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Since the 1999 protest in Seattle, the international debate
on globalization has focused more directly on the activities of those influential
organizations at the heart of this economic process - the International
Monetary Fund (IMF), the World Bank (WB) and the World Trade Organization (WTO).
The vast majority of progressives concerned with critical issues such as the
growing levels of inequality, poverty, unfair trade, unsustainable debt and
climate change, are vociferously calling for a debate on whether these
organizations should be simply reformed or progressively dismantled.
Working
For Development?
The mandates of the IMF and World Bank have changed
significantly since their creation by the US and UK Governments at The Bretton
Woods Conference in 1944. They were initially designed to ensure global financial
stability and economic growth in countries affected by the war - mainly in
Europe, a function which they were largely successful in thanks to a generous
Marshall Plan initiative.
Since then the World Bank has steadily increased its
original mandate to become the single largest source of development finance in the
world, lending for large-scale development and infrastructure projects such as
building roads, dams, pipelines, and extracting natural resources. Whilst the
IMF was originally created to maintain global financial stability and monetary
cooperation by making loans to countries with balance of payment problems, it
is now the lender of last resort for cash strapped developing countries.
In their respective capacities, both institutions are often heavily
criticized for imposing harsh conditions on their loans known as Structural
Adjustment programs (SAPs). These SAPs tend to reduce government expenditure
for social needs such as education, health and welfare in order to channel
finance to loan repayments, and in this way exacerbate poverty in many developing
countries.
In 1995, the World Trade Organization (WTO) was established to
replace the General Agreement on Tariffs and Trade (GATT), with the intention
of providing an international framework for the rules that govern trade and to
staunchly promote free trade. The liberalizing or ‘opening up' of markets in
developing countries to global competition is one of the WTO's key policies,
and the organization clearly states that trade rules, although binding on
governments, are primarily for the benefit of the business community that
produce, import and export goods and services.
Economic
Growth and Globalization
Together the policies of free-trade, development loans, SAPs
and privatization are the key ingredients of economic globalization, and have
been for the past few decades. There is
now a glut of evidence that supports the fact that these institutions, which
are broadly unaccountable and opaque, are not effective at reducing poverty and
inequality, or in facilitating fair trade or fair finance. They are also heavily
criticized for ignoring human and labor rights, and for being heavily biased in
favor of the economically dominant countries which largely control their
operation. So widespread is the dissent and criticism against them that Latin
America as a continent has recently created an alternative means of financing
trade and development - The Bank of the South.
It is the underlying ‘neoliberal' ideology that these
organizations propagate which needs most careful examination - namely the
belief that economic growth and free-markets are the best means of generating
wealth for development and poverty reduction. The evidence, after the 30 years
of economic globalization that these institutions have spearheaded, is that the
benefits are unevenly distributed, accruing more readily to corporations and
the wealthy. In addition, the export-led agriculture policies that these
institutions promote tend to reduce domestic food security and leave developing
countries at the mercy of market forces.
The Need for Reform
Whilst market efficiency and economic growth are important for
development in many respects, the blind pursuit of these goals is clearly
harmful to a planet whose resources are vastly over-consumed, as well as
failing the world's poorest citizens - almost half of whom still lack the
essentials of life such as access to basic food, clean water and essential medicine.
Calls to substantially reform these institutions, and even
to progressively dismantle them in favor of representative, pro-poor alternatives
which operate within the United Nations framework, are increasingly pertinent
in this time of growing economic disparity. They demand serious consideration
if the distribution of essential goods and services is to be coordinated in a
more sustainable and cooperative manner by the international community.
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