Was structural adjustment necessary, and it did di d it work? Answer with reference to one country. The inception of the structural adjustment programmes programmes (SAPs came a!out due to the concei"ed ideas of #underde"eloped #underde"eloped areas$ of the world and the #delusion of communist ideals$ in President Truman$s Truman$s inaugural address in %&'& (ono"an, %&&). Although it was not until President *eagan and P+ +argaret Thatcher came into power in %&& and %&-% that structural adjustment !egan its implementation on the de"eloping world (hor, /001. Structural adjustment was a method in which the 2retton Woods Woods institutions, !eing the 3+4 and the World 2ank, would gi"e out conditional loans to inde!ted countries (+ilward, /000. These conditions were were the e"entual e"entual pri"atisation of their economies, the democratisation of go"ernment, and the remo"al of tari5 !arriers6 essentially a neoli!eral approach to the opening up of these countries$ go"ernments and economies (7hong 8 9:pe;ico as a reference, whether whether or not it was a necessity and for whom, and whether or not it worked out in the short term and the e"entual long term. The glo!al crisis, fuelled fuelled !y the sharp rise rise in oil prices !y P@7 P@7 in %&, crippled most of +e>ico$s pri"ate sector, and thus the state was forced into action (Bellman, %&&. The P*3$s (3nstitutional *e"olutionary Party response in"ol"ed e>tending the pu!lic sector !y taking o"er failing pri"ate enterprises, maintaining them as sources of employment to, as Bar"ey (/001 puts it, #sta"e o5 the threat of the workingico. +e>ico. What su!sided was an increase of +e>ican de!t from ).- !illion dollars to a plummeting 1- !illion dollars !y %&-/, what followed was Eolcker$s high interest interest rate policy which meant paying !ack the loans l oans was nigh impossi!le6 +e>ico declared !ankruptcy in August %&-/ (Bar"ey, /001. At this point, a macroeconomic reform seemed an ine"ita!le necessity. 3n the Fnal days
Print document
In order to print this document from Scribd, you'll first need to download it.
of President Portillo$s administration he sided with the 3+4 to reFnance the foreign de!t. A loan of ' !illion dollars was issued, in return for an austerity programme consisting of huge go"ernment sector Cancel Download Andcuts Print(Bellman, %&&. The 2retton Woods institutions pulled together to impose neoli!eral reform upon +e>ico, what followed wasG pri"ati;ation, reorgani;ation of the Fnancial system, lowering of tari5 !arriers, and the opening of internal markets to foreign capital. 3n %&-', under President de la +adrid assisted !y DSico was not in a position to disagree with the implementation of neoli!eral reform and structural adjustment at the time, essentially they had no choice. 3t has !een highlighted that structural reform and neoli!eral ideologies were an unnecessary side e5ect of the necessary loans that were granted to +e>ico (Smith, Acuna, 8 Iamarra, %&&'. Whether or not neoli!eral reform #worked$ for +e>ico prior to %&-), 2ello (%&&' posits that it certainly #worked$ in fa"our of DS policy, with the opening up of internal markets to foreign capital, a "ariety of +e>ican !anks and !usinesses were !ought out !y DS !usinesses, and the DS thri"ed upon this opportunity (Watts, %&&'. +e>ico then joined the IATT (Ieneral Agreement on Tari5s and Trade in %&-), a decision that was ne"er e"en contemplated prior to +e>ico$s !ankruptcy, potentially another factor in a scheme to !eneFt DS foreign !usiness and e>ports (Bellman, %&&. 3n the years of %&- to %&--, +e>ico$s per capita income fell at a rate of 1 percent per annum. 3nCation had gone up to appro>imately %1J !y the years that followed %&). At the same time, go"ernment Fscal remodelling and re< orientation meant state e>penditure declined (Bar"ey, /0016 pu!lic healthcare declined, as did education and food su!sidies for the poor (Beredia 8 Purcell, %&&1. The World 2ank$s structural adjustment programs were said to !e #short term pain, for long term gain$, !y the end of the %&-0s, +e>ico was e"idently still immersed in the #short term$ chaos of neoli!eral reform . The World 2ank$s presumptionKsynta> here is not entirely accurate. According to *iddell (%&&/ the total longico, !ut for the majority of the de"eloping world. n the contrary, 2enerMa (%&&& sides with the World 2ank in claiming that o"er the long
Print document
In order to print this document from Scribd, you'll first need to download it.
cost of high social ine=uality and the widening of the income gap (2enerMa, %&&&.
Cancel And Print 3n +arch %&&0 NA4TA was formed. ThisDownload was followed !y another structural
adjustment programme, along !road neoli!eral lines, known as the Salinas #*e"olution$ (Bar"ey, /001. President Salinas pri"ati;ed +e>ico$s !anks, and employment in the state sector was cut in half (!etween %&-- and %&&'. 2y the year /000, the num!er of stateico would !e less likely to fall into !ankruptcy as employment was no longer dependent upon the state, argua!ly a necessary austerity measure (*os, %&&. The su!se=uent lowering of import !arriers, and the passing of the permission of foreign ownership and pri"ati;ation of ejido indigenous lands !y Salinas in %&&%, allowed the Dnited States to dri"e down prices of corn and other products to e>port to +e>ico, which meant only the most eOcient +e>ican farmers could compete (Bar"ey, /001. @ssentially, the indigenous farmers that were protected !y the %&% 7onstitution, enshrining them with legal rights to own and collecti"ely use land in the ejido system, were close to star"ation and forced to join the already o"ercrowded cities, which at the time were riddled with unemployment (*os, %&&. As Bar"ey (/001 criti=ues the Salinas #re"olution$, he implies that it may ha"e !een necessary for reform to a"oid stateico socially with the indigenous farmers, and the conse=uential ur!an unemployment. +e>ico$s neoli!eral reform policy may ha"e !een a conditionality of loan payments recei"ed from the 2retton Woods institutions and thus a necessity, !ut it failed to work with the lower income population of +e>ico, which e"entually led to riots and the uprising of the apatista re!ellion in 7hiapas, %&&' (Watts, %&&'. The apatista re!ellion is a perfect e>ample of how the structural adjustment program, del"ing further into neoli!eral ideals, didn$t work. 3n terms of political ideology reCecting the "iews of its people, +e>ico and the P*3 go"ernment was "ery much out of touch, as 2ouillon et al (%&&& suggests, they were go"erning a country against the will of the majority of the population. What this led to was a host of riots in southern +e>ico that were =uickly controlled !y state army forces. Although the apatista re!ellion had no true economic or, much to its dismay, political e5ect, it showed the underlying social unrest and
Print document
In order to print this document from Scribd, you'll first need to download it.
incompati!ility with structural adjustment reform and the people of +e>ico (Bellman, %&&.
Download And Print in %&-/, the DS 4ederal The %&&1 #te=uila crisis$ was Cancel caused !y, as it happened
*eser"e raising interest rates putting speculati"e pressure on the peso, which was e"entually de"alued. +e>ico could no longer mo!ili;e enough dollars to pay o5 their dollarercising e>ecuti"e powers managed to pull together a '.1 !illion dollar rescue package. 3t is essential here to note that without the close relations +e>ico had with the DS in terms of geography and trade partnerships such as NA4TA, it may ha"e del"ed e"en further into a deep recession, and we may ha"e witnessed the failure and irrele"ancy of the SAP. 3n order to sa"e American Frms operating within, and e>porting to +e>ico, and to keep the legitimacy of neoli!eralisation, 7linton was o!liged to act as he did (Bar"ey, /001. 3f anything, the further neoli!eral ideals put forward !y 3+4 pressures and Salinas may ha"e had its share of necessity, !ut it is clear to see at this time, that for +e>ico structural adjustment was failing, !ut not for the DS. The #te=uila crisis$ allowed DS capital to !uy up all assets at Freican !ank was foreign owned, !y /000, /' of the 0 +e>ican !anks were foreign owned6 so for the DS, the SAP in +e>ico was a great success (ollar 8 S"ensson, %&&-. The SAP produced o"er /' !illionaires according to 4or!es +aga;ine (%&&', and the /'th, coincidentally, richest man in the world 7arlos Slim (Bellman, %&&. 7arlos Slim$s annual salary e=uates to the poorest % million +e>icans$ salary per annum (Bellman, %&&, e"en at this point, it is still hard to argue +e>ican adjustment worked. 3n %&&1, !ased on a study !y Beredia (%&&1 o"er 10J of the +e>ican population li"ed in po"erty. This did not change, in /0%0, the World 2ank$s data on population at the national po"erty line was 1%.J(World 2ank, /0%%. 3n %&-0, !efore structural adjustment, +e>ico$s IP was L%' !illion dollars (World 2ank, /0%%, the pri"ati;ation and opening up of trade to glo!al markets e"entually paid o5 for the country$s o"erall IP (Adelman 8 Taylor, %&&0. Aside from the %&-/ crisis and the %&&1 #te=uila crisis$, where +e>ico$s IP plummeted, !y the end of the /0 th century +e>ico$s IP reached '-%./ 2illion dollars. 3n /0%% +e>ico$s IP had reached %.% trillion dollars. So in terms of actual wealth accumulation i.e. IP, structural adjustment worked for +e>ico (Adelman 8 Taylor, %&&0.
Print document
In order to print this document from Scribd, you'll first need to download it.
To conclude, it is e"ident to see that the success and necessity of +e>ico$s SAP was completely su!jecti"e. 3n the case of +e>ico$s relationship with the DS, structural adjustment allowed for sta!ili;ed !enefactors Cancel Download And Print and de!t relie"ers in the form of the 2retton Woods institutions (Beredia 8 Purcell, %&&1. The loans themsel"es were a necessity for +e>ico, as they helped the country rependiture on pu!lic ser"ices had huge social impacts on the +e>ican people. A necessity economically, !ut whether it worked in anyone$s fa"our other than the Dnited States and +e>ico$s upper classes is contested. Structural adjustment allowed +e>ico as a country to esta!lish itself in the glo!al economy. 3t Ft into DSico, as o"er 10J of +e>icans li"e !elow the po"erty line (World 2ank, /0%%. Structural adjustment led to the amalgamation of foreign in"estment and the pri"ate sector and worked well in that respect, !ut con"ersely a large part of the +e>ican population was and still is marginalised today, an unnecessary repercussion (Bar"ey, /001. Dnemployment soared for the working classes after the SAP, and it argua!ly alienated the state from its people, leading to ci"il unrest (2ouillon, 9ego"ini, 8 9ustig, %&&&. Structural adjustment was necessary for +e>ico to connect with the glo!al economy, this worked for +e>ico$s IP o"erall. n the contrary, for the +e>ican working class, and the se"ere income gap that resulted from neoli!eral reform, it didn$t work out at all, nor was it necessary.
Bibliography Adelman, 3., 8 Taylor, @. (%&&0. 3s structural adjustment with a human face possi!leG The case of +e>ico. The Journal of Development Studies , -<'0. 2ello, W., 7unningham, 8 *au. (%&&'. Dark victory: The United States, structural adjustment, and global poverty. 9ondonG Pluto. 2enerMa, 9. (%&&&. Structural adjustment policies. The lgar !ompanion to "eminist conomics , )-<)&1. 2ouillon, 7., 9ego"ini, A., 8 9ustig, N. (%&&&, April %&. #ising $ne%uality in &e'ico: #eturns to (ousehold !haracteristics and the )!hiapas *ect) . *etrie"ed +arch , /0%, from httpGKKpapers.ssrn.comKsolKpapers.cfm?a!stractQidR%-/%-
Print document
In order to print this document from Scribd, you'll
7hong, A., 8 9:pe;ico. $nter+merican first need to download it. Development -ank , ale Dni"ersity and National 2ureau of @conomic *esearch. atta<7haudhuri, +. (%&&0. +arket and Io"ernmnet 4ailure. The Journal Cancel 4ailure Download And Print of conomic erspectives , /1<&. ollar, ., 8 S"ensson, H. (%&&-. What e>plains the success or failure of Structural Adjustment Programs? /orld -ank olicy #esearch /orking aper , No. %&-. ono"an, *. (%&&). Tumultuous 0ears: The residency of (arry S. Truman 1232+ 1245. Dni"ersity of +issouri. Bar"ey, . (/001. -rief (istory of 6eoliberalism. New orkG >ford Dni"ersity Press. Bar"ey, . (/001. Dne"en Ieographical e"elopments. 3n . Bar"ey, -rief (istory of 6eoliberalism (pp. -<%%&. New orkG >ford Dni"ersity Press. Bellman, H. A. (%&&. Structural Adjustment in +e>ico and the og that idnt 2ark. !entre for #esearch on 7atin merican and the !aribbean , %<%. Beredia, 7., 8 Purcell, +. (%&&1. Structural Adjustment in +e>icoG The *oot of the 7risis. %uipo U-78 , prepare !y the e"elopment IAP for the Social Summit in 7openhagen, %&&1. hor, +. (/001, Huly %1. Structural Adjustment @>plained. (+. +orrell, 3nter"iewer +ilward, 2. (/000. 7hapter /G What is Structural Adjustment. 3n I. +ohan, @. 2rown, 2. +ilward, 8 A. ackico. mployment and Training apers , %ico
