Professional Documents
Culture Documents
Its Discontents
by Joseph Stiglitz
Presented by
Eun Young Chough, Clement
Despres and Caroline Frost
Outline
The Foundations of our Global
Institutions and How They Have Failed
Why the IMF policies are not working
Case Studies:
East Asian Crisis and Russian
Transition Towards Capitalism
Alternatives Strategies for
Development
The IMF’s other Agenda
Reforming International Economic
Institutions, Reshaping Globalization
The War on
Globalization
The Foundations of The
Bretton Woods
Institutions
IMF was created to ensure global
economic stability
Founded on the idea that the markets
did not always function as they ought
to
World Bank was created to finance the
rebuilding of Europe after World War II
Not concerned with the developing
world
The Foundations of the
Bretton Woods
Institutions
Both are Public institutions funded by
money provided by taxpayers from
around the world
Taxation without representation
Power structures of both institutions
are based on the economic power of
countries at the end of World War II
Changes in the
Institutions
Free market ideology of the 1980’s was
pushed on the developing world through
these institutions
World Bank’s purpose now goes beyond just
lending for projects to providing broad
“structural adjustment loans”
These loans required approval of IMF and
brought along IMF conditions
Though IMF was supposed to be limited to
macroeconomic issues, it could reason that
almost any issue could affect the overall
economy
Why IMF Policies Are Not Working
A One Size Fits All Mentality
Out of touch with countries for
whom they write economic
conditions
“Cookie-cutter” economic stimulus
plans
IMF “Confuses ends with
means”(27).
Training of IMF macroeconomists
does not prepare them for the
Why IMF Policies Are Not Working
Liberalization and Its Discontents
Liberalization is the
“removal of government
interference in financial
markets, capital markets
and barriers to trade”
(59)
Trade liberalization can
hurt more than help
Hypocrisy from powerful
nations
Pendulum effect
Why IMF Policies Are Not
Working
Squashes out local
Foreign Investment
business and changes
culture of a place
Some argue that it results
in lower prices which
benefits the poor
With the absence of
competition laws, the
monopoly power of the
large firm eventually
allows it to raise prices
Why IMF Policies Are Not Working
Sequence and Pacing
IMF fails to be sensitive to broader social
context of their decisions
Policies and protections must be set up to ease
transitions
Extreme changes such as trade liberalization
need to be introduced gradually
Why IMF Policies Are Not Working
Ignoring Social Issues
IMF would advise a country with
budgetary concerns to charge fees for
children to go to school
Result: girls are often pulled out of
school
Countries should not follow such
advice as investing in education now
leads to a stronger economy later
IMF often makes such blunders and
this is the reason we so little
improvement in the
From Colonial Civil Servants
to Economic Advisers
Power Abuse – Ethiopia example
IMF claims to always negotiate but
IMF has the “Bully pulpit”
Developing countries are essentially
forced to turn over economic
sovereignty
IMF even means dictations of what
laws the country’s parliament has to
pass to meet IMF requirements
IMF pushes certain policies that even
Americans don’t find acceptable for
The Nature of the IMF
in a Photo
From The East Asian
Miracle to the Crisis
The East Asian Miracle
East Asian countries did not follow IMF
advices:
Strong intervention of the government in the
economy
Social Welfare and Education
High savings and good investments
Other Mistakes:
Inflation – Privatization - The
social context –Shock
Therapy - The Bolshevik
approach to market reform
Better Roads to the
Market
Poland’s strategy China’s transition
strategy:
Gradual Partial privatization,
privatization “individual
Democratic responsibility
system”
support for
Institutional
reforms, infrastructure
benefits for Two-tier price
unemployed, system
adjusting Township and
pensions for village public
enterprises
Better Roads to the
Market