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During the last decade, we witnessed crucial change in the economic policies of most of
the Third World countries through rapid devaluation of their currencies, falling prices of
their exports, rising debts and also imposition of the principles of 'free market' economic
policies. Under such situations, the international financial institutions became more
powerful than ever and imposed specific socio-economic policies in the name, of
'globalisation'. Here we intend to review these policies:, whom it benefits in terms of
employment and income. The World Bank and IMF sponsored 'structural adjustment
programme' (SAP) constitutes a powerful policy which bears a direct relationship of
changes in earnings and reinforcement of cheap labour export economy and also
budgetary austerity, trade liberalisation which is being applied simultaneously to about 70
indebted countries in the Third World and Eastern Europe.

The World Bank and IMF sponsored SAP constitutes a powerful instrument of economic
restructuring which affects the likelihood of millions of people. It favours the
internalisation of economic policies and places these policies under the direct control of
the World Bank and IMF, which are acting on behalf of powerful financial and political
interests of rich countries. The Washingtonbased World Bank and IMF are entrusted with
the execution of global economic policies which affect the likelihood of more than 80 per
cent of the world's population.

Meanwhile, since 1960, the population of Africa has doubled, while food production has
slipped back to 20 per cent less than in 1970. This fall in food production stems partly
from the agricultural policies, mainly suggested by the experts from the rich Countries
and institutions, which gave priority to export crops that have served them so badly;
partly from the lack of investment in food crops, partly from the disruption of agriculture
production by war and disorder, which has driven people from the countryside to towns.

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The,debt crisis aggravated the economic situation during the 1980s. At the heart of the
debt crisis lies an unequal structure of trade, production and credit, which defines the role
and credit, which defines the role and position of Third World countries in the global
economy. The restructuring of the world economy under the guidance of the Washington-
based financial institutions increasingly denies the individual countries the possibility of
developing a national economy. In fact, the globalisation and SAP transforms countries
into open economic territories and national economics into supplier of cheap labour and
natural resources.
In many indebted Third World countries, the real earnings in the manufacturing sector
declined by more than 60 per cent since the beginning of the 1980s. The situation of the
informal sector and the unemployed is more critical. In Nigeria under General Babangida,
for instance, the minimum wages declined by 85 per cent and are currently about 10 to 20
dollars a month. In Peru, after the SAP the fuel prices increased by 31 times overnight
whereas the prices of bread increased by 12 times. The minimum wage in 1990 had
declined by more tan 90 per cent (in relation to its 1975 level). Whereas an agricultural
worker in Peru's villages was only S8 a month in 1995, while the domestic prices of
many consumer goods in Lima were almost the same as in New York.

By the turn of the century, the world population will be 6 billion of which 5 billion will
be living in poor countries. While the rich countries with some 15 per cent of the world
population control about 80 per cent of the total world income, some 56 per cent of the
world population constituting the group of Mow income countries' (including India and
China) and a population of nearly 3 billion, receives only 5.4 per cent of the world
income, less than the GDP of France. With a population of 464 million people, gross
product of the entire Sub-Saharan African countries is about half that of the American
state of Texas (see table 1).

The disparities in income between the 'rich' and 'poor' have reached unprecedented
proportions: an average middle class family in London suburb has an income of more
than one hundred times higher than a rural household in South Asia: a Bangladeshi
peasant has to work for two years to earn what a New York lawyer earns in an hour. The
amount spent by Americans (30 billion dollars a year) on soft drinks like Coca Cola and
Pepsi is nearly twice the gross national product of Bangladesh.

These vast disparities in income within and between countries are the consequence of the
structure of commodity trade and the unequal international division of labour which
imparts to348

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the Third World a subordinate status in the global economic system. These disparities
have widened in the course of 1980s as a result of the following SAFs by the indebted
Third World countries. Thanks to the deterioration of the terms of trade and downward
movement of real commodity prices. This structure of unequal trade and development has
taken a new from since the inception of the debt crisis supported by the rich countries.

Under the close watch of the World Bank and the IMF, the exports of same commodities
are promoted in over 75 countries into a cut throat competition. Everybody wants to
export the same to west European, American and Japanese markets. The increased
concentration of income and wealth in a few OECD countries has led to the dynamic
growth of the luxury goods economy: travel and leisure, the automobile, the electronics
and telecommunications revolution, etc. The 'drive-in' and 'duty-free' culture built around
the axes of the automobile and air transport are the focal points of the modern 'high
income' consumption and leisure economy towards which massive amounts of financial
resources are channelled. The structure of global production based on cheap Third World
labour is thus conducive to a duality of consumption on a whorl level: the global cheap
labour economy is not geared towards the development of internal purchasing power. The
low wage structure tends to counter-act the expansion of purchasing power: low wages
are an input into production, however, this low wage structure cannot constitute the basis
for the dynamic development of consumer goods' market in Third World countries.

The entire economy of the rich countries, which is based on ownership of industrial
know-how, product designs, research and development, etc. subordinates the material
production. Moreover, industrial production remains subordinate to corporate monopoly
capital. At present, the entire economy appropriates close to 75 per cent of the world
income. Therein lies the origin of the Third World debt Ironically, part of the income
appropriated from the Third World is used to provide new credits to enable the poor
countries to continue servicing their external debts. The income taken from the direct
producers (based in Third World) through unequal trade and debt sen icing is lent back to
them on condition, of course, that they continued apply IMF's SAP and accept depressing
wages further and so on.

Private capital flows from the rich countries to the Third World has been highly
concentrated, with mostly East Asian countries including China absorbing some 80 per
cent of private flow to Third World countries since 1990. Foreign Direct

Investment (FDI) flows to Third World have exhibited uninterrupted growth for a decade.
Net FDI in Third World countries jumped from S25 billion in 1990 to S90 billion in
1995, of which S54 billion (60 per cent) went to East Asia. By contrast South Asia's share
was S2 billion.

CATT agreement signed in 1995 at Marrakesh (now it is called World Trade

Organisation) further undermines people's right in the Third World, particularly in the
area of biodiversity and intellectual property rights. Several clauses of the SAP are now
permanently enshrined in the articles of the World Trade Organisation (WTO). The
WTO's mandate consists in regulating world trade to the benefit of the international
banks and transitional corporations as well as 'supervising' the enforcement of national
trade policies (see figure 2). Trade regulated by WTO and SAP are managing to reduce
food resources' increase dependency on transactional companies, and cut social spending
on health and education. Millions have been forced to migrated to cities or to other
countries, where they struggle to survive, having to accept the most marginalised jobs.

In the Third World countries, a privileged social minority has accumulated vast amounts
of wealth at the expense of a large majority of the population. This new international
financial order feeds on human poverty and the destruction of the natural environment. It
generates social tension, encourages ethnic strife and often precipitates countries into
destructive confrontation among nationalities.

The internationalisation of the financial system is closely linked to that process of

'globalisation'. With the massive incorporation of technological resources, the financial
system is becoming a giant instrument to globally manipulate savings, princes and
currencies and the .wealth in favour of the privileged few. The wide majority of financial
transactions have become merely speculative with no links whatsoever to physical,
productive or territorial values.