On January 22, McMUN hosted its second annual Global Leadership Forum (GLF), which was sponsored by the Institute for the Study of International Development and featured McGill’s Professor Mark Brawley as its moderator as well as three panelists: Christian Kastrop, the Director of the Policy Studies Branch at the Economics Department of the Organization for Economic Co-operation and Development, Ajay Markanday, the Director of the Washington D.C. office of the United Nations Food and Agriculture Organization, and Kenneth Lester, chief investment officer for Desautels Capital Management.
The GLF themed around the role of structural adjustment programs (SAPs) and their persisting impact on current developed and developing countries. SAPs are economic policies, notably loans that were provided by the World Bank and the IMF to developing countries in the 1980s and 1990s in the midst of a worldwide financial crisis. Additionally, panelists and attendees alike reflected upon the relevance of these institutions in light of the 2008 worldwide financial crisis and continuing financial issues faced by current developed and developing countries.
“I think we should look back, reflect on structural adjustment programs in the 1980s 1990s and see what kind of questions have risen out of that and pose those questions again today,” said Brawley.
The panel discussion opened with each of the speakers providing background information to SAPs in light of the series of debt crises that wracked the Global South during the 1980s as well as the critiques faced following their implementation that are still relevant today. The critiques that emerged related to the Western bias of the World Bank and the IMF and the way in which SAPs were designed as a one-size-fits-all policy that did not take into account cultural leanings.
“I think the same kinds of problems and criticism that are addressed to the WB and the IMF and that they have one way of doing things and every culture has to comply to one way of doing things, generally the American way,” stated Lester.
“I think the big emerging markets would be happy to have onboard. Indonesia, China, and Brazil onboard, but, indeed, there’s a global governance issue,” Kastrop added.
In fact, panelists agreed that, with developed countries facing fundamental structural issues with their economies, the developing countries are the ones that are gradually taking the lead in shaping today’s global economy.
Lester confirmed this statement, arguing that “America is China’s bitch.” He added that whichever move China makes the United States will be the largest stakeholder and that having bought a large number of US treasuries, China is slowly diversifying its economy by investing in other more stable commodities like precious metals.
During the quester-answer period, a delegate brought up a famous issue with the IMF, the World Bank as well as other financial organizations in the context of SAPs; that is, the similarities in their structure and policies and, therefore, the unnecessariness of having a number of such institutions.
Kastrop, however, argued that there is an advantage in having a number of such institutions, as they contain subtleties in their policies suggested to developed and developing countries.
“It’s good to have different organizations with different stakeholders and different problems and different instruments which will influence what they will do in the substance. Please be sure whatever researchers do from the IMF, OECD, or the World Bank or from academia that they work on the same things and sometimes will have the same results but they can differ in tiny little things on equations,” Kastrop said.
The panelists also agreed that in the context of a rapidly globalizing world and more so in the context of private players resolving market failures, the relevance of regulatory organizations is rapidly diminishing.
Markanday stated that with its growing fiscal problems the World Bank may not survive long. He also suggested that unless global institutions like the UNO reform and become less political and “more technical” they will lose credibility with emerging economies.
Markanday urged the audience that in trying to resolve such issues related to SAPs and continuing economic crises, the current generation of students must develop a different mindset from their predecessors.
“Technology is outpacing the ways that the transformation of economy is happening. It’s not going to be agrarian, to manufacturing, to service oriented. […] It’s not going to be labour. It’s going to be a new skill set. […] So my advice, and I have three kids myself, is to be on the spot entrepreneurial. Don’t look at the traditional ways, look outside the box.”
-Soham Chintha and Emma Noradounkian