General criticisms of the IMF and World Bank

Main institutions of macroeconomics: World Bank Development banks

Main institutions of macroeconomics

General criticisms of the IMF and World Bank

Both the IMF and the World Bank have been widely criticised on several points. First, both institutions were designed and created in 1945, thus facilitating the hegemony¹ of the US as an economic power. Despite being founded by 43 countries, the fundamental principles of these institutions have promoted the interests and ideology of the US and other Western European countries. Even though the US hegemony has been in decline (with the rise of China as the new superpower), neither the IMF nor the World Bank have democratic governance systems in place, with continuing dominance of the US and Western Europe in decision-making bodies.² Thus, the Global South is not equally represented in either institution, despite having been the target of both institutions’ policies.

Second, beginning with the 1980s, principles of neoliberalism (which can be summarised as free market, privatisation, and liberalisation) have dominated both the IMF and the World Bank and shaped their policies. These policies have been imposed on developing countries through Structural Adjustment Programmes (SAPs)³ which require certain conditions (including austerity measures) to be followed by the recipients of the funds or credits.

The SAPs have been widely criticised for their devastating impacts on living standards of people, human rights, and environment. The policies implemented through SAPs include significant cuts to public spending. This hurts impoverished groups the most, as they rely on these services. For example, the compound effect of the policies by the IMF and World Bank has been the defunding of African academic institutions, which increased the cost of education and turned it into a privilege for a small minority.

Azra Talat Sayeed describes the effect of IFI policies on landless agricultural women workers in Pakistan.

The policies also include forcing countries to ‘open their markets’ of competition by removing subsidies. An illustrative example of this policy was in Jamaica. Until the 1990s, Jamaica had a successful dairy industry, partly thanks to the increased tariffs by the state which limited the import of powdered milk. When the World Bank required Jamaica to lift the tariff to grant a loan, the Jamaican market flooded with cheap powdered milk imported from the Global North. The dairy industry collapsed, leaving dairy farmers impoverished, and the country food-insecure and dependent on the Global North.

Development projects combined with austerity policies have led to forced displacement and increased the volume of global labour migration. Women from indebted countries (such as Sri Lanka and the Philippines) started to seek job opportunities elsewhere, as their living standards drastically decreased due to large cuts in public spending. The jobs available abroad as migrant workers (e.g. as maids, caregivers, nannies, sex workers) are precarious, unregulated, and associated with low wages and poor working conditions.⁴

Glorene Das quote As women entered the workforce en masse, their increasing participation in the workforce has been a dominant trend worldwide, which coincided with a general degradation in wages and working conditions. “Patriarchal structures have positioned women, particularly from vulnerable social groups, as an easier source of exploitable, low cost labour due to their marginal social and economic power.”⁵ Known as ‘feminisation of labour’, this trend is also visible in the many countries in the Global South which become dependent on feminised migrant labour, due to the money these workers send back to their homes (called ‘remittances’).

Only during the 1990s did the World Bank start to integrate gender into its policies in the context of gender mainstreaming. However, rather than focusing on promoting women’s rights, the gender politics of the World Bank remained largely ‘instrumentalist’. Since 2007, the World Bank has adopted an approach called ‘Gender Equality as Smart Economics’ (GESE). The smart economics approach combined women’s lack of empowerment and also companies’ desire for more profits to promote women’s employment to boost economic growth. In other words, the World Bank promoted gender equality due to its perceived advantages for economic growth and business interests, not as a goal in itself.⁶

Furthermore, these policies which aim to empower women through employment, actually serve the interests of business, rather than women. The World Bank’s gender policies are only implemented for its investments in projects, such as roads, schools, and mines. The loans granted for the policy-based operations (which comprise half of the World Bank’s loans) should aim at reforming a sector or the economy in general. These policies are not investigated for their possible adverse effects on women’s human rights, such as environmental degradation, blocking access to food and clean water, and increasing poverty.⁷

In other words, women everywhere are profoundly affected by the policies of the IMF and the World Bank. Every policy that threatens women’s access to education, decent jobs, housing, and healthcare, should be considered as a violation of women’s human rights. The IMF and the World Bank have included some concerns and goals concerning gender equality to their development agenda. But it will not be possible to achieve global gender equality as long as the neoliberal and capitalist understanding of ‘economic growth’ continues to be the primary goal, rather than the welfare and wellbeing of the people.

Main institutions of macroeconomics: World Bank Development banks

Footnotes

1
Hegemony refers to the condition of one country being accepted as superior to all others based on economic, political, military, and cultural power.
2
This dominance is furthered through an unwritten ‘gentleman’s agreement’ among states, where IMF’s managing director is always chosen among Europeans, and the World Bank’s managing director is always chosen among Americans. More information can be accessed at: Bretton Woods Project. (23 July 2019). What is the ‘Gentleman’s Agreement’?
3
While the terminology ‘Structural Adjustment Programmes’ started to be avoided by the IFIs (due to the increased criticism against them), the programmes are still alive as a concept and an approach to IFIs’ imposition on debted countries. Bretton Woods Project. (30 July 2019). Structural Adjustment is Dead, Long Live Structural Adjustment.
4
Ehrenreich, B., & Hochschild, A. R. (2011). “Global Woman: Nannies, Maid, and Sex Workers in the New Economy”. In S. D. Eitzen & M. B. Zinn (eds.), Globalization: The Transformation of Social Worlds (pp. 175–184). Wadsworth Publishing.
5
Balaji, A., Yahaya, D., & Maziwisa, M. R. (14 July 2020). Creating a Feminist Alliance for Trade Justice. OpenGlobalRights.
6
Bexell, M. (2012). Global Governance, Gains and Gender. International Feminist Journal of Politics 14(3), 389–407.
7
Zuckerman, E. (December 2018). A Guide to Women’s Rights and Environmental Justice Advocacy on International Financial Institutions. Both ENDS and Gender Action.