Structural Adjustment: The SAPRI Report: The Policy Roots of Economic Crisis, Poverty and Inequality

257 Pages·2004·0.88 MB·English

by  SAPRIN) Structural Adjustment Participatory Review International Network

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ABOUT THIS BOOK
A Report on a Joint Participatory Investigation by Civil Society and
the World Bank on the Impact of Structural Adjustment Policies
One factor, more than any other, has crippled national economies, increased
poverty and inequality, and made many millions of people hungry. It is a set
of policies, called structural adjustment, that has been forced on developing
countries for more than 20 years by the World Bank, the International
Monetary Fund and Western aid agencies. Country after country has been
compelled, regardless of circumstances, to adopt this ‘one size fits all’
economic strategy that exposes the world’s most vulnerable peoples and
weakest economies to the full force of the global market place dominated by
the most powerful and richest economies and corporations.
Born of a unique five-year collaboration among citizens’ groups,
developing country governments, and the World Bank, this book represents
the most comprehensive, real-life assessment of the actual impacts of the
liberalization, deregulation, privatization and austerity policies that con-
stitute structural adjustment programmes. Its authors, the members of the
Structural Adjustment Participatory Review International Network
(SAPRIN) that engaged the World Bank’s president in this ambitious and
highly participatory endeavour, present the concrete consequences of these
policies.
The stark conclusion emerges: if there is to be any hope for meaningful
development in the countries of the South and for the sustained reduction of
poverty and inequality, the Western-inspired and imposed doctrines of
structural adjustment and neoliberal economics must go.
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SAPRIN is a global network established to expand and legitimize the role of
civil society in economic policymaking and to strengthen the organized
challenge to structural adjustment programmes by citizens around the globe.
It is composed of broad-based civil society networks in Argentina, Bangla-
desh, Ecuador, El Salvador, Ghana, Hungary, Mexico, the Philippines,
Uganda and Zimbabwe, which along with non-governmental organizations
based in Europe, Canada and the United States comprise SAPRIN’s
Steering Committee. The network has brought together trade unions, small
business and farmers’ associations, environmental and indigenous peoples’
organizations, women’s and community groups, religious and human rights
organizations, development and research institutes, NGOs, and associations
of youth, pensioners and the disabled. SAPRIN’s diverse programme has
included extensive citizen mobilization, local workshops and national public
fora, participatory field research, economic literacy training, and the
development and promotion of alternative economic policy proposals at the
country level on four continents. At the global level, SAPRIN’s advocacy
work vis-à-vis the World Bank, United Nations agencies and national
governments has focused on the elimination of adjustment conditionality
and on the democratization of the economic policymaking process and on
opening it to new policy options. The SAPRIN Secretariat is based at The
Development GAP in Washington, DC.
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:
STRUCTURAL ADJUSTMENT
SAPRI
THE REPORT
The Policy Roots
of Economic Crisis, Poverty
and Inequality
by
The Structural Adjustment Participatory Review
International Network (SAPRIN)
A Report on a Joint Participatory Investigation
by Civil Society and the World Bank
of the Impact of Structural Adjustment Policies
Zed Books
LONDON & NEW YORK
TWN
MALAYSIA
Books for Change
INDIA
IBON
PHILIPPINES
SAPRIN_00 prelims 9/12/03 4:24 pm Page iv
Structural Adjustment: The SAPRIReport
was first published in 2004
Malaysia: Third World Network, 121-S Jalan Utama, Penang 10450
Philippines: IBON Foundation, 3rd Floor, SCC Building, 4427
International Old Station, Mesa, Manila
India: Books for Change, 139 Richmond Road, Bangalore 560 025
Rest of the World: Zed Books Ltd
7 Cynthia Street, London N1 9JF, UK and
Room 400, 175 Fifth Avenue, New York, NY 10010, USA.
www.zedbooks.co.uk
Copyright © The Structural Adjustment Participatory
Review International Network (SAPRIN) 2003
The right of SAPRINto be identified as the author of this work has been asserted by it
in accordance with the Copyright, Designs and Patents Act, 1988.
Cover design by Andrew Corbett
Designed and set in 10/12 pt Bembo XT
by Long House, Cumbria, UK
Printed and bound in Malta
by Gutenberg Ltd
Distributed exclusively in the USA by Palgrave Macmillan, a division of
St Martin’s Press, LLC, 175 Fifth Avenue, New York, NY 10010.
All rights reserved
A catalogue record for this book
is available from the British Library
US Cataloging-in-Publication Data
is available from the Library of Congress
ISBN 1 84277 388 7 hb
1 84277 389 5 pb
IBON ISBN 971-0325-09-4
CONTACT DETAILS FOR SAPRIN
Saprin Secretariat
927 Fifteenth Street, NW, 4th Floor
Washington,DC 20005 USA
Tel: [phone]
Fax: [phone]
Email: [email protected]
Website: www.saprin.org
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Contents
List of Tables, Boxes and Figures viii
List of Acronyms ix
Acknowledgements x
SAPRIN and World Bank Global Steering Committee Members xiv
1 Structural Adjustment and the SAPRI/CASA Experience
1
The Origins of Structural Adjustment 1
The Genesis of SAPRI 5
Forging a Joint Initiative with the World Bank
while Maintaining Civil Society Independence 7
Civil Society Mobilization and Participation 12
National Public Fora: Infusing the Economic Policy Debate
with Local Knowledge 21
Joint Research to Deepen Local Civil Society
Assessments of Adjustment Policies 24
World Bank Distances Itself from the Emerging SAPRI Findings 31
Elaborating the Results of the Global Policy Assessment 33
2 Trade Liberalization Policies and Their Impact on the
Manufacturing Sector
36
Bangladesh, Ecuador, Ghana, Hungary, Mexico, the Philippines
and Zimbabwe
Design of Trade Policy Reforms 39
Macro and Sectoral Outcomes of Trade Policy Reforms 48
Distributional Impacts of Trade Policy Reforms 62
Conclusion 69
3 Financial Sector Liberalization: Effects on Production
and the Small Enterprise Sector
72
Bangladesh, Ecuador, El Salvador and Zimbabwe
Background and Process of Financial Sector Liberalization 73
Impact of Financial Sector Reforms 75
Conclusion 83
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4 Employment under Adjustment and the Effects of
Labour Market Reform on Working People
87
Ecuador, El Salvador, Mexico and Zimbabwe
Country Characteristics 88
Adjustment Programmes, Employment and Poverty 91
Labour Market Reforms and Flexibilization 101
Wages and Working Conditions 104
Conclusion 107
5 The Economic and Social Impact of Privatization
Programmes
110
Bangladesh, El Salvador, Hungary and Uganda
Reasons for Privatization 111
Privatization Programmes and Processes 113
Economic Results of Privatization 114
Social Impact of Privatization 122
Transparency 126
Conclusion 127
6 The Impact of Agricultural Sector Adjustment Policies
on Small Farmers and Food Security
132
Bangladesh, Mexico, the Philippines, Uganda and Zimbabwe
Objectives, Policies, Strategies and Design of Agricultural
Reform 133
Economic Impact of the Reform Policies 135
Social and Environmental Impacts 143
Conclusion 149
7 The Socioeconomic and Environmental Impact of
Mining Sector Reform
153
Ghana and the Philippines
Background 153
Adjustment Policies, Legislation and Actions Affecting the Sector 155
Economic Impacts: Foreign Exchange, Government Revenue
Generation and Employment 157
Social and Community Impacts 160
Environmental Impacts 165
Conclusion 170
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8 The Effects of Public Expenditure Policies on Education
and Healthcare under Structural Adjustment
174
Ecuador, Ghana, Hungary, Mexico, the Philippines, Uganda and
Zimbabwe
Adjustment Policies Addressed 176
The Impact of Adjustment Reforms on Public Spending for
Education and Healthcare 177
The Impact of Reforms on Access to, and Quality of, Education
and Healthcare Services 185
The Impact on the Poor of the Elimination of Basic Subsidies 197
Conclusion 199
9 Structural Adjustment, Poverty and Inequality
203
The Impact of Trade and Financial Sector Reforms on
Manufacturing, Employment and Small and Poor Producers 204
The Impact of Agricultural, Trade and Mining Reforms on
Agricultural Production, Small Farms, Food Security and
Poor Communities 207
The Impact of Labour Market Reform and Privatization on
Wages, Employment, and Poverty 211
The Impact of the Privatization of Public Utilities and Public
Expenditure Reform on the Availability of Affordable
Services and on Poverty 213
Weak Macroeconomic Performance under Adjustment 217
Shaping a Different Future 220
SAPRIN National Steering Committees 226
Bibliography of SAPRI/CASA National Reports 231
Index 236
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Tables, Boxes and Figures
Tables
2.1 SAPRI/CASA Countries: Profile by Selected Indicators 38
2.2 General Objectives of the Trade and Industrial Policy Reforms
as Outlined in the Policy Framework Papers 39
2.3 SAPRI/CASA Countries: Scenario of Trade Liberalization 41
4.1 Selected Countries: Population, Territory and GDP 88
4.2 Proportion (%) of Men and Women Employed by Sector, 1980
and 1990–97 (Most Recent Data) 97
4.3 Ecuador: Average Monthly Salaries (in 1998 US$) in
Urban Areas by Economic Sector and Gender 105
7.1 International Institution Credit Provided to the Resource
Extractive Sector, 1995–99 154
7.2 Ghana: Percentage of Export Value Retained Off-shore 156
7.3 Performance of Ghana’s Mineral Industry under
the Structural Adjustment Programme (1987–98) 158
7.4 Mining Companies Operating in Tarkwa Mining District, Ghana 162
8.1 Timeline of Structural Adjustment Programmes in
SAPRI/CASA Countries 175
8.2 Annual Earnings per Employee (in US$) in Healthcare and
Education in Zimbabwe 179
8.3 Hungary: Spending on Education as a Percentage of GDP
(1991–2002) 180
8.4 Uganda: Share of Total Government Expenditures
Allocated to Healthcare and Education (1988–98) 181
8.5 Zimbabwe Infant Mortality Rate and Child Mortality
Rate per 1,000 Live Births (1978–97) 193
Figures
7.1 Mineral Production in Ghana (1987–98) 158
Boxes
2.1 Impact of Trade Liberalization: Voices of the People of Bangladesh 59
8.1 Indicators of Trends in Budget Allocation and Spending 178
viii
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Acronyms
ADB Asian Development Bank IFC International Finance Corporation
ALOP Asociación Latinamericana de organiza- IFIs International Financial Institutions
ciones de promocion (Latin America) ILO International Labour Organization
ASA Alliance of Social Associations (Hungary) IMF International Monetary Fund
AWEPON African Women’s Economic Policy ISODEC Integrated Social Development
Network (Uganda) Centre (Ghana)
BIDS Bangladesh Institute of Development ITESO Instituto Technologicó de Estudias
Studies Superiores de Occidento
BMI Multisectoral Investment Bank (El MERP Millennium Economic Recovery
Salvador) Programme
BRAC Bangladesh Rural Advancement NAFTA North American Free Trade
Committee Agreement
CAS Country Assistance Strategy NGO Non-governmental organization
CAMC Climax-Arimco Mining Corporation NOVIB Nederlandse Organisatie voor
(Philippines) Internationale Bijstand
CASA Citizens’ Assessments of Structural P Peso
Adjustment PAR Participatory Action Research
CELA Centre for Latin American Studies PERD Public Enterprise Reform and
COMECON Council for Mutual Economic Divestiture
Assistance (Eastern Bloc) PRA Participatory Rural Appraisal
COMESA Common Market for Eastern and PRONASOL National Solidarity Programme
Southern Africa PROGRESA Education, Health and Nutrition
DAWN Development Alternatives for Women Programme
in a New Era PROSHIKA Training, Education and Action
DEC Development Economics Vice (Bangladesh)
Presidency (World Bank) PRSP Poverty Reduction Strategy Paper
ECA Export credit agency PUCE Catholic University of Ecuador
EIA Environmental impact assessment RMG Ready-made garments
EPZ Export processing zone SADC Southern African Development
ERP Economic Recovery Programme Community
ESAF Extended Structural Adjustment Facility SAL Structural adjustment loan
ESAP Economic Structural Adjustment SAMCAF Southern Africa Microfinance
Programme Capacity Building Facility
FDC Freedom from Debt Coalition SAP Structural adjustment programme
(Philippines) SAPRI Structural Adjustment Participatory
FOSAFI Fund for Financial Restructuring and Review Initiative
Strengthening (El Salvador) SAPRIN Structural Adjustment Participatory
FTAAs Financial and Technical Assistance Review International Network
Agreements SDA Social Dimensions of Adjustment
FUNDE National Foundation for Development SMEs Small and medium-scale enterprises
(El Salvador) TORs Terms of reference
GATT General Agreement on Tariffs and Trade UNCTAD United Nations Conference on
GDP Gross domestic product Trade and Development
GNP Gross national product UNDP United Nations Development
GTZ Gesellschaft für Technische Programme
Zusammenarbeit (Germany) UNICEF United Nations Children’s Fund
HIPC Heavily Indebted Poor Country WRI World Resources Institute
HMC Hinatuan Mining Corporation WTO World Trade Organization
(Philippines) ZCTU Zimbabwe Congress of Trade
IDB Inter-American Development Bank Unions
IEDECA Institute for the Ecology and Develop- ZIMPREST Zimbabwe Programme for
ment of Andean Communities Economic and Social
(Ecuador) Transformation
ix