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Logo of Phnom Penh Post newspaper Phnom Penh Post - Cambodia warned of the World Bank-IMF "myth"

Cambodia warned of the World Bank-IMF "myth"

THE "free market" reforms that the World Bank and the International Monetary

Fund (IMF) have insisted Cambodia follow are not the way to a booming economy, according

to an international expert.

Dr Walden Bello told academics, Cambodian government officials and international

organizations in Phnom Penh on January 24 that free market-led economic growth was

a "myth cooked up in the recesses of the World Bank."

Bello, a professor of public administration and sociology at the University of Philippines,

and author of Dark Victories and Dragons in Distress: Asia's Miracle in Crisis, was

speaking at the International Round Table on Structural Adjustment Program in Cambodia.

He said that the Bank and the IMF believed that their free market policies were the

"elixir that will transform [developing countries] into growing, dynamic economies."

The Bank and the IMF insist that their program of "radical deregulation, sweeping

privatization", wage containment and government spending cuts are set in place

before they loan money. Cambodia is following this regime now.

However, critics say that hardly any country with a fast-growing economy had achieved

that by following free market reforms, Bello said. Some claim that state intervention

has been a central factor in the take-off of "tiger" economies.

"The notion that rapid growth in newly industrialized countries was produced

by free trade and free market policies is a myth cooked up in the recesses of 1818

H St. NW in Washington D.C. - that is the World Bank headquarters," Bello said.

"You will probably get closer to the truth if you travel a couple of blocks

up to 17th St. and Pennsylvania Ave. NW, to the US Trade Representative's Office,

which regularly attacks some of these economies as among the most closed in the world,

among the most difficult for foreign investors, and among the most pervaded by state

intervention," he said.

State intervention and protection did not stop rapid growth, and may indeed have

contributed to growth in Korea, Thailand, Taiwan, Indonesia and Malaysia, he said.

Japan had pushed more than $19 billion into those countries in five years, while

the "liberal" Philippines had attracted only around $1 billion during the

same time. "You pour that much money into a country, and you're likely to have

significant growth..."

"The idea that the key to inviting significant quantities of foreign investment

is by loosening up and giving foreign investors the store - lock, stock and barrel

- is a myth, and a dangerous one".

Asian "tigers" had not grown by "internal free market reforms"

but by unexpected capital inflows, he said. US government policies in the mid-80s

had provoked "a massive migration of Japanese manufacturers seeking to lower

their production costs to cheap labor sites in South East Asia," he said. "Japanese

business executives do not need free trade to operate," Bello quoted from a

US Congressional Research report.

In response, America has been pushing for an Asia-Pacific Economic Cooperation (APEC)

Free Trade Area. "APEC has become a key instrument to reverse the process of

America's marginalization from Asia and ensure that the spluttering US economy remains

hitched to the East Asian locomotive that is expected to pull along the world economy

in the first decades of the 21st century," Bello said.

Bello said that both the "free market" and "state-assisted capitalism"

development theories had attracted a powerful array of critics. NGOs, people's movement

and progressive academics have said there are detrimental common points in both approaches:

  • Both "fetishized" economic growth as the be-all and end-all of development;
  • Both perpetuated social inequality, even if rapid economic growth did take place;
  • Both were ecologically destructive and unsustainable. Ecological costs were not

    included in the real costs of production in the World Bank model; while with "state-assisted

    capitalism" the environment was deliberately sacrificed to attract capital;

  • Both weakened agricultural communities by "channeling personnel and capital

    from agriculture to industry";

  • Both had destructive effects on communities. "In Thailand, the Philippines,

    Indonesia and Malaysia, the story is depressingly similar: big dam schemes imposed

    from the center, uprooting and resettlement of communities."

Thailand - held up during the 1991 World Bank-IMF conference in Bangkok as an

example to the Third World - "has become instead an exemplar of the unsustainable

character of the high-speed growth model among many NGOs concerned with development."

Bello said the gap between rich Thai and poor had widened. Bangkok - fueled by the

rundown of natural capital, especially forests - prospered (and grows to the point

now of gridlock), while the Northeast stagnated. Thai entrepreneurs now lead the

plunder of timber in Burma, Cambodia and Laos. Air and water pollution is out of


Concerned groups were now calling for alternatives, he said.

They said sustainable development was dependent on "democratic, transparent

[and decentralized] decisionmaking" in the areas of production, exchange and

distribution by local and national communities.

Equity, the quality of life and ecological harmony would be emphasized over growth;

rural society and agriculture emphasized more than urban-based industry. They say

NGOs should represent an organized "popular sector" as the "third

pillar" balance to the state and to business. Finally, they wanted community

or ancestral land - or the realm of "commons" - that could not be sold

off, he said.

Bello said that the need to articulate an alternative future "is, now more than

ever, a necessity, for while the rampant consumerism that comes with high-speed growth

continues to dazzle many in Asia, there is a growing feeling that a process that

is accompanied by the decline of agriculture, increasing inequality, and uncontrolled

ecological degradation is a recipe for an unlivable future.

"Governments and people in the formerly or presently socialist countries that

want to be newly industrialized countries would do well to ponder carefully the consequences

of fast track capitalism and ask themselves: Is this a model worth reproducing?"



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