The contribution of the International Monetary Fund and the World Bank to the "neoliberalization" of the global economy
Essay 2014 5 Pages
To what extent has the International Monetary Fund and the World Bank contributed to the ‘neoliberalization of the global economy.’ Use examples to critically evaluate this claim.
Course Title: International Political Economy Tutorial: Fridays 11-12
The role of the IMF and World Bank and their impact, especially on developing countries is increasingly controversially discussed. On the one hand, you can find more and more protests against the policy prescriptions of these two institutions all over the world nowadays, whereas on the other hand they continue to force developing countries to implement these. This paper wants to take a closer look at the policy recommendations by the IMF and World Bank in order to proof the claim that they follow the neoliberal ideology. In order to do that, it will first define and characterize the concept of neoliberalism. The following section will more closely consider the policy programmes put into place in different countries to see that they match with the neoliberal ideology.
Neoliberalism became highly important in international political economy and its rise is often connotated with the names of Ronald Reagan and Margaret Thatcher. As Harvey defines it,
“Neoliberalism is in the first instance a theory of political economic practices that proposes that human well-being can best advanced by liberating individual entrepreneurial freedoms and skills within an institutional framework characterized by strong private property rights, free markets and free trade”1
Further characteristics include a state apparatus that is kept to a minimum and only has the task to “create and preserve an institutional framework that is appropriate to”2 these practices. This would for instance include to set up a legal system that can protect property rights.
A critical approach to neoliberalism would most likely include the definition proposed by Robert McChesney that it “refers to the policies and processes whereby a relative handful of private interests are permitted to control as much as possible of social life in order to maximize their personal profit”3, to which he would count large transnational corporations and wealthy investors. With this definition he points to the major characteristics of neoliberalism that include deregulation and the removal of government interference in the economy as well as the dismantling of the welfare state, which detriments the majority of the population.
Although the impacts of the IMF's 'Structural Adjustment Programs' (SAPs) are highly contentious it is not so much a question of whether IMF and World Bank follow the neoliberal ideology in their policy recommendations for developing countries. In fact, the policies used by the financial institutions as a reform package for developing countries have been summarized as “Washington
1 David Harvey A Brief History of Neoliberalism; Oxford University Press: Oxford; 2005, p.2
3 The IMF and the WORLD BANK: Puppets of the Neoliberal Onslaught published in The Thistle; Volume 13, Number 2: Sept./Oct., 2000
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