Evaluating Long Term Political Consequences of Economic Restructuring Programs

Development assistance loans provided by the World Bank and International Monetary Fund are accompanied by structural adjustment programs that must be implemented as a condition of receiving the loan. These economic reforms often include currency devaluation, inflation control, increased taxation, market liberalization, decreased expenditure, and a decrease in the size of government. Populations within countries are drastically effected by these structural economic reforms as social welfare programs are often cut, government workers laid off, and the domestic economy struggles to compete in the global marketplace. The implementation of restructuring programs also constrains the policy options that are available to the governments within these countries. While a great deal of work has been done on the winners and losers in countries that have adopted economic restructuring programs as part of their World Bank or IMF loans, there have been very few examinations of the long term political ramifications of these programs within countries that have adopted them. This paper considers the long term political consequences of World Bank and IMF structural adjustment programs. It seeks to answer the question: what are the political consequences of economic restructuring and how does this shape the rights of the population and the structure of the government? A literature review of the relevant research on the topic is given as well as a theoretical overview of the relationship between constraints and political freedom. Based on these literature reviews and theoretical overviews, a set of hypothesis were created to predict what we would expect to see as a result of economic restructuring given a country’s conditions and history. Finally, several case studies are done to analyze the direct consequences of economic restructuring. The results of structural adjustment programs in these countries were analyzed to determine how they impacted political development, stability, trust in government, and the ability to administer social programs and implement policy agenda