The IMF, Global Inequality, & Development Part A Ms. Ramos Alta Loma High School

IMF & the Third World IMF is criticized for economic & social problems in Third World –Issues of trade, inequality, and development with globalization are highly charged

South as sources of Primary Products Primary Products: raw materials & agriculture Majority of exports are in 1 sector –Uganda: 98% coffee –Zambia: 89% copper –Ghana: 59% cocoa

Diversified trade can survive slumps in a sector!!! By late 1950s- economic division of labor & specialization viewed as obstacle to development

Economic Commission on Latin America (ECLA) & Raul Prebish 2 MAJOR PROBLEMS: –Prices of primary products fluctuate Instability of income, hard to plan & develop –Price of primary products fall w/o similar fall in price of manufactured goods

Primary product fluctuation Prim Prod fall w/o other goods fall Declining Terms of Trade Leads to/ Results in

Case Study: Zambia 1980s Copper 89% trade export Fiber optics replace copper Copper price fell 80% Zambia was devastated

Need to reduce PP & shift to manufacturing Import Substitution: policy to promote economic development Reduce import to replace w/ domestic product Govt invests in industry. Infant Industry needs to be protected

Latin Am & Africa s Low-tech Need to move to high tech –Problem--- need $$$ 3 rd World NEEDS capital from abroad –Multinational corporations –Northern financial institutions

Stagnation in 1970s Problem: economic growth stalls Need to repay loans Prob worsens w/ OPEC –Raise prices 1973 & 1979

Debt Crisis of 1980s Developing nations unable to pay loans, esp Latin Am Mexico –Owed A LOT –Debt grows faster than economy –Fear consequence of default w/intl banks

–IMF loan Strings (conditionality): economic policies & reforms Structural Adjustment Policies: bundle reforms required for IMF loans

Library Activity Research a country in the region assigned using the CIA Factbook (linked on class website) Find a country vulnerable to having a PP ID the country, product/export, what & of export is it?, what is the current price?, any problem with the product in the past 30 yrs?, any foreseeable problems? Be prepared to share with the class with a visual