Many bankers and economists view the Third World as places where the economies have yet to take off. All they need are resources to stimulate the imminent prosperity. To alleviate the immense poverty, unemployment and destitution that afflicts the vast majority of people, the poor and the working class , in these nations, economists and bankers look toward the free market as the solution. As developing nations' debts accumulate to point where some must declare bankruptcy, the international banks, the International Monetary Fund (IMF) and the World Bank, began giving loans to these with the aim of stimulating the economy. Attached to these loans are conditions, meaning the debtor nation must adhere to stringent domestic social and economic policies if they were to continue to qualify for future loans and food aid. These financial aid programs are dubbed 'structural adjustment programmes' (SAPs), and are designed to put developing nations on solid footing within the global economy so they could repay their loans. The economic policies that the IMF and the World Bank favour are those which aims producing products as cheaply and abundantly as possible for export. And in turn, jobs woul

When in place, the policies under SAPs that governments are forced to adopt have detrimental consequences for the poor and working class of those Third World countries. Rather than alleviating the economic problems, the policies actually make them worse. And as the economic problems worsen, so do the social problems since they are inextricably connected. At the same time, the wealthy business owners' profits keep increasing yet none of it is "trickling down" to the rest of population as economists thought would. They do not see a penny. Proponents of the SAPs believe that recipient nations have been "living beyond their means" which is perceived to be one obstacle to economic growth.

Oscar Allen, leader of the Rural Transformation Collective, observed: The stranglehold on us by foreign institutions today is more total than under the colonial situation, because it is cultural and social as well as economic, and because it includes co-operation and co-ordination among Caribbean governments under terms dictated by the IMF and the World Bank.

Industrial nations and international banks recognised the need for a way to stimulate the faltering economies of the developing nations so loans and debts can be paid back. So SAPs were devised to improve government financial balance sheets and to stimulate economic growth and prosperity.

The following outlines the main components of SAPs and how they drive down the living standards of the poor and the working class.

SAPs scorn tariffs and levies that may be placed on exports. Some governments impose them to gain some revenue from the wealth of investors, but it contradicts export product maximising. These protectionist barriers are designed to protect local business from foreign competition. SAPs want domestic markets to be as open as possible for foreign investment. By removing them those barriers, local businesses go belly up simply because they cannot compete with the foreign companies. Much unemployment is created this way, and also local needs are even harder to meet.

Structural adjustment loans are geared towards construction projects and the expanding government services (for business), paving the road toward economic prosperity. The IMF and the World Bank was certain that the gap between export income earning and the cost of imports would close. If the governments of the debtor nations agreed to implement the social and economic policies, then the debt collection date would be postponed by the big banks thereby maintaining a certain degree of financial stability for the nation in the mean time.

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Approximate Word count = 2706
Approximate Pages = 11 (250 words per page double spaced)