Quote:
Originally Posted by Avrora
You are right, there is a huge difference in what it is supposed to happen according to the economic research and prognoses and the reality of each separate country. Corruption and laziness of the authorities plays a huge role in how IMF/WB programs are implemented. It has been known as an issue for a long time and is being worked on consistently.
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The single biggest problem with all proposals concerning economic development that comes from either the IMF or World Bank is that such proposals are not really concerned about the countries that are indebted to them.
Those two institutions (along with the Paris Club) number one goal is to get debtor nations to pay back their loans and interest to their creditors, who often are large private multinational banks such as JP Morgan. The institutions gives those banks an alternative way of forcing debtor nations to pay back their debts, because unlike what is the case with individuals, banks cannot confiscate an entire country if it defaults on its loans!
All of this leads to the "do as we say and not as we did" policy which eminates out of the Washington Consensus to the rest of the world in the form of foreign policy. Because of this, many people around the world have grown skeptic of U.S. foreign policy and particularly skeptic of IMF and World Bank.
The fact of the matter is that there is not a single rich western country that became prosperous by following what the IMF and World Bank suggests is necessary for economic development and prosperity to take place.
It should be no surprise that the IMF/World Bank policies handed out to impoverished developing nations have not worked as planned and those countries are still poor.
The only few countries that have managed to continue developing and gaining prosperity in the third world (ie. Botswana, Chile, etc) were countries that either ignored the "advice" from those institutions or countries which mimic to a certain extent the actual things that lead to prosperity in the first world. In other words, public control of natural resources, elimination or effective exclusion of people with anti-development ideas or cultures, and massive government involvement and subsidies in various sectors to increase the incentive of attracting private capital.
I will end by explaining one thing that perhaps may not rub well with some intelligent DR1ers and that is the case of public control of natural resources. The fact of the matter is this, not a single first world country has its natural resources (ie. precious metals, fossil fuels, etc) under private ownership. Their natural resources are under public ownership and the government issues lincenses to private enterprises who wishes to exploit such resources. Such lincenses are granted on various conditions, among them regulating how the profits are to be maintained in such country and/or how much would belong to the government and/or other conditions which would benefit the local population.
Chile has done something similar by taking control of its copper mines which is still owned by the military/government. The ownership of those mines has helped Chile's government in gaining enough capital in order to execute various public works programs and other social programs which helps the Chilean population, not to mention have enough money to subsidies various sectors in order to increase the incentive for private investments in such sectors.
In the United States, every single natural resource of tremendous value (from petroleum to coal mines) are in effect owned by the U.S. government. The government grants licenses to private enterprises which wishes to exploit them and again, such licenses are granted with certain conditionalities.
With most third world states, that is not the case. Third world states have privatized their natural resources at the request of the IMF and World Bank in order to qualify for loans. Often, such resources have been bought by multinational corporations based in first world countries and those corporations (thanks to IMF suggestion on third world country liberalizing their financial markets) can take all profits out of those developing countries to their bank accounts in the first world nations, such wealth never to be seen in the country from which it was extracted.
That was precisely the case in Bolivia concerning public water which was privatized. The Bechtel corporation based in San Francisco, California actually bought much of the water supply in Bolivia. Once it was privatized, the cost of water in Bolivia skyrocketed to around 300% making clean water unaffordable to most poor Bolivians. Such price hikes were necessary in order for Bechtel to make a profit from water in Bolivia.
What's the problem? Public water in first world nations all belong to the government!!! Who suggested Bolivia to privatize its public water source rather than give licenses while keeping ownership of such source? The IMF Why did Bolivia complied? Because it was a necessary step outlined by the IMF prior to Bolivia being granted a loan.
In the process, many Bolivians have been killed in the protest they have made protesting the high cost of water and the police trying to keep the protest in check, it has spurr anti-American feelings in Bolivia, it has increased the mistrust of the IMF and World Bank in Bolivia, and has partially led to the leftist president they currently have to win the presidential election.
What is one of the things the current president of Bolivia wants to do? Take the public water away from the private sector. What has kept him from doing that? IMF threatning to not give any more loans to Bolivia if it goes ahead and take the water resource away from Bechtel.
All of this occured under the notion of free market, which is not really free because while Economists are giving correct theories of what would occur under a true free market, politicians are altering the theories in order to achieve their political goals in the process screwing with the lives of millions of poor people from around the world.
-NALs
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Come On, Ride The Train ..
