I have recently done a study on economic empowerment policies in Botswana and looked at how WTO law enables or impedes such policies. My view is that WTO law gives developing countries little policy space to devices measures to empower the poor. This is fueled by the fact that when some developing countries scheduled commitments under GATS it appears that they didn't have adequate understanding of the implications of doing that. Botswana is today unable to device economic empowerment measures in the tourism industry because of its commitments. 

Other than affecting funding for education and health, increased utility prices (required by IMF and WB loan conditions, to ensure return of the loans) also affect the lives of the poor. Pakistan is a good example to quote. 

I have just finished a research on how external interventions are not grounded on on-going social relations and structure and yet local culture (not limited to tribal cultures but also culture of national governments), norms, shared beliefs and conventions influence economic activities and transactions. IMF, WTO and WB tend to hand down policies which are thought to be applicable to anywhere and at the end there are applicable nowhere. Host governments cannot therefore, innovate to find other solutions.

I have worked for a local government in northern Uganda for over 13 years and was overseeing implementation of a world bank funded programme for social action fund. After two years those of us who interact directly with the poor communities realized the implementation framework was not feasible to generate the kind of expected outcomes. In a mid-term review we wanted the implementation model changed based on our observations and responses from the communities. We found stiff resistance from the programmers at the world bank who wrote the project. At the end of the project, little impact was found and the second phase had to be changed. A lot of what we suggested are now being implemented with making reference to our earlier criticism.

All I am emphasizing here is the role of local resources and knowledge in programming and implementation of interventions from outside is very vital in tailoring interventions to the real felt needs. But this requires trust from these organizations that there is local capacity to do so. The fact that people are surviving under those dire conditions means there are local resiliency and survival strategies on which external interventions can be grafted.   

IFI impact can be seen a many different levels. There is little acknowledge of the social or cultural limitations in regards to loans or agreements. At a government level loans can be difficult to repay and it can set up  an dependency situations which benefits only the IFIs.  We have seen increasing debt  by developing countries where some debts have been written, however this also has consequences.

Could you tell me more about the IMF SAPs, please?

IMF works along the WB in financing loans and projects.  The WB can make grants as in the case of Timor but the IMF does not have this option. 

They financed loans to government with many strings attached like the privatisation of state owned enterprises for example electricity, water and banks without any thought to the impact this would have on prices, stability of supply or unemployment.  Recently the WB and IMF have taken notice of poverty in developing countries that have not necessarily changed there terms or conditions applied to loans,

There is a corollary to the Murphy's Law which says "All compex problems have a simple answer that is easy to understand, easy to defend and plainly wrong". I have the feeling that this Law is at work when people from all sides of the political spectrum discuss globalization. It would be a mistake to draw the lesson that because there are costs from import competition that one should therefore limit trade.  The same import competition that may cost country jobs in some parts of the economy is also what is responsible for spurring innovation.  If technological progress and growth is to take place, economic restructuring and reallocation of resources will be unavoidable.  We know from Schumpeter' s "creative destruction" that changes are not without costs, even if they are desirable for the wider society. The economic success of a country then depends in large part on how well it manages economic change. This does not mean that free trade is a simple solution to all issues (remember the Murphy's corollary) just that protectionism isn't.  For policymakers, the wisest course of action is to make the process of economic restructuring and reallocation as smooth as possible. Not simple, difficult to understand and even more difficult to explain to stakeholders who fear they will be the losers in the change, but nobody said that being a politician (in the true sense of policy) was an easy job.

The impact is exactly the opposite. IMF has the lowest interest rate for credits. It helps countries out of crisis at the lowest cost possible. Structural reforms do have the same impact to help economies earn money.

Hi Vladimir,

While what you have said is true, it does not take into account the social costs of restructuring the people ad in turn the economy of a country. The current policies have caused a huge amount of social unrest and in many cases have increased the social inequality within a country. 

One of the problems is that the IMF and Worldbank, as a condition of the loans they provide, require recipient countries to reduce subsidies for energy, food staples, and other commodities that benefit the poor. This is understandable from the point of view of the IMF and WB because they want the loans to have a lasting impact rather than to be eaten up right away. However, from the perspective of the poor, these policies induce hardship, in particular because they are often imposed at short notice and may lead to drastic price increases.

I suggest that you research the theory of resource curse, in particular the approach taken inter alia by Mick Moore, namely that resource curse is not only the availability of cheap resources like oil but also the easy access to foreign aid. Moore postulates that both natural resources and foreign aid are "unearned" resources from the point of view of the recipient governments, i.e. they have to do little or nothing for it. By contrast, if they would have to collect their operational budgets from tax revenue - like it is the case in most developed countries - they would have to promote a healthy economy and some form of legitimacy with the tax payers, i.e. the citizens.

Of course, this does not provide an answer whether a country should accept IMF and WB loans even if this means having to bring their fiscal accounts in order and having to cut subsidies that benefit mostly the poorest, or decline those loans. The reality is, however, if subsidies for food and energy and the like force a country to borrow more and more money, they are unsustainable. The IMF and WB just force a country to end those subsidies while the country can still borrow, rather than when it is already bankrupt. What I don't know is whether the IMF and WB nowadays allow countries to phase out the subsidies or make enough efforts otherwise at mitigating the impact on the poorest in the respective countries.

I think Stiglitz's Globalization and its Discontent and Ha-joon Chang's Bad Samaritans contain a number of examples   

Stiglitz and Chang are good to start with. I have plenty more. Here are some examples:

Graham Hancock: Lords of Poverty - The Power, Prestige, and Corruption of the International Aid Business

Arjan de Haan: How the Aid Industry Works - an Introduction to International Development

Ben Ramalingam: Aid on the Edge of Chaos

Michael Maren: The Road to Hell - The Ravaging Effects of Foreign Aid and International Charity

Alex de Waal: Famine Crimes - Politics & the Disaster Relief Industry in Africa

Fiona Terry: The Paradox of Humanitarian Action - Condemned to Repeat?

Dambisa Moyo: Dead Aid - Why Aid Is Not Working and How There Is a Better Way for Africa

William Easterly: The White Man's Burden - Why the West's Efforts to Aid the Rest Have Done so Much Ill and so Little Good

William Easterly: The Tyranny of Experts - Economists, Dictators and the Forgotten Rights of the Poor

William Easterly: The Elusive Quest for Growth - Economists' Adventures and Misadventures in the Tropics

Carol Lancaster: Aid to Africa - So Much to Do, So Little Done

Roger Riddell: Does Foreign Aid Really Work?

I would also recommend in this context:

Thomas Weiss: What's Wrong With the United Nations and How to Fix It

Daron Acemoglu & James Robinson: Why Nations Fail - The Origins of Power, Prosperity, and Poverty

the challenge with SAPs is that institutions which provide loans put conditions which should help to bring ailing economies on a healthy path. In particular subsidies and investment in 'unproductive' sectors is not encouraged. Health, education, food subsidies are considered non-productive sectors and state expenditure should be restricted, targeted, etc. This can has severe impacts on the poorest in societies.....