data and examine in detail case studies. A study of the presupposition and power relations of liberalism and development itself should in fact be a par of the approach to this paper however this too would go beyond the confines of this paper. However such an approach would have to be an amalgamation of numerous writings or tome in itself.
In an article entitled “Resisting and reshaping destructive development: social movements and globalizing networks”, P. Routledge describes neoliberal development, “Contemporary economic development is guided by the economic principles of neoliberalism and popularly termed ‘globalization’. The fundamental principal of this doctrine is ‘economic liberty’ for the powerful, that is that an economy must be free from the social and political ‘impediments,’ ‘fetters’, and ‘restrictions’ placed upon it by states trying to regulate in the name of the public interest. These ‘impediments’ - which include national economic regulations, social programs, and class compromises (i.e. national bargaining agreements between employers and trade unions, assuming these are allowed) - are considered barriers to the free flow of trade and capital, and the freedom of transnational corporations to exploit labor and the environment in their best interests. Hence, the doctrine argues that national economies should be deregulated (e.g. through the privatization of state enterprises) in order to promote the allocation of resources by “the market” which, in practice, means by the most powerful.” (Routledge)
Massachusetts Institute of Technology. (2000). The IMF and the World Bank: puppets of the neoliberalism onslaught. Retrieved April 05, 2014, from MIT website: http://www.mit.edu/~thistle/v13/2/imf.html
Eichengreen, Barry. Globalizing Capital: A History of the International Monetary System. Princeton, NJ: Princeton University Press, 1996.
The theme of this essay outlines two things. One, the key elements of Bretton woods system and second, the characterisation of Bretton woods system by Ruggie as ‘embedded liberalism’, and how far he succeeds in it. The Bretton woods system is widely referred to the international monetary regime, which prevailed from the end of the World War 2 until the early 1970s. After the end of the World War 2, the need of international monetary framework to boost trade and economic; growth and stability, was important. Taking its name from the site of the 1944 conference, attended by all forty-four allied nations; the Bretton Woods system consisted of four key elements. First, to make a system in which each member nation has to fix or peg his currency exchange rate against the gold or U.S. dollar, as the key currency. Secondly, the free exchange of currencies between countries at the established and fixed exchange rate; plus or minus a one-percent margin. Thirdly, to create an institutional forum, so-called International Monetary Fund (IMF), for the international co-operation on money matters: to set up, stabilize, and watch over exchange rates. Fourth, to remove all the existing exchange controls limiting (protectionism) policies by the members, on the use of its currency for international trade. In practice the first scheme, as well as its later development and final demise, were directly dependent on the preferences and policies of its most powerful member, the United States. According to John Gerard Ruggie, 1982, this Bretton woods system of monetary co-operation represented the type of liberalism which characterise “domestic social economic stability along with a liberal trading order.” He referred this system as ‘embed...
In this age of change, the international financial is progressing promptly on various fronts, such as the International Monetary Fund (IMF) play a pivotal role in international financial system. Yet at the same time, many criticisms point out that IMF are not efficient enough to react to settle the problems that have accompanied with this trend. This issue has drawn widespread attention in recent decades. This essay will give an overview about what the IMF it is first, and then put forward by some examples that what kind of role the IMF has done to address financial issues, good or bad. Finally, this essay will propose some solutions about the IMF how could it be more useful to solve the financial crisis.
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).
From 1971 to 1980, the author worked as an ‘Economic Hitman’ (EHM) for the consulting firm Chas. T. Main, Inc. (MAIN). His role was “to cheat countries around the globe out of billions of dollars... to encourage world leaders to become part of a vast network that promotes U.S. commercial interests. In the end, those leaders become ensnared in a web of debt that ensures their loyalty” (p17). This was accomplished by the production of economic projections that would persuade the World Bank and other international organisations to lend money to these countries. After this money was spent on developing infrastructure in the countries in question – the contracts for which went to U.S. companies – they were left with large amounts of debts which they could not hope to repay. This in turn left these countries beholden to the United States’ economic and political interests, creating a ‘global empire’ controlled by “corporations, banks and governments” (Preface, p xiii). Perkins refers to this collusion of interests as the ‘corporatocracy’, and it is they who devised and carry out this strategy. The goal is not only to increase economic growth, both for the U.S. and the corporations themselves, but “to perpetuate and continually expand the system” (Preface, p xiii).
the effect that the work of the IMF and the World Bank have had on the
Joseph Stiglit’s focused on criticizing the International Monetary Fund (IMF) and how globalization makes the rich countries richer and the poor countries poorer. At first, I thought that the book was too technical for a beginner on the subject to understand, but he was able explain well the contents of this book. This book is very informational for people, who are into globalization and economic development. His sharp critiques on globalizations, particularly on the International Monetary Fund (IMF), that was based on his own experiences. In this book, he emphasized the effect of globalization on the Least Developed Countries as well as on the Developed Countries. I chose On Globalization and its Discontent because aside from the striking title of the book, it also the sincere opinions of Joseph Stiglitz. Also, I chose this book aside from it being required, I figured out that this book will be of good help for me in the near future – if I want to pursue this track – with all the information that were given by Stiglitz.
The IMF was created at the end of WWII in order to create a framework for global economic cooperation without creating a second Great Depression. Since its creation it has evolved to tackle a variety of economic issues. The goal of the IMF is to help the governments of member countries “take advantage of the opportunities- and manage the challenges- posed by globalization and economic development more generally.” It tracks global economic trends and performance, alerts member countries of potential problems, provides of forum to discuss policy, and helps governments in times of economic hardship. It provides policy advice and financing to member countries suffering from economic adversity. Additionally, it aims to create...
Many critics and even followers of the IMF do not even know what the IMF really is. It is not a development or even a central bank. It is a credit union. It pays interests on deposits it receives from member nations. The IMF lends money to members having trouble meeting financial obligations to other members, but only the condition that they undertake economics reforms to eliminate these difficulties for their own good and that of the entire membership. Some people believe that if the IMF tells a country to do something, they must do it. This statement is false. The IMF has no authority over the domestic economic policies of its members. The IMF is a cooperative institution that 182 countries voluntarily joined because they see the advantage of consulting with one another to maintain a stable system of buying and selling their currencies.
The main reason that I absolutely agree about the development is a form of exploitation is because development is equal to modernization (Frank, 1966), which focused on the economic domination that leads to exploitation. This is because development could be explained by the used of technology, accumulation of capital, and labour forces for more convincing economic growth. Development is happens in every countries around the world. It is because development happens to achieve the economic growth which can lead to increasing the gross national product (GNP). In order to attain better economic growth, states need some improvement to dev...
“…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”
Global governance institutions, from the International Monetary Fund to the World Trade Organization, are little loved. They are often perceived as bastions of sclerotic mediocrity at best and outright corruption at worst. In the wake of the 2008 financial crash, Daniel W. Drezner, like so many others, observed the smoking ruins of the global economy and wondered the extent to which global governance institutions have affected the post-recession, international system.
Fifty-one countries established the United Nations also known as the UN on October 24, 1945 with the intentions of preserving peace through international cooperation and collective security. Over the years the UN has grown in numbers to include 185 countries, thus making the organization and its family of agencies the largest in an effort to promote world stability. Since 1954 the UN and its organizations have received the Nobel Peace Prize on 5 separate occasions. The first in 1954 awarded to the Office of the United Nations High Commissioner for Refugees, Geneva, for its assistance to refugees, and finally in 1988 to the United Nations Peace-keeping Forces, for its peace-keeping operations. As you can see, the United Nations efforts have not gone without notice.