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Lecture

MARCH 16th.docx

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Department
Political Science
Course
POLI 227
Professor
Rex Brynen
Semester
Winter

Description
MARCH 16 , 2012: o Political consequences of SAPs (continued) The change in policy will always create winners and losers.  IMF riots- often associated with cutting food subsidies or heating subsidies.  Shift in political coalitions- this can happen if the government decides to change economic policies (gains new allies, loses old supporters), or if a new government is brought it.  Weakening of neo-patrimonialism because there are fewer state resources to spend. You can use the sell off of state assets as a type of neopatrimonialism and use economic liberalization to hand out the benefits of economic liberalization. (ex. Egypt) o How to implement?  Gradual (less likely to cause political opposition, but does not send signals about your determination to shift economic direction) vs. short, sharp shock (better economically, but not politically) Egypt is an example of the gradual implementation. Bread is Egypt is very cheap because it is subsidized, which was a heavy drain on resources. To prevent the riots of the past, the Egyptian government made improved and slightly less subsidized break and made them both available. Slowly over six months they made less of the cheap, subsidized bread available until only the new, more expensive bread was available and everyone had switched over to the less subsidized bread.  “The IMF made me do it….” Part of the structural adjustment is its theatre- it enables you as a domestic political actor to blame someone else. It is often the case that the technocrats believe that they need to do it, but they can shift blame to save their political supporters even if they agree with the IMF.  Changing approaches? Over the last decade, change can be seen in the approach of the World Bank (less so the IMF) and others: o Debt relief for HIPCs- the debt burden is declining for developing countries as whole. o Increasing acceptance of the role of the state- in the past they often adhered to neo-classical or neo-conservative methods, so it is a significant change that there is an acceptance of the importance of more institutions and bigger governments. o Importance of rule of law and institutions, good governance (emphasis on lower levels of corruption) o Great attention to poverty alleviation  This results in debates on the pros and cons of targeting directly at poor populations vs. overall subsidies. When you target directly at the poor, no one supports it but the poor whom it benefits, so it is difficult politically, whereas overall subsidies may be less effective but benefit all. o Role of civil society, “stakeholder consultation” o Attention to gender, environmental, and conflict issues (these changes are much more substantial at the World Bank, a development agency that provides advice and money at concessional rates and provides resources, than at the IMF, which is about fiscal balance and wanting countries to stay within their budget).  The World Bank is more unpopular in Western countries than in it is in the developing countries who actually deal with it. In sub-Saharan Africa, the World Bank is as popular as NGOs.  2008- Global Recession: Generally a recession in the industrialized world leads to reduced industrial production, which leads to less demand for raw materials, which is detrimental to the developing world. In 2008, this was not the case. The developing countries were not necessarily doing worse. This is because there are such rapid demands from the BRICs that it doesn’t matter which countries are in the recession, because they are selling everyone. If the United States is buying less, they can compensate by selling more to China. This highlights how the global political economy is changing. Even sub Saharan Africa had positive growth rates.  What is the relationship between the nature of the economy and the nature of the political system?  Economic Reform and Political Liberalization: o Market enhances democracy? There is a clear connection between the emergence of a capitalist market and democracy (except in China, because their shift to a capitalist economy from a command economy did not lead to political liberalization or democracy).  Economic pluralism, role of middle and business classes (historically important in the emergence of the, economic growth creates conditions that are more hospitable to democracy. o Democracy enhances the market? A more open political environment allows people to develop new ideas that could be capitalized on in the economy.  Innovation and freedom (the freer the political environment, the more likely you are to have entrepreneurs and market success). o Market economies may weaken democracy? Because they create winners and losers and some benefits from the economy at the expense of the others. It is undeniable that huge inequalities have implications for the political system.  Economic inequality, marginalization of the poor  Latin America: even though we have political democracy and elections, the level of inequality that the economy sustains means that some people in the population have less of a voice. The rich benefit
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