Imf And The World Bank Essay

1023 Words Dec 15th, 2015 5 Pages
Near the end of the 19th century, the IMF and the World Bank sought to develop the Third World and rid it of its poverty through liberalization and structural adjustment programs. By using debt as leverage, the IMF and World Bank issued loans to developing nations with the conditionality that they would restructure their economies and political systems to reflect fiscal discipline, financial and trade liberalization, public expenditure cutbacks, and other reforms promoted by the Washington Consensus and neoliberal thinking. In Planet of the Slum, however, Davis argues that these very institutions meant to alleviate global poverty have in fact, worsened the situation, leading to, what he describes as a “surplus of humanity” living in the slums of the global south.
While the IMF and World Bank claimed that reducing government spending would help bring the Third World out of debt and into development, these drastic measures of austerity resulted in cuts in social services, which made poorer populations of the global south even more vulnerable to. Reduction of social safety nets was coupled with free market policies that dragged the economies of the Third World onto the global market, forcing its underdeveloped industries—a result of colonial rule—to compete against industrialized nations. As the First World heavily subsidizes its agricultural products, rural farmers of the global south were uncut and unable to make a living. This led to famine, death, and displacement of…

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