Assignment marks obtained: 70 percent.
The essay topic was interesting and relevant to the course.
Additional discussion of other specific aspects of how the IMF’s Structural Adjustment Programs (SAPs) lead to further problems in Developing Nations could be provided. For example, SAP measures such as Fiscal Austerity plans which have to be implemented may worsen social, political and environmental conditions in the nation.
Other SAP measures such as reducing or eliminating controls on foreign investment into the developing nation also has to be carefully monitored else these may lead to potential financial crisis.
It is important to ensure that inflows of financial capital from abroad is in the form of Foreign Direct Investment (FDI) which can create productive capacity and bring in much needed capital equipment, management skills and technology from abroad and that this form of foreign investment is preferred to inflows of financial capital from abroad in the form of Foreign Portfolio Investments (FPI) such as buying Developing Nation stocks and bonds because such portfolio investments are very volatile and are being Hot Money flows—will leave the developing nation at the first sign of trouble and an lead to potential financial crises.
The important point of relevance is that the role of the IMF in specifically promoting (or failing to) FDI inflows into Developing Nations as part of the SAPs could be examined further.
Moreover, to present a more complete view of “the one size fits all” criticism regarding the appropriateness of the IMFs polices the relevant issue of MORAL HAZARD associated with the one-size-fits-all IMF approach could be
Title: The IMF approach to economic stabilization.
Purpose
In this short essay I will discuss the purpose of the IMF and how they deal with countries in economic crisis. I will also discuss what some people believe to be the negatives of the IMF.
Introduction
The IMF approach has often been pegged as...