The International Monetary Fund (IMF) and the World Bank have been primary actors of financial lending in attempts to reduce poverty in many developing countries for almost seventy years. Through various means of structural adjustment programs the IMF, World Bank as well as other regional and global services have lent and invested billions of dollars into underdeveloped countries to promote democratic government reforms, technological advancement, agricultural efficiency, as well as encourage the creation of services such as health and education systems. There is but one major problem: these underdeveloped countries that are receiving this incredible aid are still extremely impoverished and continue to lack regime stability - a paradox. If underdeveloped countries are getting so much attention on the global platform and are receiving so much aid as a result, why are these countries, particularly, African countries still struggling so much?
Much like the natural resource curse, underdeveloped regions in Africa perpetually struggle to survive and develop meanwhile receiving millions, billions, sometimes trillions in aid. I would call this phenomenon the financial lending curse. The natural resource curse identifies the economic struggle faced in Africa in regions rich in natural resources, but see little to no financial returns. The financial lending curse portrays the exchange whereby underdeveloped countries receive financial aid to pursue progressive reforms, but fails to progress enough to pay back what they owe, and therefore fall into deeper debt which causes more socioeconomic burdens. By these two definitions, it is clear to see the parallel between the natural resource curse and the financial lending curse, the latter of which this essay will expound on. Structural Adjustment Programs cater to the financial lending curse.
This essay will illustrate the downfalls of African governments due to state intervention and how this led to foreign intervention in state economic affairs.
Both developed and underdeveloped countries are in a perpetual state of change. Countries all over the world are mending and bending policies to accommodate to the progression of history. In every spectrum, reform has been the primary strategy to attempt economic growth and reduce poverty. Many regional and global agencies support various methods of reform as a means to decrease state intrusion in its economy and encourage privatization. However, the intent, channels of reform and the influence of actors have proven to be contradictory. It also must be noted that is difficult to deem reform projects as a success or failure. On one side of the coin “it does appear that some of Africa’s most aggressive reformers – Ghana, Rwanda, Mozambique – have had strong economic recoveries” (Moss 105), but it is crucial to understand that although their recoveries are visible that there “seem to be severe limits to how far these countries have changed” (Moss 105). Another very...