NOTES ON STRUCTURAL ADJUSTMENT PROGRAMMES

(Rbinson Rojas)(1997)

Since the late 1950s the International Monetary Fund have been imposing monetarism (neo-classical economic theory based economic policies) as a condition for lending money to less developed societies facing problems with their balance of payments. What makes of monetarist strategies a main issue for developing societies during the 1980s and the 1990s, is that the World Bank adopted as its main policy imposing monetarist economic policies on less developed countries. Therefore, since the late 1970s-1980s until today, not only the IMF but also the World Bank have been the champions for creating deregulated markets all over planet earth. Thus, poor countries had to apply the above policies if they needed to finance deficit on balance of payments and/or finance new projects for further economic and/or social development. They have to accept the "Washington Consensus", as this neo-liberal perspective is called. Structural Adjustment Programmes is the name for this comprehensive economic policies imposed on or accepted by the ruling elites in less developed societies. The main aim of structural adjustment programmes is to transform all the economies in the world into capitalist economies inserted in one system under the management of international capital. If we look at the main five measures imposed by adjustment programmes it appears very clear that they tend to facilitate an economic environment favourable to the activities of globalized production as controlled by transnational corporations: 1.- promotion of outward-oriented growth; 2.- expansion of the private sector's role as the growth process's driving force; 3.- removal of barriers to international capital flows; 4.- diminishing economic role of the state; and 5.- deregulation and restructuring of domestic labour markets. During the 1950s, 1960s and 1970s, "structuralism" was the established orthodoxy for development theory and policy for African, Asian and Latin American developing countries. The basic tenets of structuralism were as follows: 1.- in poor countries, the economies were structurally different from advanced industrial economies (capitalist center of the world economy). This structural difference was an outcome of colonization by Western European imperialist nations) Because of the above: 2.- Advanced industrial economies needed economic policies as theorized by Keynes (the management of aggregate demand -national demand), while 3.- poor countries economies, being disarticulated ("fragmented" economies, "fractured" economies), were a "special case" of Keynesian economics: development economics. 4.- development economics was about the state-government playing the main role in social and economic "modernization", and planning economic development, in partnership with private capital -both national and foreign- passing through stages of import-substitution leading to export-led strategies. All the above shaped a school of thought based on the idea that the market economies in the world were divided in a "dual" system: modern

economies and traditional economies, being the traditional economies in need of becoming modern through "development economics". During the last stage of the period of the Cold War, the concept of "mono-economics" began to develop, based on the notion of final victory, end of history, the arrival of the final stage in human development, because the capitalist system had defeated-destroyed all alternative attempts to economic development. This "mono-economics" (Friedman, Von Hayek, et al) concept allowed to argue that the dynamics of the free-market was good for both "advanced industrial economies and poor economies". Calling themselves "neo-liberals", which is just another label for "neo-classicals", the followers of "mono-economics" argue that: 1.-The free-market structure delivers economic growth, full employment, and human development both in industrialized areas and rural areas of the world; 2.-Structural adjustment was necessary for advanced industrial economies and less developed economies, with the aim of unchained those economies from Keynesian constraints and "development economics" constraints; 3.-Structural adjustment has two main components: a) stabilization of prices through balanced budgets, and b) market liberalization/deregulation plus public sector reform as the environment for free-markets. 4.-a central assumption is the primacy of macroeconomic stabilization for both the external sector (balance of payments), and the domestic sector (inflation under control mainly through controlling the level of wages) 5.-to support the above notions, the following political assumptions were necessary: -the state is always enemy of economic growth; -international financial institutions are more prepared to lead structural adjustment than domestic financial institutions; -international capital is the most efficient capital available for poor economies in their quest for economic take-off. Of course, the origin of structural adjustment policies has to be sought not merely in the deteriorating international economic environment of the 1970s, but also in the evolution of policy thinking within the World Bank, the latter evolving from the evolution of economic thinking within the elite groups in the US and the UK. Structural adjustment policy is composed of: A) Stabilization, and B) structural adjustment. A) is composed of A.1 fiscal policy A.2 monetary policy A.3 devaluation B) is composed of B.1 B.2 B.3 B.4 resource mobilization public sector allocation market liberalization institutional reform

B.3) market liberalization is composed of: B.3.1 goods market (agriculture and industry)

B.3.2 B.3.3 B.3.4 B.3.5 B.3.6 B.3.7 B.3.8 B.3.9

current account (exports and imports) domestic financial markets (banking system) capital markets (treatment to foreign capital) internal factor markets (capital and labour) return to market-determined price removal of qualitative restrictions promotion of private sector operations limitations on the role of government

B.3.8) promotion of private sector operations is composed of: B.3.8.1 divestiture (leaner civil service, health, education, housing, etc) B.3.8.2 closure (transferring state firms to the private sector) B.3.8.3 privatization of services (contracting out) B.3.8.4 exposure to competition from the private sector (prisons, hospitals, schools, etc) (Some basic literature: J.Toye, "Structural Adjustment, Issues and Experience", ILO, 1995 A. Rahman Khan, "Structural Adjustment and Income Distribution", ILO, 1993 UNDP, "Stabilization and Adjustment. Perspectives on adjustment and economic reform in Africa", UN, 1991 L. Demery and T. Addison, "The alleviation of poverty under structural adjustment", World Bank, 1987. Oxfam, "Africa. Make or Break. Action for Recovery", Oxfam, 1993 Oxfam, "Embracing the Future. Avoiding the Challenge of World Poverty", Oxfam, 1994 Oxfam, "The Oxfam Poverty Report", Oxfam, 1995 D. Reed (ed.), "Structural Adjustment, the Environment, and Sustainable Development", EarthScan, 1996 R.Rojas: 15 years of monetarism in Latin America: time to scream UNCTAD: The Trade and Development Report, 1997 (press release 1) UNCTAD: The Trade and Development Report, 1997 (press release 2) R.Rojas: Notes on economics: about obscenities, poverty and inequality World Development Report 1997, World Bank, 1997) By and large, any adjustment programme will 'stabilize' the internal economy through adjusting the exchange rate; reducing any fiscal deficit (reducing public expenditure and/or increasing taxes), contraction in the money supply, and, 'structural' adjustment will liberalize the trade regime (reduction/abolition of restriction on imports; more incentive to export); improving the productivity of public investment (charging for services, abolishing subsidies, etc); restructuring the tax system (through indirect taxes); liberalizing the allocation of credit, and improving the incentive to save; improving efficiency of public enterprises (emphasis on profits); liberalizing prices (especially price of labour, labour markets will be the main target here). SOME FINDINGS

Oxfam (1994) assessed World Bank practice as follows: "Structural adjustment programmes are undermining recovery prospects, compounding inequalities, undermining the position of women, and failing to protect access to health and education services. "Project interventions often continue to cause unacceptable -and unacceptably violent- human displacement and environmental damage. "The Bank has failed to develop a coherent debt-reduction strategy for the world's poorest countries. "While endorsing 'good governance' in the South, the World Bank is itself unaccountable to citizens and governments in the developing world." Focusing on structural adjustment programmes, Oxfam (1994) summarizes that "structural adjustment programmes (SAPs), designed by the World Bank and the IMF, proliferated in the early 1980s, as one country after another in the South was afflicted by a lethal combination of high interest rates and falling commodity prices. Along with the balance-ofpayments loans came conditions. These required government compliance with targets for residing budget deficits, liberalising imports, deregulating internal markets, and promoting exports. The stated objective has been to support export-led recovery. More recently, the World Bank and the IMF have claimed that SAPs constitute and integral part of a poverty-reduction strategy geared towards 'employment intensive' growth." And, then says that "what is unacceptable...is the imposition of the type of extreme deflationary measures associated with structural adjustment. The Bretton Woods system was created to avoid such pressures, and far more could have been done to develop alternatives. In particular, as we argue below, the Bretton Woods agencies should have demanded large-scale debt reduction to release development resources"... "Instead, the IMF has imposed a monetarist strait-jacket on much of the South. Potentially competitive labour intensive industries and rural employment have been undermined by declining public investment in social and economic infrastructures, credit shortages and import constraints. Moreover, the imposition of an 'export-led growth' strategy for resolving the debt crisis has carried the seeds of its own destruction, especially in the world's poorest countries. Increased commodity exports have contributed to the most protracted and deepest depression in world markets since the 1930s..."In Oxfam's view, these adjustment policies were in large measure responsible for the 'lost decade' of the 1980s, when most developing countries experienced steep declines in human welfare. The danger now is that structural adjustment policies will consign large swathes of the developing world to another 'lost decade' of deepening poverty, rising inequality, slow growth and mass unemployment"... The following was Oxfam's overview of the 'lost decade': ---In Latin America per capita incomes dropped by 10 per cent and investment fell from 23 per cent to 16 per cent of national income during the 1980s. Import activity dropped sharply, as governments transferred a massive stream of wealth -totalling over $200bn, or some 6% of GDP, during the decade- out of the region. Inevitably, deflation on this scale increased social misery, with the costs of adjustment passed disproportionately to the poor. The World Bank itself estimates that nearly one third of the region's population was living in poverty by 1990, up from 27% a decade earlier; and an estimated 10 million children are suffering from malnutrition. Over

the 1980s, the poorest 20% of the region's population saw their share of income fall to less than 4%. Unfortunately, the Bank has remained oblivious to the connections between these trends and its own adjustment policies. The Inter-American Development Bank has identified inequality as one of the major obstacles to recovery in the region. ---In Africa, where more than thirty countries have embraced structural adjustment, average incomes fell by 20% during the 1980s, open unemployment quadrupled to 100 million, investment fell to levels which were lower than in 1970, and the region's share of world markets fell by half to 2%. Today, sub-Saharan Africa is the only developing region in which poverty is increasing and human welfare is worsening. Africa recovery prospects have suffered in acute form from the emphasis placed by SAPs on export-led recovery. As one country after another expanded production of primary commodities for stagnant world markets, they contributed to the worst international price slump since the 1930s. During the second half of the 1980s, West African cocoa producers almost doubled their production, only to see their foreign-exchange earnings fall. The IMF now concedes that worsening terms of trade have undermined its adjustment programmes, and the World Bank's most recent GLOBAL ECONOMIC PROSPECTS report acknowledges that world prices for coffee, cocoa and tea -Africa's major primary commodity exports- have been depressed by oversupply." An empirical illustration of Oxfam's argument is the following: Diverging prices for commodities and manufactured goods in the international market during the process of globalization: UNIT VALUE INDEX of manufactures OIL All exported by groups food agric. minerals, France, Germany, raw ores, Japan, United Kingdom, materials metals and United States 1960 100 100 100 100 100 100 1965 108 102 98 98 78 115 1970 117 95 108 103 70 148 1975 221 251 132 164 56 91 1980 329 556 102 106 74 108 1985 275 503 81 83 64 83 1990 446 230 63 61 53 76 1996 504 184 63 62 55 69 2006 529 570 81 59 52 169 ---annual growth 1960-80 (%) 6.1 9.0 0.1 0.3 -1.5 0.4 1980-06 (%) 1.8 0.1 -0.9 -2.2 -1.3 1.7 Source: From UNCTAD Handbook of Statistics (2007) database at: http://stats.unctad.org/Handbook/TableViewer/ (data processed by Dr. Rbinson Rojas. ________________________________________________________________________ SUMMARY FOR FREE MARKET ECONOMIES WITH NEGATIVE NET FACTOR INCOME FROM ABROAD ($ MILLION -1992 PRICES) -----------------------------------------------------------------1960-1992 1960-1975 1976-1992

TOTAL -3065221.19 -672230.50 -2392990.70 PER Day -254.48 -115.11 -385.66 PER HOUR -10.60 -4.80 -16.07 -----------------------------------------------------------------AFRICA/per hour -2.21 -2.01 -2.39 LATIN AMERICA/per hour -3.26 -1.52 -4.90 ASIA/per hour -1.79 -0.72 -2.79 INDUSTR>/per hour -3.35 -0.55 -5.98 -----------------------------------------------------------------Note: Six industrialized countries received more than 95% of the above flow (United States, Switzerland, Japan, Germany, Luxembourg and France) ===Source: World Bank Tables 1995===processed by Robinson Rojas=== ________________________________________________________________________ Oxfam (1994) added that "...economic growth has yet to translate into a reduction of poverty and inequality...". The World Bank "...also confirmed that there is little prospect of economic growth making an impression on poverty in the foreseeable future. In Ghana, the star pupil of both the World Bank and the IMF, the average citizen will not cross the poverty line for another half-century. Moreover, after a decade of adjustment and aid transfers equivalent to 8% of national income, private investments in Ghana remains insufficient to replace existing capital stock, and the country's debt has tripled to over $4bn." Oxfam(1994) listed the following assessment of structural adjustment programme's effect on employment: 1) In Zambia, fragile industries have been confronted with punitive interest rates and a surge in competition from cheap imports. More than three-quarters of its textile factories have closed by 1993, generating mass unemployment in urban centres. "This has not prevented the IMF from lauding Zambia as a model to be followed by others for its achievements in lowering inflation. 2) In countries such as Mexico, Costa Rica and Bolivia, average wages have fallen by one third since 1980 -and they are still falling. "This partly explains the increase of 38m to 69m in the number of urban-based people living in poverty in the region. In Costa Rica, one of Latin America's model adjusters, the proportion of the population unable to meet its basic needs increased from 21% to 28% between 1987 and 1991." 3) According to the International Labour Organisation, real wages in Africa have fallen by between 50% and 60% since the early 1980s in most countries. "In Tanzania, the average minimum wage was below even the minimum food basket by 1988, and by 1991 it was insufficient to purchase twenty day's worth of goods." 4) "In Latin America, open unemployment has risen to an average of over 10%, and is considerably higher in countries such as Peru and Bolivia. In Sub-Saharan Africa, average unemployment in countries such as Zambia, Tanzania and Ghana is in excess of 20%. 5) "Rising unemployment and falling wages have been accompanied by a massive expansion of employment in the informal sector, which now accounts for around two-thirds of employment in Africa. This has been welcomed by the World Bank and the IMF as a move towards market

'flexibility'. However, that 'flexibility' reflects the deepening impoverishment of women, who have been forced to take on multiple jobs, working long hours for low pay in the informal sector to maintain family income. Their plight has been worsened by a steep decline in informal sector wages, which have fallen by almost 60% in Latin America since 1980s." 6) "In Chile, widely cited as a model adjuster by the World Bank and the IMF, income inequalities have widened dramatically. In 1990, minimum wages were 20% lower than in 1980. Meanwhile, the income share of the poorest 20% of the population fell by a fifth between 1980 and 1990. Flexible labour markets are now the main cause of poverty in Chile." ( see C. Schneider, "Chile, the underside of the miracle", and R. Rojas, "15 years of monetarism in Latin America. Time to scream") 7) Trade union rights "have been severely eroded in a number of adjusting countries. Chile under the regime of General Pinochet is most extreme example. But the right to collective action in defence of wages has also been seriously curtailed in Ghana, Zimbabwe, Mexico and the Philippines. 8) In Latin America, adjustment policies have dramatically changed the "poverty profile in most countries. In addition to the general increase in poverty noted earlier, the number of people living in extreme poverty increased from 62m to 93m between 1980 and 1990. Over the same period, falling wages and rising unemployment increased the urban poor population, which in 1993 accounted for 60% of the total." 9) "In the Philippines, the mass unemployment and impoverishment caused by stabilisation and structural adjustment forced millions of destitute families to migrate to marginal upland forests and coastal areas for a subsistence livelihood, with devastating environmental consequences." A. Rahman Khan ("Structural adjustment and income distribution. Issues and experience", ILO, 1993), concludes that "the claim that, on average, official adjustment programmes under the auspices of the World Bank and the IMF have performed well, not only by the conventional standards of promoting adjustment and preserving growth but also in terms of protecting the poor, is very hard to substantiate convincingly". Khan (1993) uses the following World Bank table to illustrate his statement: _______________________________________________________________________ The performance of the 19 highly intensively adjusting countries Country Annual per Annual GDP growth Trend in poverty/ capita GDP rate (%) inequality growth rate (%) 1980-90 1965-80 1980-90 _______________________________________________________________________ Argentina -1.7 3.4 -0.4 increasing rural poverty Bolivia -2.6 4.4 -0.1 increasing poverty Cote d'Ivoire -3.2 6.8 0.5 increasing poverty Ghana -0.3 1.3 3.0 increasing rural poverty Jamaica 0.3 1.4 1.6 not known Kenya 0.4 6.8 4.2 increasing rural poverty Malawi -0.5 5.5 2.9 increasing rural poverty Mauritania -1.0 2.1 1.4 not known Mexico -1.0 6.5 1.0 increasing rural poverty Morocco 1.4 5.7 4.0 declining rural poverty

Pakistan 3.1 5.2 6.3 rising inequality Philippines -1.5 5.7 0.9 increasing poverty Senegal 0.0 2.3 3.0 not known Togo -1.8 4.3 1.6 not known Tunisia 1.3 6.5 3.6 declining rural poverty Turkey 2.6 6.2 5.1 not known Uganda 0.3 0.6 2.8 declining poverty Venezuela -1.7 3.7 1.0 increasing poverty Zambia -2.8 2.0 0.8 increasing poverty ________________________________________________________________________ source: World Bank, data gathered in 1992. ________________________________________________________________________ In the same work, Khan compares the performance of adjusting countries and non-adjusting countries during the period 1980-1989. The adjusting countries were 55: Burkina Faso, Burundi, Cote d'Ivoire, Central African Republic, Chad, Congo, Gabon, Gambia, Ghana, Guinea, Guinea-Bissau, Kenya, Madagascar, Malawi, Mali, Mauritania, Niger, Nigeria, Senegal, Sierra Leone, Somalia, Sudan, Tanzania, Togo, Uganda, Zaire, Zambia, Zimbabwe, Bangladesh, China, Indonesia, South Korea, Nepal, Pakistan, Philippines, Thailand, Morocco, Tunisia, Turkey, Hungary, Yugoslavia, Argentina, Bolivia, Chile, Colombia, Costa Rica, Ecuador, Guyana, Honduras, Jamaica, Mexico, Panama and Uruguay. The non-adjusting countries were 31: Benin, Botswana, Cameroon, Ethiopia, Lesotho, Liberia, Mozambique, Rwanda, Myanmar (Burma), India, Malaysia, Papua New Guinea, Sri Lanka, Algeria, Egypt, Jordan, Oman, Syrian Arab Republic, Yemen AR, Yemen PDR, Poland, Portugal, Dominican Republic, El Salvador, Guatemala, Haiti, Nicaragua, Paraguay, Peru, Trinidad and Tobago and Venezuela. The following were the main findings: 1.- Growth in per capita GDP between 1980 and 1990: Adjusting countries: 27 of the 55 had negative rates of growth. Non-adjusting countries: 16 of the 31 had negative rates of growth. 2.- Public expenditure in social sectors: Adjusting countries: Sectoral expenditure as % of total public expenditure in 11 intensely adjusting countries: Year Education Health Total (social sectors) 1980 14.8 6.6 36.2 1986 12.0 5.5 32.7 Non-adjusting countries: Sectoral expenditure as % of total public expenditure in 12 countries: Year Education Health Total (social sectors) 1980 10.0 4.5 25.7 1986 12.1 4.7 28.6 3.- Infant mortality rate: Adjusting countries: In 23 intensely adjusting countries the of decline during 1977-82 was 12.7% and during 1982-87 was 12.6%. Non-adjusting countries: In 29 countries the rate of decline during 1977-82 was 13.0% and during 1982-87 was 11.2%. 4.- Average undernutrition rate:

Adjusting countries: For 24 intensily adjusting countries 7.81% in 1980 and 8.44% in 1986. Non-adjusting countries: For 32 countries 2.54% in 1980 and 4.31% in 1986. 5.- Primary school enrollment rate: Adjusting countries: For 25 intensely adjusting countries 94.2% in 1980 and 90.1% in 1985. Non-adjusting countries: For 33 countries 86.0% in 1980 and 91.1% in 1985. ________________________________________________________________________ About the rural poor, Oxfam (1994) said that "Oxfam's experience is that, in the absence of redistributive reforms and effective state intervention in support of the poor, the benefits of increased prices tend to flow towards powerful traders and intermediaries. This confirms the broader lesson, which the World Bank and the IMF continue to ignore, that people operate in markets governed by power relations; and they leave the market place with rewards which reflect those relations. The evidence across the developing world is that narrowly-defined price and marketing reforms are an insufficient mechanism for achieving poverty reduction." The following examples in Oxfam(1994) documented the above: 1) In Ghana, research by the International Fund for Agricultural Development (IFAD) suggests that the benefits of pricing reforms have gone mainly to cocoa farmers, rather than to the staple food producers who account for the bulk of the country's poor. In Zimbabwe, tax and pricing reforms under adjustment have brought windfall gains for commercial farmers, but relatively modest improvements for smallholders. 2) "In Zambia, Tanzania and Mozambique, where Oxfam works with smallholders producers, higher prices have not 'trickled down' to the poor, most of whom are excluded from effective participation in markets by inadequate access to land, credit and marketing infrastructure. Instead, the prime beneficiaries have been monopolistic private sector traders, who are well placed to exploit the poorest producers and most marginal areas." 3) "In the Sahel region of Africa, the liberalisation of agricultural marketing has had adverse consequences for many of the poorest producers. According to a World Bank technical working paper on Senegal, Mali and Niger, "the withdrawal of parastatal agencies from the agricultural sector resulted in increases in farmgate prices for inputs, due to the cessation of credit schemes. These increases in costs were not compensated by increases in process of crops and livestock." The report goes on to note that low prices, along with the collapse of public investment on extension services, have remained a major disincentive to increased investment." 4) "Agricultural production is growing more slowly in Sub-Saharan African countries adhering most closely to World Bank-IMF adjustment policies than in other countries. Independent research suggests this reflects the erosion of extension services and infrastructural support caused by expenditure cuts." 5) "In Nicaragua, Oxfam works with smallholders livestock farmers who have seen their livelihoods undermined by restrictions on access to credit following the introduction of an IMF stabilisation programme.

As a result of tough new conditions and high interest rates, the amount of credit taken up by smallholders fell by two-thirds in the year following the introduction of the 1991 stabilisation programme. In Costa Rica, agricultural credit to small-scale farmers was cut by half during the second half of the 1980s, while the country's SAP reoriented resources towards the commercial export sector." 6) "In Zambia, Oxfam works with poor women farmers. Because of their urgent need for post-harvest cash and inability to market their crops following the withdrawal of state purchasing agencies, these women have been forced to sell to private traders at extremely low prices. As a recent World Bank report acknowledges, smallholders across the country have been seriously affected by an IMF-imposed credit squeeze." 7) "In Tanzania, Oxfam project partners have been unable to market their cotton crop, because of the collapse of state-supported infrastructure and transport provision. As a result, producers have lost household income and the country has lost desperately-needed foreign exchange." 8) "In the Philippines, import liberalisation has encouraged a sharp increase in imports of rice, corn and other food staples. These imports have undermined the livelihoods of peasant producers and driven down rural wages and the household incomes of the poor. In the Andean countries of Latin America, Oxfam has witnessed a similar process, with heavily subsidised US grain exports destroying local livelihoods." 9) "In Mexico, adherence to IMF stabilisation guidelines resulted in a reduction of price support and credit provision for smallholder maize farmers. This compounded rural poverty resulted in increased male migration to urban centres, adding to the labour burden of women. The future of the rainfed, smallholder maize sector in Mexico remains uncertain in the face of moves towards trade liberalisation under NAFTA. Some estimates suggest that as many as 6 million producers, mainly farming ecologically fragile hillsides, will be displaced by US maize exports." 10) "Adjustment policies typically increase prices for commercial crops, where marketing is controlled by men, rather than for staple food crops controlled by women. This has had important implications for the distribution of power and income within the household. It has also resulted in additional demands on female labour to support cash-crop production." As Oxfam (1994) concludes "what these cases illustrate is that the state has a vital role to play in developing agricultural production and food security. This includes acting as a buyer of last resort to maintain prices, providing credit and extension services to smallholder producers, and protecting local food systems from cheap imports. The state also has a vital role to play in supporting investment in smallhoder agriculture." The above is exactly what Western European governments have been doing in wealthy Europe since the late 1950s until today with the Common Agriculture Policy, and the United States government with their farmers. The question is, why what is good for rich countries' farmers is 'inefficient' for poor countries' farmers. The answer is straight forward: the IMF and the World Bank impose structural adjustment programmes in poor countries to protect the interests of rich countries'

capitalist ruling class. Thus, IMF and World Bank claims that they are 'helping poor countries' to modernise and develop are utterly dishonest. Ten years ago, in 1987, the United Nations/NGO Workshop on "Debt, Adjustment and the Needs of the Poor", that took place in Oxford, concluded: "The economic crisis has exposed the unsustainability of the development models adopted by the elites of the Third World and supported by policymakers of the North and the international community; models of development which have brought countries into greater dependence, on an unequal basis, on the world trade and financial systems. In the post-colonial period, many Third World countries have continued to be dependent on the export of primary commodities as the main engine of economic growth. However, the prices of primary commodities have plunged 'vis-a-vis' prices of manufactured goods due to reduced demand from the North and oversupply in the South (partly caused by the World Bank's encouragement to Third World countries to expand primary commodity exports and over-optimistic price projections). The fall in terms of trade alone is causing the Third World to lose US$100 billion a year which are transferred to the rich countries in the form of cheaper imports and profits from exports"..."It is clear that the crux of the development crisis rests on the unequal distribution of resources and economic power at both the international and national levels. This basic inequality is reinforced by outward-looking development models (dependence on primary commodity exports, foreign investment and foreign loans, over-dependence upon non-essential imports) that increasingly suck resources from the Third World. At the same time, inequalities existing at the national level in Third World countries mean that when GDP declines, the poor suffer most in terms of retrenchment and unemployment; sharply lower incomes due to the collapse of primary commodity prices; government cutbacks on subsidies; reduced access to welfare, health and education; and increased consumer prices due to devaluation and elimination of subsidies." (from "Final Statement of the UN/NGO Workshop on "Debt, Adjustment and the Needs of the Poor", in WORLD DEVELOPMENT REPORT, Vol. 15, Supplement, pp. 255261, 1987). IMF and World Bank-imposed cut backs on social expenditure as a an 'efficient' measure to implement structural adjustment programmes have been burdening the poor sectors of less developed societies. Oxfam (1994) found that "in the Philippines, real per capita spending on health was lower in 1992 than in 1982. Moreover, the share of health spending in the total budget fell from 3.4% in the early 1980s to 2% for the period 1990-1993. Meanwhile, the expansion of cost-recovery has undermined the access of the poor to health provision". "In India, the Department of Rural Development cut its social expenditure budget in the first year of the country's stabilisation programme. This was followed in 1992-1993 by a 46% cut in the rural sanitation budget and a 39% cut in rural water-supply spending -areas of social expenditure of vital importance to poverty reduction." "In Nicaragua, per capita social spending is back to the level of the mid-1970s, following a dramatic decline during the 1990s"..."Meanwhile, infant mortality rates are increasing, after declining steadily for more than a decade." "In Zimbabwe, per capita spending on health and education has fallen by one third since the introduction of an adjustment programme in 1990"...

"Infant and maternal mortality rates have increased sharply, with maternal mortality rates have increased sharply, with maternal mortality rates among women from Harare attending the city's main hospital doubling between 1991 and 1992." "In Zambia, where the World Bank pledged to protect social expenditure, the 1992 education budget accounted for 9.1% of the total budget, compared with 13.4% in 1985. In the health sector, the World Bank itself has acknowledged that the introduction of user-fees is perceived by village women as a serious threat to their health status, yet it initially supported their introduction. These fees have had a detrimental impact on the provision of immunisation for measles, whooping cough, diphteria and tuberculosis -diseases which have re-emerged as major killers across the country." "Evidence from many developing countries have shown that economic pressures and the introduction of user-fees in education result in disproportionately higher drop-out rates among young girls." "Oxfam's experience across Africa, Asia and Latin America is that the curtailment of social services, has forced women to compensate by increasing their unpaid work-burden. Increased poverty, the collapse of water and sanitation services, and the erosion of primary health acre provision has brought with it an increase in incidence of poverty-related diseases -such as measles, cholera and malaria- and in the amount of time spent by women caring for the family." United Nation's "Human Development Report 1996", identified five types of bad economic growth that were most common in the world after the triumph of "globalization", which is equivalent to structural adjustment programmes in less developed societies. The five types were: -Jobless growth -the overall economy grows, but fails to expand job opportunities. -Ruthless growth -the rich get richer, and the poor get nothing. -Voiceless growth -the economy grows, but democracy/empowerment of the majority of the population fails to keep pace. -Rootless growth -cultural identity is submerged or deliberately outlawed by central government, as in some of the states of former Yugoslavia or the Kurdish areas of Iraq and Turkey. -Futureless growth -the present generation squanders resources needed by future generations. About the last type of growth, two major forces contribute to increase environmental damage when structural adjustment programmes are implemented: -activities of transnational corporations in the manufacturing, agribusiness and mining sectors, creating atmospheric pollution, water pollution, degrading fertile soil, and making million of smallholders landless. -activities of poor people, both in the countryside and the urban areas through survival activities. D. Reed (ed.), "Structural Adjustment, the Environment, and Sustainable Development", Earthscan, 1996, wrote a "Summary of the Environmental Impacts of External/Internal Adjustments. "...Both devaluation and trade liberalization"...in..."the countries

included in this study"..."have had important and immediate effects on their extractive and agricultural economies. In some cases, the growth impacts are clearly positive; for example, new agricultural incentives have stimulated expansion and diversification of tradeable crops and shifts to nontraditional commodities. The environmental impacts of those shifts are positive in that they have improved relative returns to the agricultural sector, raised farm incomes for some producers, and thereby encouraged on-farm investments. Over time, these improvements may also encourage the introduction of new technologies and reduce povertyinduced environmental damage." "One of the key points raised in the foregoing conclusions is that the environmental impacts of the external adjustments are determined largely by the farmers' status in the adjusting countries. Commercial producers are able to respond to new price incentives from international markets by diversifying crops, intensifying production, and continuing to introduce new technological improvements. They are also able to absorb the rising costs of agricultural inputs without major difficulty. In short, the changing ratio of inputs to producer prices has either remained favourable to commercial farmers or their expanded production has overridden the negative effects of relative price changes." "Small farmers and rural workers with little or no land cannot absorb the increased costs of agricultural inputs, such as seed and fertilizer, as easily; nor have they been able to respond as effectively to the new price incentives offered by trade liberalization. Given their precarious situation, the small farmers' priority is to ensure their families' food security, often by extensifying food production, with all the attendant environmental problems. There are indications that the small farmers' situation has opened opportunities for commercial farmers to expand their commercial land holdings, thereby increasing their benefits from the emerging economic system. The full impact of the emerging economic changes on small farmers and rural populations will become more evident when the impacts of internal adjustment, including fiscal policy reform, are taken into account." "The extractive sectors, including forestry and mining, have responded quickly to the new economic incentives. Expansion in these sectors created environmental problems, and although some are already visible, the studies suggest that the long-term impacts may be more serious. This point also applies to the tourist sector. Local employment may increase as new hotels and facilities are built, but environmental problems are already in evidence and are expected to intensify. Expanded industrial production, coupled with expanded transport systems relying on poorly maintained used equipment, will lower the quality of urban environments through rising air pollution levels. These environmental costs are not immutable features of the adjustment programs implemented in the nine countries. They often result from disregard for the effects of price changes on the environment and from the lack of complementary policy reforms prior to or during the economic restructuring process." "...As regards reductions in agricultural extension activities and social services, the impacts fall decisively on the poor, and most directly on the rural poor and women"..."Loss of credit for agricultural inputs, such as hybrid seeds and fertilizer, the reduction of agricultural extension services to encourage intensification of production, and the disruption of marketing systems caused by privatization are among the most direct effects of internal economic adjustments on rural populations. These changes generated downward pressure on the living standards of the poor and, in the process, accelerated the most intractable environmental problem facing many

countries -that is, poverty-induced environmental degradation." "...Poverty has deepened in seven of the nine countries, and it continues to be pervasive in El Salvador. In these countries, the 'informalization of the economy', declining agricultural productivity in many areas, diminishing access to agricultural inputs and technical advice, an increasing population pressures have converged to lower living standards, particularly among the rural poor. Cutbacks in social services have weakened the survival systems of the most vulnerable. The poor respond to their falling standards of living by migrating and by increasing their reliance on natural resources." "Depending on conditions in each country, the direction of migration varies: in some African countries, the poor tend to move back to the land; in El Salvador, Jamaica, and Venezuela, they move to urban areas. Jamaicans often emigrate from the island to the United States and Canada. Those who remain survive through agricultural extensification, deforestation, intensified use of marginal lands, and a wide range of informal productive activities ranging from brewing home beer to catching animal species for export." "The decline in living standards has been accompanied by a weakening of institutions of both the government and civil society involved in managing and protecting the environment. The institutional decline resulted in the loss of resource rents, weakened control over natural resource management, and increased extraction of natural capital. In short, the social and institutional impacts of adjustment measures transmitted to the environment are profound, and they may have long-term consequences.