Question

1. What are structural adjustment loans, and how have they affected LDCS, women, and the poorest groups in LDCs? 2. How has the World Bank tried to change its approach to development, and how successful has it been?

Answer 1

1 ) Structural loan is a loan given to developing countries. It is a mechanism by which the international financial institutions impose structural adjustment. There are policy conditions like:

Tax reforms

Fiscal policy discipline

Competitive exchange rates

Privatization of state Enterprise etc.

The aim of the structural adjustment loans is to provide economic stability to the developing nation's. These loans have an effect on women and on least developed countries , both socially and economically. These loans may reduce the purchasing power because there is a principle of free market. This principle means possible higher prices for basic necessities , devaluation etc. Family income fails to meet the expenses and women have to join the workforce often as unskilled labour's on minimum wages. The burden on women, LCDs and the poorest groups in LCDs is increased.

2) The world Bank has tried to change it's approach to development. In 2005 the world development report 'equity and development' was released by the world Bank. The report suggests a shift from targeting pro poor growth or inclusive growth. This used to be the central theme of the developmental agenda in 2000. Though the extent to which the world Bank has actually been successful or has adopted the new approach remains disputable. As it has not proposed a fundamental change of policy principles.

3) Export led growth strategy is when a country tries to enhance it's economy by expanding it's export. The East Asian NIEs , like many others have successfully implemented the export led growth. The least developed countries lack the technological growth and the human skills that this strategy requires. Low wages ,poor working conditions and unskilled labour market are few reasons why it is challenging for least developed countries to be the supplier for the global demand.

4) There are various political factors that have helped the export led growth. Often there is a devaluation of the national currency to facilitate export. The tariff barriers are reduced. The government also provides subsidy to the export oriented industries. These industries are also given higher access to the local market by the government.