Globalization: A Tool Used to Stunt Third World Growth

“From the suites of Davos to the streets of Seattle, there is a growing consensus that globalization must now be reshaped to reflect values broader than simply the freedom of capital.” (Sweeny) Globalization is a force which is presently being used only in the sense of “the freedom of capital” (Sweeney); something which is not all that free. This is discussed in Stilglitz’s Globalization and Its Discontents, and in Escobar’s Encountering Development: The Making and the Unmaking of the Third World, whereas globalization should be viewed as an instrument to facilitate the use of an untouched global free-market system. In addition, global institutions should use upgrading and innovation globally to help with third world’s development, as discussed in Humphrey and Schmitz’s Governance and Upgrading: Linking industrial Clusters and Global Value Chain Research, and in Freeman’s A Schumpeterian Renaissance? However, in using what are thought to be helpful market-recovery institutions, such as the IMF (International Monetary Fund) and the World Bank, the hidden agendas of the United States and developed countries are crippling the growth of the under-developed countries. Thus, the attempt by developed countries to help third world countries is misguided, when it should be encouraging an untouched global free-market system and a culture of innovation.

At the outset of Globalization and Its Discontents, Stilglitz discusses the IMF’s failure as a facilitator of global stability in the global marketplace. Stilglitz goes on to say that the IMF of the past is very different from the IMF of today. In the past, the basic ideology behind the IMF was to fund the country in severe economic downturn, so that it would seem creditworthy. The country could then fund basic expenditures and tax cuts, which were needed to help stimulate the economy with expansionary policy intent. The IMF of the present, however, is run by market fundamentalists that believe that markets work well on their own and the country’s government intervention would be a negative one, but the IMF (in the name of monetary policy) can intervene as it pleases with a contractionary policy intent. Stilglitz believes that the IMF intentionally worsened the problems they were trying to remedy through stabilizing