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Introduction The findings of our study have ethical and practical implications. Since the passage of the United Nations Universal Declaration of Human Rights in 1948, the promotion of better human rights practices by governments around the world has been one of the most important functions of the United Nations. It is morally wrong for agencies of the United Nations, which include both the World Bank and the International Monetary Fund, to undermine one of their parent organization's most important goals, the promotion of good human rights practices (Clapham 2006; Darrow 2003; Skogly 1993; 2001). The practical implication of our findings is that structural adjustment programs are not producing good economic outcomes mainly because they combine relatively ineffective policies with the undermining of a necessary precondition for economic growth – respect for human rights. The World Bank and IMF should be pursuing equitable economic development. We have defined equitable economic development as the simultaneous achievement of economic growth and advancement in protections of economic and social rights of citizens. Achieving one element without the other should be considered “development failure.” We argue that respect for some human rights will promote equitable development. More precisely, respect for some physical integrity and civil rights and liberties will lead to faster rates of economic growth and progress in achieving respect for economic and social rights to such things as health care, education, and housing. [ABSTRACT FROM AUTHOR]

Introduction Developing countries are likely to have a higher rate of economic growth if they have democratic political institutions and if their citizens have protections of their civil liberties (Kaufmann 2005; Kaufmann and Pritchett 1998; Sen 1999). Critics of the World Bank and IMF have contended that structural adjustment agreements undermine institutional democracy and protections of civil liberties. There were four main variants to this “undermining democracy” argument. The first three critiques focus on the deleterious effects of structural adjustment on the development of democratic institutions and democratic methods for selecting leaders. We find no evidence in support of this critique. In fact, we find considerable evidence to the contrary. Countries undergoing structural adjustment were more likely to develop democratic institutions and democratic human rights than those not undergoing structural adjustment. The fourth argument suggesting that the implementation of structural adjustment programs undermines democratic rights is not about procedural democracy. It is about substantive democracy or the extent to which the actual policies produced in a society reflect what most people want. It's an important contention, and we will return to it later, but it is not an argument that can be tested using the kinds of evidence available for large-scale comparative analysis of the type we have conducted in this project. The first argument was that the World Bank and IMF allegedly were more willing to negotiate with authoritarian governments than with democratic governments, because authoritarian governments were more likely to implement unpopular policies (Pion-Berlin 1984; 1989; 1997; 2001). [ABSTRACT FROM AUTHOR]

Introduction As we have shown in previous chapters, countries under structural adjustment for a relatively long period tend to have governments that provide lower than expected levels of respect for economic and social rights (Chapter 7). The deprivations caused by structural adjustment conditions are generally unpopular in less developed countries: anti-government demonstrations occur more often (Chapter 7). Sometimes these protests become violent, increasing the occurrence of riots and organized rebellion (Chapter 7). Governments often respond to these challenges to their authority by increasing the repression of physical integrity rights (Chapter 8). Many country studies have also provided evidence that structural adjustment conditions have led to reduced government respect for worker rights. For example, comparative case studies conducted by the Structural Adjustment Participatory Review International Network (SAPRIN) took a close look at the effects of structural adjustment programs on workers in Ecuador, El Salvador, Mexico, and Zimbabwe (SAPRIN 2004). The study's findings showed how a combination of labor-market reforms, layoffs resulting from privatizations and civil service reform, and the shrinking of labor-intensive productive sectors had severely undermined the position of workers. Employment levels had dropped, jobs had become more precarious, real wages had deteriorated, income distribution had become less equitable, and worker rights and unions had been weakened. Structural adjustment reforms had allowed employers greater flexibility in establishing the terms and conditions of work, and public enterprises had been privatized without adequate regulation (SAPRIN 2004, Chapter 4; also see Heredia and Purcell 1996; Lloyd 2001). [ABSTRACT FROM AUTHOR]

Introduction Dramatic scenes of anti-government protest and rioting, which were met with acts of government-sponsored repression, took place across Morocco in the summer of 1981. These protests and the government's violent response came in the midst of an economic slump caused by lower levels of international demand for phosphates, fruits, and vegetables, Morocco's main exports (Paul 1981: 30). The bleak economic situation was worsened by austerity measures imposed by the International Monetary Fund, which called for the removal of food price subsidies and cuts in government spending (Paul 1981: 30). Paul (1981) describes in detail the violent repercussions of government-spending reductions which led to spontaneous demonstrations. Many students responded to reductions in education funding mandated by the IMF with rioting. The government responded to this first round of action with arrests of members of the former communist party and socialist parties in Morocco. Demonstrators were arrested and brought to trial for “endangering public order.” Organized labor responded to the removal of price controls with calls for action. The Moroccan Trade Union Confederation called for a strike, which turned out to be very successful. The effect of this strike almost entirely shut down Morocco's largest city, Casablanca. Two days after this strike union leaders asked all citizens to join the protest. Demonstrators poured into the streets in all parts of the country, turning over buses, smashing cars and windows, setting things on fire, often targeting banks in the process. [ABSTRACT FROM AUTHOR]

Introduction The causes of why people engage in anti-government protest and rebellion are multifaceted (e.g., Fearon and Laitin 2003; Regan and Henderson 2002; Regan and Norton 2005; Sambanis 2004a; 2004b). The reasons for these actions fall into two broad categories. The first concerns groups that take action for political reasons, choosing their moment to take advantage of governmental weakness. Second, groups take action against their government because they have fared poorly under its economic policies. This research demonstrates that the consequences of World Bank and International Monetary Fund involvement in the governance of developing countries increase the probability of anti-government protest and rebellion along two dimensions already highlighted in the civil conflict literature. The first describes how the involvement of these international financial institutions constitutes a marker of government weakness increasing the probability of rebellion as opposition groups sanction violent attacks to take advantage of this situation for their own political advantage. The second concerns the deleterious economic consequences of these agreements on developing countries. The consequences of these programs increase levels of hardship for many people in countries undergoing structural adjustment. Many more citizens, as a result, have been harshly treated by their governments leading to greater amounts of anti-government protest and rebellion as people try to change government policy to improve their personal circumstances. The evidence presented later provides support for these arguments linking the negotiation of structural adjustment agreements with an increased probability of rebellion. [ABSTRACT FROM AUTHOR]

Introduction In 2000, the World Bank and IMF, the Organisation for Economic Co-operation and Development, and the United Nations published a jointly prepared document titled A Better World for All. In it, the world's two most important international financial institutions guaranteed that, in partnership with others, they would make substantial progress in reducing world poverty by 2015. The report proposes measuring poverty reduction in seven areas: world poverty (the percentage of people living on the equivalent of 1 US dollar or less per day), gender gaps in school enrollment, primary school enrollment, infant mortality and maternal mortality (Sadasivam 1997), access to health services, and sustainable development. Among other specific goals mentioned in the report, the promises include decreasing rates of infant mortality by two-thirds and maternal mortality by three-fourths, providing access to all that need health services, and ensuring that all children are enrolled in primary school. Taken together, the goals in the report are commonly referred to as the “Millennium Development Goals.” This report and these promises made in it were necessary because there is a growing consensus that most of the countries we usually refer to as “developing economies” are not developing at all or are not developing as quickly as had been hoped. Jeffrey Sachs, an economist who directs the Millennium Development Project, notes that, according to World Bank estimates, 1.1 billion people or about one-sixth of the world's population live in extreme poverty (Sachs 2005). [ABSTRACT FROM AUTHOR]

Introduction In 1982 the Republican administration of Ronald Reagan voiced concern over the state of emergency decreed by the Chilean military government of Augusto Pinochet and the increased levels of human rights abuses that were taking place. The administration threatened to direct its representative to the IMF to vote against the award of structural adjustment packages unless the Pinochet regime lifted its state of emergency and improved its record of respect for human rights. Three years later the Reagan administration also abstained in its support for World Bank and IMF loans to Chile for several months until the regime lifted its state of siege (Coad 1985; Omang 1985). Apparently the administration was concerned over the levels of human rights abuses taking place; most attention had been paid to the opposition press censorship (Coad 1985). This example provides an intriguing contrast to the founding charter of both the World Bank and International Monetary Fund, which excludes political considerations in the loan-agreement process of these institutions. When decisions are being made about the allocation, amount, and conditions under which resources are apportioned, the idea that only economic factors affect the evaluation of member countries' representatives to these decision-making boards, is, at best, wishful thinking: politics inevitably becomes involved. In our historical assessment of how these institutions came to make their decisions over the 1981–2003 period, we built upon the existing literature that identified significant factors affecting the decisions of these institutions to enter into structural adjustment agreements with developing countries. [ABSTRACT FROM AUTHOR]

Introduction What is the impact of the World Bank and International Monetary Fund on government respect for human rights and on equitable economic development? Many different groups have protested that the impacts have been negative. Recent anti-structural adjustment demonstrations have taken place at the 1999 Ministerial Meeting of the World Trade Organization (WTO) in Seattle, at the annual meetings of the IMF and World Bank (in Washington DC on alternate years), and at the annual summits of the Group of 8 (G8) industrialized countries. There were massive protests at the 2005 Summit of the Americas in Mar del Plata (near Buenos Aires), at the 2000 Annual Meeting of the IMF and World Bank in Prague, and at the 2001 G8 meeting in Turin, among others. Protesters have questioned the motives and criticized the impacts of these institutions on the economies and societies of liberalizing countries. The popular press has reported upon the activities of these institutions extensively, with much criticism of the austerity measures that have been associated with structural adjustment agreements and their harsh consequences in developing countries. With emotions raised and hyperbole flowing, we need to step back and ask if the criticism of these institutions is warranted. Has the academic community generated any answers when trying to assess the impact of these institutions? Recent studies which have controlled for what have become known as “issues of selection” have concluded that IMF structural adjustment agreements have deleterious consequences on economic growth (Przeworski and Vreeland 2000; Vreeland 2003). [ABSTRACT FROM AUTHOR]

Introduction There is a growing consensus that greater respect for certain human rights leads to economic development that benefits a broader section of society. In this chapter, we explore the logic behind this argument and discuss the relevant findings from previous research. Based on this logic and empirical findings, we conclude that the Bank and the Fund ought to be pursuing a human rights-based approach to economic development in less developed countries. In Chapter 11, we explicitly define what such an approach would look like. For now, let us simply define a human rights-based approach to economic development as one that explicitly seeks to improve the human rights practices of the governments of developing countries as a method to improve levels of economic development. We begin by defining economic development. Economic development that includes economic growth accompanied by a relatively high level of respect for economic and social rights has been described as “equitable economic development” (Sen 1999). It is also sometimes called “high-quality economic growth,” “pro-poor economic growth,” or “equitable economic growth,” the term we will use. This type of growth we believe is the appropriate measure to decide whether economic development is taking place within a society. This is also the standard that we believe should be used to evaluate the economic outcomes of structural adjustment programs. [ABSTRACT FROM AUTHOR]

Introduction In 1981, the Reagan administration in the US, the Thatcher administration in the UK, and their allies compelled the International Monetary Fund (IMF) and World Bank Group (known as the “International Financial Institutions” [IFIs]) to launch an ideological assault against the state and promote a shift in power from the state to the market. From 1981 to the present, the IFIs have financed structural adjustment agreements (SAAs) in developing and transition countries to achieve that goal. Structural adjustment agreements call upon recipient governments to liberalize and privatize economies in the context of strict budget discipline. Adjustment lending facilitates economic integration – the hallmark of globalization – on terms that are advantageous to corporate and finance capital. The policy conditions associated with adjustment loans have accelerated transnational corporate penetration and expansion of markets in developing countries and lowered risks of portfolio investment and foreign direct investment. The role of the state has been reshaped to serve market liberalization, as governments have downsized, decentralized, and privatized (or “contracted out”) their functions. Such measures were intended to jump-start economic growth and free up resources for debt service. However, in most countries, public investment in critical areas (health care, education, infrastructure) foundered, growth rates were disappointing, and debts mounted to unsustainable levels (Pettifor 2001). This volume explores the relationship between adjustment and respect for human rights. Importantly, as governments in developing countries implemented World Bank and IMF-financed structural adjustment programs (SAPs), respect for human rights diminished. [ABSTRACT FROM AUTHOR]

Why would an entrenched authoritarian regime establish an independent constitutional court with the power of judicial review? This is one of the most intriguing questions for students of contemporary Egyptian politics. In a country where the ruling regime exerts its influence on all facets of political and associational life, it granted the Supreme Constitutional Court (SCC) substantial autonomy from executive control. The paradox is all the more intriguing when one reviews the surprisingly bold rulings that the SCC delivered in a variety of areas over the past quarter-century. The Court consistently worked to curtail executive powers, expand freedom of expression, and shield groups active in civil society from state domination. Moreover, it provided the most important avenue for opposition parties, human rights groups, and political activists of every stripe to credibly challenge the Egyptian government for the first time since the 1952 military coup. Opposition parties used the SCC to contest electoral laws and strict constraints on political activity, human rights groups used the SCC to strengthen civil and human rights safeguards, leftists initiated litigation aimed at blocking the regime's privatization program, and even Islamists mobilized through the SCC to challenge the secular underpinnings of the state. In the process, the Supreme Constitutional Court stood at the center of the most heated debates concerning the political direction and even the fundamental identity of the Egyptian state. [ABSTRACT FROM AUTHOR]

Scholars and policymakers have placed a great deal of faith in judicial reform as a cure-all for the political and economic turmoil plaguing developing countries in Latin America, Asia, Africa, and the Middle East. Rule-of-law institutions have been charged with safeguarding human rights, spurring economic development, and even facilitating transitions to democracy. These expectations are grounded in our understanding of the way that legal institutions, markets, and the state developed in the West. Although dependency scholars and others have highlighted the radically different circumstances that “late-late” developing countries face, there is still a pervasive assumption that rule-of-law institutions, market economies, and democracy are self-reinforcing. Indeed, these relationships seem both intuitively sound and historically accurate. Some of the earliest writings in the social sciences by Adam Smith, Max Weber, David Ricardo, and others examined how independent and effective judicial institutions provided the stable property rights system necessary for long time horizons and vigorous private investment. Similarly, judicial institutions are seen as essential tools for providing the checks and balances necessary to curb arbitrary rule. In this view, arbitrary rule is inimical to democratic governance and viable market economies alike, making legal infrastructure essential not only to enforce the rules of the economic game, but to enforce the rules of the political game as well. Finally, we have long observed that economic growth and market economies are positively correlated with the social requisites for democracy. [ABSTRACT FROM AUTHOR]

There once was a time, not long ago, when Europe was close to full employment. In the 1960s and early 1970s, after the completion of the postwar recoveries and before the demise of the Bretton Woods exchange rate regime, unemployment rates throughout Europe were generally in the range of 2 to 3 percent or lower (European Commission 1998b: 224–53). It appeared, as Andrew Shonfield proclaimed in Modern Capitalism, that, with few exceptions, governments had – through indicative planning; increased cooperation between business, government, and labor; and the application of Keynesian principles to macroeconomic policy – overcome the job-destroying effects of business cycles and recessions (Shonfield 1969). Now, some three decades later and in the wake of the major recessions of 1974–75, 1980–84, and 1991–94, Europe is afflicted with enduring high levels of unemployment. Throughout the 1990s, the fifteen member states of the European Union (EU) experienced an average rate of unemployment of about 10 percent, an almost fivefold increase from the average for the fifteen states in the 1960s. Even some half-dozen years after the end of the last major recession, and despite the sustained recovery in much of Europe in the last half of the 1990s, the rate of unemployment remained close to double digits in the EU as a whole and in double digits in the eleven member states that formed the euro-zone, and it was expected to remain at or close to those levels in the foreseeable future. What makes the long-term deterioration in employment in Europe especially notable, of course, is the fact that it has been far more severe than in other advanced economies (see Table 1.1). [ABSTRACT FROM AUTHOR]

Until very recently, the economic ideology that inspired Japanese industrial policy has been largely neglected in social science discussions in English-speaking countries (but see Pyle 1974). It was widely believed that the Japanese experience of economic development had little intellectual foundation. Not only does every educated person in North America know that Western mainstream economics is largely irrelevant to the study of Japanese-type economies, even specialists in Japanese studies believe that neither academic nor government economists played a major role in Japan's high-growth strategy. Academia in general has long indulged in what Saitō Seiichirō (1981:298) calls “a fallacious contrast between the prosperity of the Japanese economy and the desolation of Japanese economics.” These perceptions may be correct in the sense that neoclassical economics has not exerted any notable influence on Japanese development. Academicians, however, have neglected the fact that a group of Japanese economists represented by Arisawa Hiromi (1896–1988), Nakayama Ichirō (1898–1980), and Tōbata Seiichi (1899–1983), who belonged to the generation educated before World War II, played a very important role in the state's policy making. These economists helped the nation to establish an urgent agenda, to identify the future direction of economic development, and to build a theoretical framework for Japan's industrial policy in the context of international pressures and domestic turmoil from the 1930s to the 1960s. Their major propositions, reflected in successive state policies, constituted the core of what Japanese economist Kanamori Hisao (1985:127) calls “Jissen-ha economics” (the economics of actual fighting) – the logic of Japanese industrial policy. [ABSTRACT FROM AUTHOR]