Structural Adjustment Program (SAP’S).
Structural Adjustment Program (SAP’S)
Structural Adjustment Program: economic policies which countries must follow in order to qualify for new World Bank and International Monetary Fund (IMF) loans and help them make debt repayments on the older debts owed to commercial banks, governments and the World Bank
1.) move from locally based sustenance production (small farmers) to large scale industrial production for TNC’s
-provides TNC’s with cheap land, labour, and resources
2.) Reduction of government expenditures. Causes limited cash flow in areas of government spending in Health care, education and welfare measures
3.) Privatize public assets and services (electricity, timber, oil, etc…). No more nationally owned companies. TNC’s can buy these companies at bargain prices
4.) Laws are passed to make it easier for foreign nationals to buy land
5.) Devaluating currency. Hard to create manufactured goods. Make it difficult to purchase anything from the developed world.
6.) No Tariffs: no taxes on anything coming in or out of the country. Makes it impossible to protect their local market. Decreased revenue since they cannot tax business.