Difference between revisions of "Globalisation:International Monetary Fund:Case Studies"
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Towards the beginning of the 1990s, East Asian countries had liberalized their financial and capital markets because of increased national pressure form the U.S Treasury Department. This pressure stimulated a flood of short term capital. This short-term capital helped spped up an unsustainable real estate boom, but every real estate bubble has to burst at some point, frequently with catastophic consequences. This is exactly what happened in Thailand and caused an extensive economic problem.<ref> Joseph Stiglitz "[http://www.mindfully.org/WTO/Joseph-Stiglitz-IMF17apr00.htm What I learned at the World Economic Crisis http://www.mindfully.org/WTO/Joseph-Stiglitz-IMF17apr00.htm 04/03/08]" </ref> | Towards the beginning of the 1990s, East Asian countries had liberalized their financial and capital markets because of increased national pressure form the U.S Treasury Department. This pressure stimulated a flood of short term capital. This short-term capital helped spped up an unsustainable real estate boom, but every real estate bubble has to burst at some point, frequently with catastophic consequences. This is exactly what happened in Thailand and caused an extensive economic problem.<ref> Joseph Stiglitz "[http://www.mindfully.org/WTO/Joseph-Stiglitz-IMF17apr00.htm What I learned at the World Economic Crisis http://www.mindfully.org/WTO/Joseph-Stiglitz-IMF17apr00.htm 04/03/08]" </ref> | ||
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Revision as of 12:35, 18 March 2008
The Following are case studies of financial situations in the world market, the IMF involvement and responses of the organisation.
Contents
The east asian crisis
The global economic crisis began on July 2, 1997 in Thailand. Previous decades had seen the countries of East Asia improve dramatically, incomes had soared, health had enhanced and poverty had decreased rapidly. Some of the countries had not experienced a single year of recession in almost 30 years.[1]
Towards the beginning of the 1990s, East Asian countries had liberalized their financial and capital markets because of increased national pressure form the U.S Treasury Department. This pressure stimulated a flood of short term capital. This short-term capital helped spped up an unsustainable real estate boom, but every real estate bubble has to burst at some point, frequently with catastophic consequences. This is exactly what happened in Thailand and caused an extensive economic problem.[2]
IMF involvement In Mexico
One of the regions where the IMF has attracted most criticism is for their heavy and unbalanced involvement state and financial structure of Mexico. In recent history, the IMF has granted over $5 billon (USD) to mexico in an attempt to give mexico less poverty, stability, economic gain and financial protection from declining oil revenues [1]
IMF policy and advice
However many of the programmes undertaken as a result of IMF Stuctural Adjustment Policies (see policies section) have been subject to criticism. In fact the IMF could be considered liable as a large instigator of Mexico's financial crisis in 1994. The IMF advised that mexico should devalue the Peso; also by encouraging the privatisation of many state run banks and other industries the country built up a massive debt burden [2]. In other cases the Mexican Government was advised to steer away from the public funding of improvements to the systems of water provision in their traditional agricultural areas during times of drought. Instead the IMF advised to focus on the "Maquilladora regions" (The northern region where manufacturing of parts for American firms for export is the prevalent industry) [3].
Results
The result of IMF advice and structural adjustment was the decimation of land use, ensuing poverty, a depressed economy and unemployment in the agricultural sector. Is this true nature of the "success" the IMF claims to be Having in the Region? Only when the mexican government reverted away from the IMF programs (by revaluing the peso and beggining to move away from IMF aid) did their economic status improve. [4]
Essentially in this case; promotion of capitalist interests through structural adjustment polices led to the economic failure of a large state, with wide reaching affects..
