(Shah, 2010)
F. Impact of Structural Adjustment Policy Preconditions
According to Shah the preconditions impact poorer countries in a devastating manner and it is reported that the following factors result in "further misery for the developing nations" and ultimately keep these countries dependent on nations that are developed: (1) Poor countries must export more in order to raise enough money to pay off their debts in a timely manner; (2) Because there are so many nations being asked or forced into the global market place -- before they are economically and socially stable and ready -- and told to concentrate on similar cash crops and commodities as others, the situation resembles a large-scale price war; (3) Then, the resources from the poorer regions become even cheaper, which favors consumers in the West; (4) Governments then need to increase exports just to keep their currencies stable (which may not be sustainable, either) and earn foreign exchange with which to help pay off debts. (Shah, 2010) Required in these cases is that governments: (1) spend less; (2) reduce consumption; 93) remove or decrease financial regulations. (Shah, 2010) The result is that over time: (1) the value of labor decreases; (2) capital flows become more volatile; (3) a spiraling race to the bottom then begins, which generates social unrest, which in turn leads to IMF riots and protests around the world. (Shah, 2010)
The work of the World Bank entitled "Poverty Reduction Strategy Papers" reports that the PRSPs are "one of the most tangible outcomes of the new approach to development defined in the Bank's Comprehensive Development Framework." (The World Bank, nd) It is reported that the World Bank ahs based its Country Assistance Strategies, its plans for assistance to countries that are low-income on PRSPs which are produced in alignment with five principles as follows: (1) They are country-driven, involving broad-based participation by civil society and the private sector as they are produced; (2) They are directed toward achieving results and focused on outcomes that would benefit the poor; (3) They recognize that tackling poverty requires a comprehensive approach because poverty is more than just a lack of income but that poor people also suffer from a lack of opportunity, security, and voice in decisions that affect their lives; (4) They are partnership-oriented in that they encourage the coordinated involvement of bi-lateral, multilateral and non-government organizations in the country's poverty reduction program; (5Z) They are based on a long-term perspective for poverty reduction. PRSPs foster greater openness in policymaking. Governments have sought increasingly to include traditionally marginalized groups, the private sector and civil society in developing them and because of this, poverty-reduction strategies developed through this process tend to have broader community and stakeholder support and are "owned" by the government. (The World Bank, nd) It is reported that these five principles include the following examples and specifics: (1) Country-driven: Country-ownership of a poverty reduction strategy is paramount. Broad-based participation of civil society in the adoption and monitoring of the poverty reduction strategy tailored to country circumstances will enhance its sustained implementation' (2) Results-oriented: (a) An understanding of the nature and determinants of poverty, and the public actions that can help reduce it, is required for the formulation of an effective strategy; and (b) Medium- and long-term goals for poverty reduction, including key outcome and intermediate indicators, are needed to ensure that policies are well designed, effectively implemented and carefully monitored' (3) Comprehensive: (a) Sustained poverty reduction will not be possible without rapid economic growth; macroeconomic stability, structural reforms and social stability are required to move countries to a higher path of sustainable growth; (b) Poverty is multidimensional; specific actions are needed to enable the poor to share in the benefits from growth, increase their capabilities and well being, and reduce their vulnerabilities to risks; and (c) A poverty reduction strategy should integrate institutional, structural and sectoral interventions into a consistent macroeconomic framework; (4) Partnerships: Government development of a strategy can provide the context for improved coordination of the work of the Bank and the Fund, as well as that of regional development banks and other multilaterals, bilateral assistance agencies, NGOs, academia, think tanks, and private sector organizations; and (5) Long-term Perspective: (a) A medium- and long-term perspective is needed, recognizing that poverty reduction will require institutional changes and capacity building -- including efforts to strengthen governance and accountability -- and is therefore a long-term process; and (b) National and international partners' willingness to make medium-term commitments will enhance the effectiveness of their support for a poverty reduction strategy. (International Monetary Fund, 1999)
It is reported that at the country-level the following differences exist: (1) the extent of commitment to poverty reductions and preparation of country-owned poverty reduction strategies; (2) the type...
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