Structural Adjustment Programs and Debt Crisis as Causatives of Poverty - Essay Example

Running head: SOCIOLOGY Sociology Essay Questions Insert Insert Insert Insert Structural Adjustment Programsand Debt Crisis as causatives of Poverty Since the early 1980s the IMF and the World Bank insisted on countries to adopt Structural adjustment programs as a condition for aid. These programs has for long been a hindrance to development on the heavily indebted countries. It is these programs that led Mexico to be heavily indebted in the 1980s, the popularly known “Mexico financial crisis”. The programs were also strongly resisted in Jamaica with riots against the IMF (Smith, 1997). The countries that have failed to adopt these programs have been denied aid. The structural adjustment programs included tax reforms, flexible interest rates, deregulation, property rights, trade liberalization, a favourable environment for foreign direct investment, competitive exchange rates, reduced public expenditure and reordering of government priorities, and fiscal discipline and end to deficits. These policies may sound impressive at a glance but they have underlying limitations. Reordering of state priorities is aimed at recovering costs from basic services and makes people to pay highly for health and education. Reduction in public spending means reducing subsidies for foodstuffs, public transport among others. This increases the prices for these commodities leading to high poverty level. Tax reforms are always implemented equally among the rich and the poor thus lowering the tax burden for the rich and increasing the tax burden for the poor. This leads to an increase in the gap between the rich and the poor. Flexible interest rates in most cases lead to increasing interest rates leading to reduction in credit facilities for the small and medium firms. This leads to an increase in unemployment rate. Privatization favours the few rich and transnational organizations that grab the opportunity and amass a lot of wealth. Foreign direct investment, from experience, leads to joining and acquisitions of existing companies; this leads to reduction of workforce. Property rights are rarely realized by the informal sector where they are more important (George, 2007). In conclusion it can be said that the structural adjustment program has led to poverty among the majority in the concerned countries because they are only beneficial to a few. IMF and World Bank need to enforce policy review on these conditions if they sincerely want to redeem the concerned countries from the chains of poverty. China’s effect on OECD Financial assistance Conditions The presence of increased aid from China has greatly undermined power of OECD donors to insist on specific conditions linked to international aid. This has led to calls on China to adhere to the OECD set guidelines on delivering developmental assistance (Hanson, 2008).China’s developmental assistance has less strings attached and in most cases is not published making it hard to determine the level of aid being extended. On the other hand, OECD aid is often given based on a given guideline and the figures are mostly published. Countries that do not meet the stipulated guidelines such as political, economic, or social reforms are normally denied aid. The entry of China as a major player in the provision of aid to Asia, Latin America, and African Countries has often downplayed this stringent rules. Notable examples are Sudan and Zimbabwe; OECD members stopped assistance to these countries in an effort to compel them to institute good governance and end oppressive rule. China has overlooked these conditions and has been providing aid to both Sudan and Zimbabwe (Campbell, 2008). Overlooking the conditions, according to critics, has slowed down the pace of reforms in the concerned countries. However, those of contrary opinion argue that China’s intervention will lead to lessening of stringent conditions imposed by OECD members and hasten the pace of development in Third world countries. References Campel, H. (2008). China in Africa: Challenging US Global Hegemony. Third world Quarterly George, S. (2007). Down the Great Financial Drain: How Debt and the Washington Consensus Destroy Development and Create Poverty. Development (2007) 50, 4–11. doi:10.1057/palgrave.development.1100356 Hanson, F. (2008). The Dragon in the Pacific: More Opportunity than Threat. Sydney: Lowy Institute. Smith, N. (1997). The Satanic Geographies of Globolization: Uneven Development in the 1990s. Public Culture Community Capacity Building in a Development Program Introduction All communities have the capacity that can be built. Quite unfortunately, the capacity that can be built in a community capacity building program is normally defined by the donors, managers and the political elite and not the community itself. The common approach is for the managers to determine the capacities to be built, strengths to be developed and what the community is capable of doing. This is contrary to the spirit of community development principles that require the community to set their own agenda and not just to act on an externally imposed agenda. Imposition of external agenda is a curtailment to community empowerment and reduces the communities’ agency in determination of their future. Authentic community capacity building programs have the communities define their own capacity and not having the capacity built by an external person or group. Top-down Versus Bottom-up Approach to Community Capacity Building The top-down approach in community development states that an enabling environment with suitable policies and legal frameworks, community participation included, human resources and strengthening of managerial systems should be created. This definition stresses more on the role of stakeholders and just mentions the community as an inclusion and not a major player. This development process can be termed as institutionalised and the first priority is given to managerial and institutional operatives. In this approach more importance leans towards managerial role and little space is left for community participation and control of the process. There are many capacities overlooked in the top-down approach such as; the capacity of the society to engage in political action, the capacity of the community in establishing and managing the local economy, the capacity to be responsible for the local environment, the capacity to express itself culturally, the capacity of diversification, the capacity to demand acknowledgement of their human rights, among others. The communities that would want to develop such capacities would find the top-down approach as a curtailment to their initiatives. The imposition of a developmental agenda on a community can lead to the project being viewed as colonial imposition, where the funders are taken to have superior, wisdom, know-how and expertise and consequently imposing their own agenda to the community. This approach reduces community participation in the project and hence the community can detach itself from the project. The approach breeds dissent and resistance towards the project by the concerned communities (Ife, 2010; & Fisher, 1997). For successful capacity building in a community development, a bottom-up approach should be envisioned where there is maximum community participation in the project. In this approach the development agenda are generated and implemented by the community with help of stakeholders. The community members should be educated and not merely trained. This is because training will normally be considered as a transfer of knowledge from the facilitator to the community. The education should be a two way approach where the facilitator considers the opinions of the community and just builds up on the ideas. Such an approach will encourage community acceptance of the project and consequently taking ownership. Quite unfortunately, most capacity building developmental programs take the form of a bottom-up approach. This has led aid to be perceived as fulfilling the capitalistic interests of donors, and misused for the interest of power politics (Gronemeyer, 1992). References Fisher, W. (1997). Doing Good? The Politics and Anti-Politics of NGO Practices. Annual Review of Anthropology Gronemeyer, M. (1992). Helping’ in Wolfgang Sachs (ed.) Development Dictionary. UK: Zed Books. Ife, J. (2010). Capacity Building and Community Development’ in Kenny and Clarke (eds). Challenging Capacity Building: Comparative Perspectives. UK: Palgrave Challenges Underpinning Poverty Reduction Realization in MDGs Some of the above goals are not on track as we approach year 2015. This has been caused by factors such as high food and fuel prices, global recession and natural disasters. Attainment of MDGs has also been hindered by uneven development between countries. There are some challenges to attainment of MDGs. The regions of Sub-Saharan Africa and South Asia carry three quarters of populace living in paucity. Even though we approach year 2015, the people in these regions are still struggling to provide their children education and healthcare. East Asia has done well in terms of poverty reduction because of sustained rapid growth especially in China. However, pockets of dire poverty are still experienced in the region. In the Pacific region, extreme poverty is being experienced by close to four million people and about 1 million children are out of school. Poverty is most seen in Kiribati, Papua New Guinea, Timor-Leste and Solomon Islands (Anderson, 2008). According to the global monitoring report of 2008, there are several worldwide challenges that stand in the path of attainment of MDGs. Their statistics show that one billion of the world’s population is still experiencing extreme poverty, 75 million school going children are out of school, the mortality rate for the children stand at 10 million per year, Treatable pregnancy and birth complications take the lives of 550,000 women per year, 2 million people die per year due to HIV/AIDS and about half of the developing world lack proper sanitation facilities. These challenges points to the fact that halving the proportion of the underprivileged by 2015 might be unattainable. Role of Australian Aid in Attainment of MDGs The Australian Aid is geared towards achievement of the MDGs. The program endeavors to reduce the proportion of the deprived in developing countries. The program has invested in health, education and Sanitation (Rudd, 2011). In Papua Guinea, about 900,000 children got immunized against measles and other childhood diseases between the years 2000 and 2009. This was an initiative of AusAID. The Australian aid have built and renovated 2000 secondary schools in Indonesia between 2006 and 2010. Australian aid has promoted provision for clean drinking water and sanitation facilities in Kenya, Zimbabwe, and Malawi. These initiatives are very vital in the reduction of poverty among the poor countries of the world and attainment of MDGs. Australian Aid use of NGOs and Commercial Consulting firms The Australian aid program has in some instances employed commercial consulting firms and NGOs in the dissemination of assistance. The choice of NGOs is because they have grass roots attachment that gives them a good chance in providing assistance to the local communities. The NGOs are also less susceptible to politicization (Fisher, 1997). The commercial consulting firms are employed to provide technical assistance in the dissemination of aid. This specialized knowledge enables projects to be implemented in an expertise manner. However, this approach has its own limitations and tensions, for example most of the NGOs are not well audited, and this provides an avenue for embezzlement of funds, NGOs and the commercial consulting firms are mostly from Australia and this might lead to resistance by the local communities for lack of involvement. Commercial consulting companies have been accused of doing business with the aid money in the foreign countries. This money has not well benefited the recipient countries but has made the owners of these companies (mostly Australians) more affluent (Jackson and Oates, 2010). References Anderson, T. (2008). The Limits of RAMSI. Retrieved December 19, 2012 from Fisher, W. (1997). Doing Good? The Politics and Anti-Politics of NGO Practices. Annual Review of Anthropology Jackson, K. and Oates, P. (2010). AusAID Adviser Review a bad Aussie Joke. Retrieved December 19, 2012 from Rudd, K. (2011). An Effective Aid Plan for Australia: Reducing Poverty, saving Lives and Advancing Australia’s National Interests. Australia: CANPRINT Communications Pty Ltd. Read More