Major Criticism of SAPs

Overview

Short-term Negative Impacts - Who Suffers and Who Gains?

Imposition of Western Expertise

Environmental Impacts

Overview

One of the major criticism on SAPs is that they have actually hurt the poor, deepened poverty and increased the gap between rich and poor in both local and global terms. Initially, SAPs were viewed as a temporary measure, to be used for three to five years, to restore sustainable balance of payment in recipient countries. In the beginning, and negative effects on poorer people were thought to be “transitional”. However, severe and painful negative impacts on the poor became apparent in short-term. Some observers say that SAPs lead to unsustainable resource exploitation and environmental destruction. SAPs have paid little attention to their environmental impact. SAPs call for increased to generate foreign exchange to service debt. The acceleration of resource extraction and commodity production that results as countries increase exports is not ecologically sustainable. Another criticism of SAPs is that their top-down styles of development undermine national sovereignty and impose of the Western Neo-classical model in a context where it may not be applicable. To ensure a continued flow of funds, countries already devastated by debt obligations have very little choice but to adhere to the conditions guided by the IMF, the World Bank and other major donors.

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Short-term Negative Impacts - Who Suffers and Who Gains?

In the short run, adjustment involves both winners and losers. The World Bank claims that it has benefited farmers, processors and manufacturers since currency devaluation increases the price of imported goods and stimulates exports. However, SAPs’ negative impacts have been more clearly recognized in the process. SAPs were designed and implemented with little considerations for change in human element in short-term. The reforms under SAPs were narrowly concentrated on the reform of macroeconomic structure and tended to neglect socio-economic issues. SAPs failed to address the needs for poorer people and thus, hurt the poor population. Consumers (especially the landless and the urban poor) were hit with higher prices of imported goods (and locally-produced goods by ripple effects) caused by currency devaluation. Lifting of general subsidies on necessities for living such as electricity, gasoline and housing affected the poor who depended on them during the removal of subsidies (Picciotto, 1996).

It is universally accepted that "social" concerns like health and education are greatly impacted by SAPs. Most often, when governments are told to reduce public expenditure, the first budget to be cut are those of health, education, and welfare. Since the wealthy and powerful can afford private medical care or education, they remain largely unaffected by cuts in budgets while vulnerable sectors including women, children, the elderly and minorities suffer the most from the short-term inpacts of SAPs due to sharp cuts in public expenditure.

The reductions in living standards of the poor are likely to be more serious in countries with low average incomes per capita, partly because incomes are already low, and even across the board cuts will drive many below the poverty line. Also, partly because these countries tend to be less flexible and responsive to shocks, they therefore have to deflate by more for any given correction in the balance of payments (Streeten, 1987).

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Imposition of Western Expertise

Some analysts even believe that structural adjustment programs are a World Bank policy tool used to subjugate the developing economies and “adjust” them so they better serve the purposes of the rich industrialized nations. These people are of the opinion that SAPs are the Western financial system’s attempt to open new markets for its goods and to create the conditions under which the Third World will continue to repay its debts to the North’s commercial banks and multilateral lending institutions, and to provide cheap raw materials for the industrial engines of the First World. The policies of SAPs focus narrowly on domestic economic adjustment and stabilization of economy that actually served for the developed countries’ primary self-interest to sustain development of global economy. In addition, the donor agencies insist in the argument that democratization in the context of a “free market” economy would compel government to be more accountable, less corrupt and thus more efficient in order to promote development since they would be judged on their performance and thrown out if they did not effectively deliver the needs of the public. Strongly encouraging democratization to the world, as if it is the only form to foster development, these agencies actually fail to consider non-democratic government’s capacity to solve their economic, social and political problems.

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Environmental Impacts

The environmental impacts of adjustment processes are mixed. Some of the price reforms have positive environmental impacts, for example, by intensifying commercial agricultural production, promoting less-erosive crop mixes, and reducing subsidies for agricultural inputs. Others have negative outcomes, as exemplified by widespread extension of substance farming, acceleration of deforestation, and overtaxing of soil productivity. Downward pressures on living standards and informalization of the economy have obliged many urban and rural poor to increase their reliance and pressures on natural resources and environmental services just to survive (Reed, 1996). The environmental impacts of SAPs differ according to the kind of economy undergoing reform, that is, whether they are extractive, agricultural, manufacturing, or information/service economies.

A principle response of extractive economies of SAPs was to expand and intensify extraction of natural resources to be traded on international markets. This is consistent with the type of policy changes applied, including removing barriers to capital flows, encouraging expansion of the export sector, and reducing the state’s regulatory capacity as regards natural resource management. Under these conditions, the environmental impacts have been quite damaging.

Subsistence farmers extend production in response to deteriorating economic and social conditions, leading to major environmental damage. Rural families with little or no land have no alternative but to intensify pressure on marginally productive agricultural areas or enter the growing ranks of informal workers in urban centers. The mutually reinforcing character of deepening poverty and environmental degradation in broad areas of some countries indicates that environmental problems will worsen in coming years (Reed, 1996).

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