It ensures access to other peoples’ raw materials and infrastructure on the cheapest possible terms. Dozens of countries must compete for shrinking export markets and can export only a limited range of products because of Northern protectionism and their lack of cash to invest in diversification. Market all world country name and their capital pdf ensues, reducing exporters’ income to a bare minimum while the North enjoys huge savings.
Their programs have been heavily criticized for many years for resulting in poverty. In addition, for developing or third world countries, there has been an increased dependency on the richer nations. This is despite the IMF and World Bank’s claim that they will reduce poverty. IMF and World BankIMF and World Bank Reform? The role of the state is minimized. Privatization is encouraged as well as reduced protection of domestic industries.
Other adjustment policies also include currency devaluation, increased interest rates, flexibility of the labor market, and the elimination of subsidies such as food subsidies. To be attractive to foreign investors various regulations and standards are reduced or removed. The impact of these preconditions on poorer countries can be devastating. Poor countries must export more in order to raise enough money to pay off their debts in a timely manner.
Because there are so many nations being asked or forced into the global market place—before they are economically and socially stable and ready—and told to concentrate on similar cash crops and commodities as others, the situation resembles a large-scale price war. Then, the resources from the poorer regions become even cheaper, which favors consumers in the West. These nations are then told to peg their currencies to the dollar. But keeping the exchange rate stable is costly due to measures such as increased interest rates. 99, or in Mexico, Brazil, and many other places.
When IMF donors keep the exchange rates in their favor, it often means that the poor nations remain poor, or get even poorer. Millions of children end up dying each year. Competition between companies involved in manufacturing in developing countries is often ruthless. We are seeing what Korten described as a race to the bottom. With each passing day it becomes more difficult to obtain contracts from one of the mega-retailers without hiring child labor, cheating workers on overtime pay, imposing merciless quotas, and operating unsafe practices. 103This is one of the backbones to today’s so-called free trade.