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Globalization Through World Bank – IMF-WTO -- A
Historical Background.
In the Communist Manifesto,
Karl Marx while analyzing the nature and development of
Capitalism mentioned with penetrating insight the globalizing
tendency of capital. Historically the international flows of
capital and commodity trade have taken place through (a)
colonial and imperialist conquest, (b) trade and investment
among advanced capitalist countries and, (c) exchanges among
Third World countries.
The present state of international
capitalist development is ‘obviously’ the all round
Globalization of economy. Presently, Globalization is condemned
as well as praised. ‘What is this phenomenon of globalization
that has been subject, at the same time, to such vilification
and such praise?’ – asks Joseph Stiglitz (p.9). He answers
himself, ‘To understand what went wrong, it’s important to look
at the three main institutions that govern globalization – the
IMF, the World Bank, and the WTO. The IMF and World Bank both
originated in World War II as a result of the UN Monetary and
Financial Conference at Bretton Woods, New Haphshires in July,
1944, part of concerted effort to save the world after the
devastation of World War II and to save the world from future
economic depression’ (p.10 & 11). So far so good. But ‘The most
dramatic change in these institution occurred in the 1980s, the
era when Ronald Reagon and Margaret Thatcher preached free
market ideology in the United States and the United Kingdom.
The IMF and World Bank became the new missionary institutions,
through which these ideas were pushed on the reluctant poor
countries that often badly needed their loans and grants.
The ministries of finance in poor countries were willing to
become converts, if necessary, to obtain funds, though people in
these countries often remained skeptical…
‘Although the missions of the two
institutions remained distinct, it was at this time their
activities became increasingly intertwined. In the 1980, the
Bank went beyond just lending for project (like roads and dams)
to providing broad-based support, in the form of structural
adjustment loan; but it did it when the IMF gave it approval and
with the approval came IMF-imposed conditions on the country’ (Stiglitz,
p.13 & 14 – emphasis added).
The Bretton Woods agreement had
called for a third international economic organization – a World
Trade Organization to govern international trade relations.
Ultimately, Uruguay Round of Discussions culminated in the
formation of WTO on 1st January,1995.
What are the results of IMF
prescription for Globalization? ‘A growing divide between the
haves and the have nots has left increasing numbers in the Third
World in dire poverty, living on less than a dollar a day.
Despite repeated promises of poverty reduction made over the
last decade of the twentieth century, the actual number of
people living in poverty has actually increased by almost 100
million. This occurred at the same time that world income
actually increased by average 2.5 per cent annually. If
Globalization has not succeeded in reducing poverty, neither has
it succeeded in ensuring stability. Crises in Asia and Latin
America have threatened the economies and stability of all
developing countries. There are fears of financial contagion
spreading around the world, that the collapse of one emerging
market currency will mean others fall as well……The Globalization
and the introduction of market economy has not promised result
in Russia and most of the other economics making the transition
from Communism to Market.’ (Stiglitz p.5&6).
Stiglitz continues, ‘Not only in
trade liberalization but in every other aspects of Globalization
even seemingly well-intentioned efforts have often backfired.
When projects, whether agriculture or infrastructure,
recommended by the West, designed with the advice of Western
advisers and financed by World Bank or others have failed,
unless there is some form of debt forgiveness, the poor in the
developing world still must repay the loans;’ (p.8). This is not
the end. ‘If , in too many instances, the benefits of
Globalization have been less than its advocates claims, the
price paid has been greater as the environment has been
destroyed, as practical process have been corrupted and the
rapid pace of change has not allowed countries time for cultural
adaptation. The crisis that have brought in their work, massive
unemployment have, in turn, been followed by longer-term problem
of social dissolution – from urban violence in Latin America to
ethnic conflicts in other parts of the world, such as Indonesia
‘(p.8). and thus it is no fault that ‘The critics of
globalization accuse Western countries of hypocrisy, and the
critics are right’ – concludes Stiglitz (p.6, emphasis added).
Niole Wendt, a scholarly
contributor to the Journal of the University of Iowa,
penetratingly scrutinizes the harmful policies of World Bank &
IMF.
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