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Financial IGOs and the Developing World

Since the 1970s, tougher rules and strict conditions have been applied for large-scale lending, especially for developing countries. These have included the SAP and HIPC schemes:

SAPs

SAPs

  • SAP stands for Structural Adjustment Programmes. They are usually made up of loans from the IMF and World Bank.
  • SAPs have made countries that receive lending follow specific routes to development, such as privatisation.
  • Africa Action, an NGO, is critical of SAPs, claiming that the assumption that the market leads to benefits for the rich and poor is flawed.
  • Ghana launched its structural adjustment plan in 1983. The IMF and World Bank say it is one of the most successful SAPs in Africa.
HIPC schemes

HIPC schemes

  • HIPC stands for Heavily Indebted Poor Countries. There are 37 nations in this group, including Ghana, Ethiopia, Afghanistan and Senegal.
  • HIPC schemes aim to make sure that no country faces an unmanageable debt burden (amount of debt).
  • Under HIPC schemes, countries must reduce poverty over time and meet other criteria. If they meet all of these criteria, then they may have all their external debt cancelled.
    • Chad achieved this in 2015.
  • Some people argue that SAPs and HIPCs mean the sovereignty of these nations is questionable - are they perhaps neo-colonial?

Regional Trade Blocs

Regional trade blocs are intergovernmental groups that reduce the barriers to trade in their region.

European Union

European Union

  • The European Union is a trade bloc made up of 28 European nations (as of 2018).
  • The European Union is the most tightly integrated trade bloc, because it combines common external tariffs, with the free movement of labour and for many nations, a common currency in the Euro.
NAFTA

NAFTA

  • The North American Free Trade Agreement (NAFTA) is a trade bloc made up of the USA, Canada and Mexico.
  • NAFTA supports free trade between its three members. Removing internal quotas and tariffs is the aim of the organisation.
  • NAFTA does not have common external tariffs on nations outside the 'customs union' or 'trade bloc'.
ASEAN

ASEAN

  • The Association of Southeast Asian Nations is a trade bloc of 10 Asian countries, including Indonesia, Malaysia, Singapore, the Philippines, Thailand, Brunei, Cambodia, Laos, Myanmar and Vietnam.
Mercosur

Mercosur

  • Mercosur is an economic grouping of Argentina, Brazil, Paraguay and Uruguay.
  • It was established by the Treaty of Asuncion in 1991.
  • Mercosur does have an external tariff on goods from outside the trade bloc.
COMESA

COMESA

  • COMESA is a grouping of 19 countries in east and southern Africa.
  • Its members include Kenya, Libya, Egypt, Madagascar, Mauritius and Zambia.
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