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Obstacles to progress

Realities

“ To this day, economists can point to few, if any, examples of substantial economic growth

among the LDCs under SAPs. Moreover, very few of the loans have been paid off. Pressure
mounts to forgive these debts, some of which demand substantial portions of government

expenditures to service.
***
Since SAPs are based on the condition that loans have to be repaid in hard currency,
economies were restructured to focus on exports as the only source for developing countries
to obtain such currency. For the inward-oriented economies it was therefore mandatory to

switch their entire production from what was domestically eaten, worn or used towards goods
that industrialized countries were interested in.

However, as dozens of countries underwent this restructuration process simultaneously and
often were told to focus on similar primary goods, the situation resembled a large-scale price

war: Developing countries had to compete against each other, causing massive worldwide
over-production and deteriorating world market prices.

While this was beneficial for Western consumers, developing countries lost 52% of their
revenues from exports between 1980 and 1992 because of the decline in prices.
Furthermore, debtor states were often encouraged to specialize in a single cash crop, like

cocoa in Ghana, tobacco in Zimbabwe and prawns in the Philippines, which made them highly
vulnerable to fluctuations in the world market price of these crops.

The other main criticism against the compelled integration of developing countries into the
global market implied that their industries were not economically or socially stable and
therefore not ready to compete internationally.

After all, the industrialized countries had engaged in the free trade of goods only after they had
developed a more mature industrial structure which they had built up behind high protective

tariffs and subsidies for domestic industries. Consequently, the very conditions under which
industrialized countries had developed, grown and prospered in the past were now discouraged
by the IMF through its SAPs.

***
There are multiple criticisms that focus on different elements of SAPs. There are many

examples of structural adjustments failing. In Africa, instead of making economies grow fast,
structural adjustment actually had a contractive impact in most countries. Economic growth in

African countries in the 1980s and 1990s fell below the rates of previous decades. Agriculture
suffered as state support was radically withdrawn. After independence of African countries in

the 1960s, industrialization had begun in some places, but it was now wiped out
***