Globalization III: Structural Adjustment Policies Western industrial economies – Deregulation and privatization -post-Fordism; downsizing; restructuring social spending along market lines; financial liberalization Post-communist societies – marketization and shock therapy

Crisis of development: 1970s Neo-liberal explanation extend role of the state economic arena Expansion of Parastatals(state-owned enterprises) Decline of exports High tariffs Expansion of social spending

Reforms: Structural Adjustment Polices Privatization Deregulation -- smaller state (downsizing e.g, civil service) -- lower social safety nets -- remove subsidies (agriculture, education, health-- introduction of User Fees)

Competition and comparative advantage (Rational: enable international free trade; foreign direct investment in developing countries) Competition - efficiency – productivity - growth Results: Limited economic gains (historical dependencies--declining prices for primary commodities)

Globalization III-political conditionally Results: democratic transition in the developing world Economic development plus liberal democracy leads to leads to modernity

Structural adjustment programs SAPS -- Austerity measures The pain of structural adjustment on the poor is justified through the long-term gains to a nation's economy. These gains will benefit the poor in the future. But, in country after country these gains have failed to materialize

Example of Mexico in Mexico declared it was going to default on debt payments. $50 billion rescue package (biggest in history to that date). IMF forced Mexico to repay debt before any other national expenditures – ‘austerity’. Mexico diverted energies to exports - to pay creditors, the banks. 1995: GDP fell by 6.6% – bankruptcies – over 2 million redundancies – 52% inflation.

Admitting failure 'IMF riots' over the past 15 years -- Zambia, Venezuela, Jordan, the Philippines, Jamaica, etc. World Bank has accepted that SAPs have failed the poor, with a special burden falling on women and children. Yet together with the IMF it still demands developing countries persist with SAPs if they wish to have access to future loans or debt relief.

Why the support for SAPs? Reproduction of local political power; (e.g. Pakistan “The ruling elites found it convenient to perpetuate low literacy rates. The lower the proportion of lower and literate people, the lower the probability that the ruling elite could be displaced.”

Challenges to Nation-States Demise of nation-states (deepening of global interconnectedness) Limits nation-states’ political and economic power (expansive power- international institutions globalization III-WTO, World Bank and IMF) Developing countries (economic stagnation)

Increased migration and movements of peoples (refugees, etc) Cultural level (global culture of consumerism--music, consumerism, cinema, etc).