The Effects of Industrial Economic Control on Developing and Third World Countries

Times following WWII were difficult for most countries in their quest to revitalize socially, economically and politically. These periods were especially trying for developing pre-colonized nations who were granted independence; usually with fascist governments similar to that of their former owners. During this time, the US, with the assistance of the other members of the Big Five (China, France, Germany, and the UK), created the International Monetary Fund (IMF) and World Bank which gave loans to these desperate countries with extremely high interest rates. The loans provided by the IMF and the World Bank: were given with the purpose of authoritatively obtaining economic control, continue to subjugate countries within a paradox of economic restraints and regulations, and will lead to an otherwise inevitable neo-liberal framework that threatens the mindset of global economy. This can only lead to arising impacts including environmental destruction, war, disease, and global economic exclusion.

The interest rates of these loans were outrageous and would not have fooled a normal leader into the guise that free money was available, however two circumstances made these loans very unique. First of all, these loans were offered at a unique time period when countries needed the money to fund their independence; and secondly they were purposely offered to dictators who would accept the money without fear of its threats to their countries. “The biggest debts are run up by corrupt dictators and then inherited by their democratic successors” (Alan Shipman, lecturer in Social and Political Sciences at Cambridge University) and thus this lead to enormous debts with every increasing rates owed by countries that essentially had nothing to do with the money received. The worst part of the loans is explained in “The Human Face of Economics” by Scholl & Arrizabalaga: “The IMF requires the government to privatize state owned enterprises, devalue the local currency in order to enhance competitiveness for export and of course adopt �free trade’. Embracing �import liberalization’ as part of the free trade package has disastrous consequences.” Now, some governments are transferring resources totaling more than four times what they were spending on the health of their people to creditors with no signs of calming in the era of SAPs leading to a 400% increase in debt. The Big Five has, during this time, gained more in resources than even available in colonial conquest under the shield that it is merely free market economy at its best.

The immoral aspects of these loans don’t only include our methods of obtaining repayment or forced method of free market fundamentalism, but also how these debts actually affect their countries. Ann- Louise Colgan, Director of Policy Analysis and Communications at Africa Action perfectly explains that “over the past two decades, the World Bank and International Monetary Fund (IMF) have undermined Africa's health through the policies they have imposed. The dependence of poor and highly indebted African countries on World Bank and IMF loans has given these institutions leverage to control economic policy-making in these countries. The policies mandated by the World Bank and IMF have forced African governments to orient their economies towards greater integration in international markets at the expense of social services and long-term development priorities. They have reduced the role of the state and cut back government expenditure. While many African countries succeeded in improving their health care systems in the first decades after independence, the intervention of the World Bank and IMF reversed this progress … providing fertile ground for the spread of HIV/AIDS and other infectious diseases. Cutbacks in health budgets and privatization of health services eroded previous advances in health care and weakened the capacity of African governments to