Structural adjustment policies shrank the economies that pursued them

Evidence

As Rodrik demonstrates, a decade into these adjustments the majority of “adjusted” countries had not yet returned to where they started from in terms of lost GDP—lost through the implementation of these policies. Successes were few, far between, and subject to frequent reversals. Latin America’s economic record was actually much better during the 2000s, a period when the pace of reforms slowed down considerably, and in some countries halted or was even reversed. As a recent survey of the results of IMF and World Bank reforms in Latin America shows, after the crises of the 1990s, the region’s reform index was basically flat in the 2000s. What seemed to be generated instead of growth were large financial crises, as capital accounts were opened up and controls on inflows were abolished—a uniquely IMF addition to the Washington Consensus checklist—and banking systems were liberalized. For Latin America in particular, the 1990s compounded the losses of the debt crisis decade of the 1980s. Far from creating growth, these policies shrank the economies that pursued them, just as we see happening in Europe today. … In fact, it’s hardly a stretch to see EU policy in the European periphery as little more than a localized set of structural adjustment policies implemented with just as much success as one would expect given past results. — Mark Blyth, Austerity, 440

Categorization

• XREF: Directly supports the austerity-literature thread and Mattei’s critique; also parallels the empirical failures of Washington Consensus programs. — connects to: Structural adjustment programs exported expansionary austerity to the developing world with poor results — Mark Blyth, Austerity: The History of a Dangerous…, 439; Advanced economies have faced downward economic and productivity growth since the 1970s — Nick Srnicek, Platform Capitalism, 27; Neoliberal structural adjustment replaced postwar modernization as imperial policy (+3 more)
• ADDENDUM: Connects to the factual-economics groundwork underlying ‘On Sacrifice’ style arguments about who bears the costs of policy regimes; but more precisely it parallels the ‘Grafting’ point that imposed external systems fail where local conditions differ.
• SEED: An essay on how Washington Consensus failures in Latin America prefigure current EU periphery austerity could be a strong accessible piece.

Broader Connections

• Neoliberal structural adjustment replaced postwar modernization as imperial policy #expands (0.80)
• Uncontrolled financial liberalization and consumption-fuelled borrowing collapsed Chile’s economy in 1982 #exemplifies (0.80) — Philip Mirowski & Dieter Plehwe (eds.), The Road from Mont Pèlerin, 1594
• Advanced economies have faced downward economic and productivity growth since the 1970s #complicates (0.72) — Nick Srnicek, Platform Capitalism, 27
• Austerity structurally dismantled the workers’ movement and its economic alternatives #exemplifies (0.72) — Clara E. Mattei, The Capital Order, 654
• Global interdependence weakened national economic control and Keynesian policy #expands (0.72) — Anthony Giddens, The Consequences of Modernity, 188