Structural adjustment programs are overall promoted by the Breton Woods twin institutions World Bank (WB) and International Monetary Fund (IMF), which represent the neoclassical recipe of development focusing on least developed countries showing an increased need/interest for international financial support and assistance. In this case we are addressing countries "with low, stagnant and unequally distributed per capita income that have remained depended on primary commodities for their export", which in this context face high risks of prolonged conflict. (Collier and Elliot, 2003:53) In order to comprehend the intrinsic correlation between 'structural adjustment programs' (SAP) and armed conflicts when addressing development process, we will try to provide an insight into some of the SAPs compounding elements and ways they give incentives for an armed conflict to arise.
It has been argued that there is a close interrelation between development and conflict as "civil wars […] reflect not just the problem for development, but a failure of development." (Collier and Elliot, 2003:9) Countries which have evolved from a conflict due pose more probability for a new conflict to reaper in future. It is projected that within a time span of 5 years typical countries reaching the end of civil war face 44% risk of reverting to conflict. (Ibid, 2003:83) Certainly, the disruptive nature of armed conflicts can heavily impact the economic growth, but there are certain restraints to believe that conflict is for most a development misfortune. If considering that the main cause of conflict is the failure of economic development, we could assume that this statement carries more contentious connotation. Usually it is easier to portray that the risk for a conflict to arise is linked to state's weak institutional performance, poor educational system, unemployment and inequality. Michael Brown exemplifies that high unemployment, inflation, inequality, economic modernization are one of the determining conditions contributing to the use of violence by some groups in a society. Nevertheless, these particular negative elements are actually the main issues that structural adjustment programs mitigate in order to help recipient countries to reach an efficient socio-economic level of development.
The main formula of structural adjustment programs consist in its macroeconomic policy reform that addresses the recipient country through the following measures: fiscal austerity, export-oriented growth, currency devaluation, trade liberalization, privatization, good governance reforms and granting more rights for foreign investments in respect to the national laws in force. (John Rapley, 2007: 92-104) Not surprisingly, that most of the above mentioned measures due pose a high congruency with the essential context of the Washington Consensus, which sometimes structural adjustment programs are labeled to. Structural adjustments undertaken by WB and IMF presuppose conditional loans with operational purpose which often are part of the Poverty Reduction Strategy Paper of one recipient country. Despite the fact that this particular state-led development approach follows a constructive logic in the measures applied for boosting one state's efficient economic reform (mainly in post-conflict setting) , there are number of concerns over the negative consequences that structural adjustments programs invoke. As much as these programs help to stabilize the internal socio-economical matters, inevitably and continuously they lead to rising poverty level, deep concentration of income among the population, higher unemployment, undermined rural livelihoods and social upheaval most frequently portrayed in the persistent political tensions and inequality. All these issues do represent the pre-existing socio-economic difficulties that may be considered determinant factors pushing a social unrest and eventually an armed conflict.
One of the components of structural adjustment programs is fiscal austerity which assumes the process of balancing state budgets in case of overspending. Each time the government needs to spend more, it needs to take more money out of the economy. This situation creates the following scenario "by withdrawing money from the economy, through taxes and borrowing, and by driving up interest rates, the government 'crowds out' the private investors" making it difficult for businesses "to attract savings and restrict investment". (John Rapley, 2007:80) When there is less private investment, we might usually expect a decline in economic activity. Moreover, third-world countries are characterized by government spending taking place most frequently in short-transfers (spending which contributes to inflation) mostly supporting civil service and military. Once the state chooses to prioritize military expenditure during civil war, this directly reduces the economic growth as less concern is given to public infrastructure, health sector, education and social services. Therefore, we could agree with the fact that structural adjustments programs do affect in reducing spending in social services due to priority given to other economical concerns, in this way increasing prices and living cost for poor population, increasing unemployment, inequality and poverty, all in one leading to an internal domestic unrest eventually translated into a conflict. However, there is a contrasting ideas portraying that "the main economic losses from civil war arise not from the waste constituted by diverting resources from production but from the damage that the diverted resources do when they are used for violence."(Collier and Elliot, 2003:14)
Trade liberalization, as another measure of structural adjustment programs, looks into "maximizing the free flow of goods and services" in the recipient country. The trade-openness measure presumably may lower the risk of inter-state warfare and takes place either by "reducing quantitative and quantitative restrictions on imports and devaluing overvalued currencies" or by "liberalizing domestic market through elimination of price controls and marketing boards" (John Rapley, 2007:81) Certainly, this approach does fulfills the role in cutting government overspendings and benefit state budget in terms of value-added taxes collected through privatized inefficient state-owned companies. Under such circumstances, a more transparence governance as well as rigorous control over suspicious rents that could fund war-related activities is possible. Unfortunately, there is also flip-coined effect to this "picture-perfect" image. As Rapley argues ISI regimes usually try to limit the existent imports on consumer goods and favor industries with lower opportunity costs, abandon the expensive one and still rely on imports to fill the gap, when it comes to the allocation of hard-currency in the domestic market. The existence of hard currency in the economy dictates trade in primary commodities, which according to Tony Edison, may also include 'conflict commodities' (blood diamonds, timber and drugs), and "these can provide warlords with more resources than the state itself". (Tony Edison, 2004:5) All these leading to a higher risk for war finance attempts, which could resource and perpetuate conflict.
As concerns good governance reforms promoted by structural adjustment programs, it focuses on tackling corruption by reducing the size of the state. In this regard, Rapley puts into analysis that "rather than being top-down and economic, rent seeking (in the recipient country) may be bottom-up and political". Under this context, the author points out that once the rolling back of state takes place, it eventually will not reduce the rent-seeking, but "it will drive up the prices of the resources or positions of power being sought, because their greater scarcity will stiffen competition among them." (John Rapley, 2006:109) Further authors mentions that corruption in Africa, as an opportune example, indeed might be considered bottom-up: "even if a politician wants to be honest, the pressure from his/her supporters is so great that political and physical survival does depends on using position in the government to dole out favors". (Ibid, 2006:109) This certain setting can be indirectly related to the governance weakness in promoting inefficient peaceful resolution of conflicts, as the power in the end lies in the system, and not individual. Ballentine and Sherman state that "the weaker the state, the better the prospects of successful insurgency", the outbreak of rebellion is more likely is to occur when the legitimacy of the state is diminished, and there is existence of "internally generated corruption and decay that impaired both the regime credibility". (Ballentine and Sherman; 2003: 265) When it comes to dealing with structural adjustment programs, governments with weak institutional framework, due face particular tensions between donor agencies. Because most of times donor agencies do posses more knowledge and funding to implement required reforms, which make recipient countries to find themselves trapped in the situation of adequately responding to the requirements of the international community or even its own population". (Eriksson, 1998: 60).
As we may conclude from the above-mentioned, structural adjustment programs do pose a risk of perpetuating an armed conflict in the context of state's weak institutional performance, unemployment inequality, and government's rent-seeking behavior. Different states had to deal differently with neoclassical experiment of structural adjustment programs, and usually the success or failure of reforms highly depend on main elements of political economy existent within the country that is responsible and accountable for implementation. As Dollar and Svensson argue "the foremost key to successful adjustment lending is to find good candidates to support." (David Dollar and Jakob Svensson, 1998:4) John Rapley straightforward exemplifies in his findings that when analyzing the impact 'structural adjustment programs' on the country's internal development/regression, we can either consider Chile's boldest measure yielding from misery, boosting economic growth and social indicators, or Ghana's needed multi-facet response to expand export and increase investment, or India's shock therapy that redirected national economy from agricultural-oriented economy to opportunism of industrial sector.
Identify the main differences in industrialization policies in East Asia and in Latin America. What factors can explain these differences?
Industrialization policies promoted by the newly industrialized countries of East Asia have recorded impressive economic strides that serve as successful lesson-learn experience for other developing countries. In contrast, though Latin American countries embarked on pursuing an industrialization-led development much earlier, they somehow ended up to be overhauled by East Asia in the course of the past decades. In this essay, I would like to explore main differences in industrialization policies pursued both by East Asia and Latin America, in the context of their individual developmental strategies.
The main logic behind the developmental state model is the state intervention, a process that can generate: either (i) inefficient industries via import-substituting industrialization requiring subsidization on a permanent basis for their survival - the case of Latin American countries, (ii) "rent seeking" on a substantial scale, which detract the attention of economic agents from productive activities into lobbying for increased allocations of government subsidies and protection, (iii) or emergence of countries with achieved extraordinary rates of economic growth, namely East Asian countries.(Ziya Onis,1991:109) Moreover, Cristobal Kay argues that, when contrasting industrialization policies in Latin American and East Asia, one should consider that an important discrepancy between them relates to the timing of the agrarian reform which for countries as Taiwan and South Korea resulted to be "a key ingredient in the subsequent successful industrialization process". (Cristóbal Kay, 2002: 1076) For Latin American countries "most agrarian reforms happened after industrialization was already firmly established and were often seen as a way to revive the flagging industrialization process following what has been termed the exhaustion of the easy phase of import substitution industrialization". (Ibid)
Developing states foster economic and industrial processes that constrain the
autonomy of social actors in the short run while, in the long run, enhance
their prospects for empowerment and autonomy from the state. As Bellin
points out, "by sponsoring industrialization, the [authoritarian] state nurtures
the development of social forces ultimately capable of amassing sufficient
power to challenge it and impose a measure of policy responsiveness upon it.
In short, the very success of the state's strategy leads to the demise of the state's
capacity to dictate policy unilaterally" (Bellin 2002: 4).
While this developmental paradox may in the long run foster conditions
that favor democratic openings, it is not a natural by-product of economic
development in just any developing country. It is, rather, a specific outcome of
development processes unleashed by "developmental states." Chalmers Johnson
(1982: 18-19) defines developmental states as those that combine the
market-rationality of capitalist economies of states like the United States with
the ideological-plan economies of states similar to that of the former Soviet
Union. "In the plan rational [i.e. developmental] state, the government will
give greatest precedent to industrial policy; that is, to a concern with the structure
of domestic industry and with promoting the structure that enhances the
nation's international competitiveness."5 Developmental states, at least in their
successful variety, are preponderant in East Asia, with Japan, South Korea, and
Taiwan being paradigmatic cases. Elsewhere in the developing world, only the
Chilean and to a much lesser extent the Argentine and the Brazilian states
come close to being considered developmental, although all three were more
aptly classified as "bureaucratic-authoritarian" in their pre-democratic days
(O'Donnell 1973). In other parts of the developing world, most notably in
the Middle East, in Central America and the Caribbean, and throughout
Africa, the dynamics of economic transformation and development have been
decidedly different. Whatever the inter- and intra-regional differences in the
economic development of each of these remaining parts of the developing
world, the one more or less consistent feature in all of them has been the state's
ability to withstand being swept away as a result of the consequences of the development that it itself fostered. A partial exception is South Africa, although
its democratic transition was as much a result of the relentless struggle of the
African National Congress (ANC) against a state that was morally bankrupt
and internationally isolated as it was a consequence of economic development
and the rise of a small but articulate group of middle class, black revolutionaries
(DeFronzo 1996).
Th e Middle East's Democracy Deficit in
Comparative Perspective
The new Dutch development policy report by the Scientific Council for the Government (WRR) suggests that "development aid" needs to move away from providing social services (Education, health, etc) to a more growth oriented development. What are the essential differences and similarities between these two perspectives on development and can development they be perceived as mutually exclusive? Discuss.
The political economy of armed conflict: beyond greed and grievance
Door Karen Ballentine,Jake Sherman,International Peace Academy p.265
Rowlands, Dane, and Troy Joseph. "The International Monetary Fund and Conflict Prevention." Conflict Prevention: Path to Peace Or Grand Illusion? Ed. David
