University of Ottawa

Reading Report: Structural Adjustment Programs

Juan Camilo Sarmiento Jaramillo

Masters in Globalization and International Development
Understanding Globalization - MDG5121 B
Student # 5840496
JSarm101@uOttawa.ca
 This report seeks to understand the historical and social theories that led to the
conception and implementation of Structural adjustment programs (SAPs). To begin is
important to provide a social theory context. The structural adjustment programs were
designed under scope of the modernization theory. This theory is based on premise that
development can be achieved through further development processes that were used by
today's developed countries.1 This belief that development requires developed countries
to help developing countries, by teaching them how to achieve progress. Within the
modernization theory, some authors claim that this occurred during the second wave of
modernization. This second wave takes place in the 1970's and 1980's. In this period, its
developed what some call the cultural and economic imperialism and Western
domination.2
Both the program for structural adjustment and the International Monetary Fund
were created simultaneously. This happened during the Bretton Woods Conference in
1944. There both, the IMF and the World Bank, were created to deal with the imbalances
-deficits or surpluses- of the national balance of payments, and in particular, the regime
and limits of deficit funding. The Agreement gave rise to the IMF, which aligned with the
White Plan. This plan considered that funding should be narrow and short-term and be
subject to structural adjustment. As a result, the Bretton Woods conference established a
system without sufficient breadth and flexibility to support the balance of payments and
above all provide the necessary financial resources to sustain the development process of
developing countries, many of which, then subjected to colonial rule, were not present at
the conference.3
The IMF member countries with a balance of payments in deficit could have
access to resources only through an agreement that promised to take adjustment measures
aimed at easing the imbalance in a sustainable manner, which would be a matter of
monitoring by IMF. The adjustment thus became one of the central aspects of the system,
and in practice became the sole responsibility of the countries with a deficit and not those
who had a surplus. During the seventies, however, many developing countries chose to
approach the international capital market before the IMF, getting plenty of cheap credit.
                                                                                                               
1  Encyclopaedia  Britannica,  2010  
2  Schiller, 1976  
3  Universidad  Complutense  de  Madrid,  2009  
In sum, in the late seventies, the IMF's role in financing the balance of payments deficit
became increasingly irrelevant.
The primacy of the market and the absence of a responsible international
framework and under public control for the regulation of capital movements were some
of the factors determining the birth of the "debt crisis" of 1982.
In fact, "debt crisis" in the 80's, affected many developing countries, which were
focused exclusively of restoring macroeconomic balances, in particular, the balance of
payments, through short-term measures for fiscal discipline and monetary devaluation.
The adjustment is limited to a stabilization program with the only principle to reduce, as
soon as possible, the external deficit. However, it was soon recognized that stabilization
is not an end in itself: it is not enough to reduce demand, it must also increase supply by
improving resource allocation. Incentives by international organizations the stabilization
measures have been complemented with structural adjustment measures such as: tariff
reductions, deregulation of financial markets or the elimination of "distorting"
agricultural prices.4
This distinction between stabilization and structural adjustment is politically
decisive. Actually, the stabilization program is an important and necessary set of policies
that involves numerous unpopular measures, mainly because they reduce drastically
incomes and consumer spending by reducing the salaries of public servants, subsidies and
employment in construction. However, structural adjustment measures can be phased
over many years and every measure taken, while it produces winners and losers, so the
government can build a coalition of beneficiaries to defend its policies.
In this context, some of the problems of structural adjustment policies are due to
its application in which national elites were mostly those who benefited. This increased
the problem of inequitable distribution of the wealth produced. This coupled with the
ambiguity of the policies and the limited control that the IMF developed large socio-
economic problems.5 Among these, there was the liberalization of local markets. This
policy of openness allowed the entry of foreign products to local markets with few
restrictions, creating in its wake problems of unemployment due to closure of local
companies unable to compete with multinationals that had established in these countries.
                                                                                                               
4  Morrison,  1996  
5  Cypher & Dietz, 2009  
Local businesses were in no position to compete with multinationals. There was no
adjustment period or preparation, neither any coordination with their governments.
Further, it must be added the national interests of developed countries, which through
adjustment programs, obliged emerging economies to open their markets in specific
sectors for their own benefit and not benefit the recipient country.
The case of Honduras, President Reina who announced in January 1994, a policy
change for the poor, following the dramatic consequences of structural adjustment
pursued by his predecessor. However, on the occasion of the visit of a mission of
international financial organizations, in May that year, he was forced to adopt similar
measures had initially fought. In fact, according to forecasts, the debt service absorbed in
1994, 35% of export earnings. The balance of payments deficit is 500 million dollars and
unchecked inflation. Even so, the new austerity measures, including conditions that affect
the poorest, were the condition for receiving a loan from the Inter-American
Development Bank, the IMF and World Bank.6
Nonetheless, there have been countries that have had great success in
implementing these measures, such as Chile and Costa Rica. These two countries have in
common the fact that in the decades prior to structural adjustment had made greater
investments in health and education of its population and its production plant. This
explains how, some countries like Chile and Costa Rica were able to adapt to the new
model more easily. Meanwhile Central America, the Caribbean and the Andean region,
which also have implemented these programs, the growth has been lower.
In conclusion, structural adjustment programs had been varying success results
due to national circumstances, which were not taken into account at the time of its design
and implementation. In addition, local elites redirected resources and accumulated wealth
produced by the countries without an equitable distribution in their societies. This is
clearly seen in those countries so models of economic reforms such as Chile and Costa
Rica, where there was a greater redistribution and a positive social impact of reforms,
actually resulted in the reduction in poverty. Nevertheless, the success or failure did not
rely only in the SPA or the government, but it depended on the strategic implementation
of policies of economic and social adjustment by the local society.

                                                                                                               
6  Centre Tricontinental, 1994  
Bibliografía - Resumen de los libros – Análisis de los argumentos
 
1. Encyclopaedia Britannica Ultimate Reference Suite (2010). Economic
development. Chicago: Encyclopædia Britannica
Este articulo analiza los diferentes y teorías de los sistemas socio-económicos de
desarrollo. Dado que este reporte se centra en la teoría de la modernización, el artículo
habla de autores como Walt Rostow y Organski. El artículo describe la teoría de la
modernización establece que el desarrollo se puede lograr a través de seguir los procesos
de desarrollo que fueron utilizadas por los países actualmente desarrollados. Así como
que la Teoría de la modernización, en contraste con el liberalismo clásico, visto el Estado
como un actor central en la modernización de "atrasados" o sociedades
"subdesarrolladas".
Un factor clave en la teoría de la modernización es la creencia de que el desarrollo exige
que los países desarrollados para ayudar a los países en desarrollo a aprender de sus
propios progresos.

2. Morrisson, C. (1996). La Faisabilité politique de l'ajustement. Paris: Centre de

développement de l'OCDE.

Este reporte de la Organización para la Cooperación y el Desarrollo Económico (OCDE),

elaboró un reporte en 1996 sobre los programas de ajuste estructural y las políticas de
ajuste lo acompañaron. De manera concisa el reporte describe las políticas de
estabilización económica y como el ajuste puede provocar disturbios sociales, incluso
poner en peligro la estabilidad de un país. En este reporte se analiza las consecuencias
políticas de tales programas. Al parecer, cinco estudios de caso detallados y dos grandes
muestras de países de América Latina y África, los costos políticos en materia de huelgas,
manifestaciones o disturbios son muy diferentes de una medida de estabilización a la
otro. El calendario de las medidas, el sistema constitucional, las intervenciones dirigidas
donantes también afectan a estos costos. Esta investigación ha permitido definir y
precisar las características de un programa de estabilización que la política óptima para el
resultado económico misma, minimizando los costos políticos.
 3. Universidad Complutense de Madrid (Spain). (2009). Diccionario Crítico de
Ciencias Sociales. Terminología Científico-Social. Madrid: Editorial Plaza y
Valdés.

Este artículo presenta el conjunto de los programas de ajuste estructural. Desde sus
inicios, pasando por las reformas hechas en años posteriores y finalizando en el impacto
en los países por parte del programa. En torno a 1980 la crisis de la deuda externa dio
paso a la denominada "década perdida para el desarrollo". Caída de la producción y de la
renta, desequilibrios macroeconómicos, asfixiante endeudamiento externo, inestabilidad
política y social y empobrecimiento de las clases medias y los sectores populares han sido
la realidad dominante durante la década. La vulnerabilidad producida por el
endeudamiento obligó a muchos países a olvidar las estrategias nacionalistas de
desarrollo y las reivindicaciones de un "Nuevo Orden Económico Internacional", y
ponerse en manos del FMI y el Banco Mundial a fin de reprogramar la deuda y recuperar
el crédito externo.

4. Centre Tricontinental. (1994). Alternatives Sud (Vol. 1). Louvain-la-Neuve,

Belgique: Centre Tricontinental.

El tema de este libro es enfocado en las repercusiones y el funcionamiento de los

Programas de Ajuste Estructural. El libro presenta una serie de casos en diversos países y
regiones alrededor del mundo, tales como África, en particular Zambia, Cuba y Vietnam.
El libro presenta como cada uno de Programas de Ajuste Estructural (PAE) son una
cirugía, probablemente dolorosa, pero esencial para la recuperación económica. Para
otros, muestra los efectos inmediatos en la sociedad, la exclusión y la desaparición física
prematura de millones de personas en el Sur, en última instancia, condenó as medidas
tales como el fin no justifica los medios.

Bajo este principio, el libro presenta las diferentes realideades, y como el PAE son
mecanismos no solo económicos sino también social, político y cultural.
 5. Cypher, J. M., & Dietz, J. L. (2009). The Process of Economic Development. New
York: Routledge.
 
El tratamiento dado por Cypher y Dietz incluye una breve introducción que comprende
una descripción y un análisis de las motivaciones de los donantes. Esto incluye una
discusión más amplia del FMI y el Banco Mundial. Algunos autores pueden solicitar que
la ayuda international está muerta, después de haber sido suplantado por flujos
extranjeros, pero para un número muy grande de los países más pobres del mundo, la
ayuda extranjera sigue siendo la principal fuente de capital internacional y los fondos de
inversión, el descuido del tema en las obras de el desarrollo económico es, pues,
sorprendente.

El capítulo sobre el Banco Mundial y el FMI en Cypher y Dietz tiene una discusión
bastante amplia de las políticas de ajuste, incluidos los informes sobre los resultados de
los estudios de los impactos de estas políticas (tal vez con un énfasis en la antítesis de
puntos de vista del Banco, aunque esto es no así para la discusión del Fondo Monetario
Internacional). Por otra parte, hay una extensa discusión del renacimiento neo-liberal y la
sustitución importante debate entre la promoción de exportaciones.
Cypher y Dietz tienen una amplia serie de ejemplos de una amplia gama de países en
desarrollo de todo el mundo, incluyendo datos actualizados al día y los resultados de
investigaciones recientes