Monografias | Globalization: the current scenario for economics of development and structural adjustment programs

            The main objectives of this article are:  (i) to present a summary concerning the major features of the theory of globalization, as a theoretical contribution within the field of economics of development, and its link with network analysis models as a research tool; and (ii) to discuss the main foundations to establish economic adjustment programs in non industrialized nations.  These are important topics, elements of a framework in which efforts for economic integration of Third World countries are carried out.

            Here we will have three sections.  The first one will summarize the theory of globalization as a theory of development.  This set of theoretical principles have implications for the Third World countries´ insertion into the international economic system.  The second part will show the more factual characteristics under the current circumstances.  Here we will have a general perspective in reference to the globalization features and the network analysis perspective of economics of development.  A particular point to keep in mind is the important impact that processes of globalization are having in reference to the development conditions, especially those of the less advanced nations.  These repercussions include international trade issues and exporting policies.  These are topics discussed at the end of the second part.  Finally the third part will show the major foundations to carry out economic adjustment programs at a macroeconomic level.

            The main argument in this paper is based on the following elements:  (i) one of the main assumptions from the theory of globalization is the increasing connection and interdependence, in a particular sense in terms of the international trade links; (ii) based on the aforementioned element, it is important to discuss, taking into account elements of globalization, conditions related to network analysis models as an instrumental tool for research, export leading policies and the macroeconomic adjustment models. 

These economic adjustment policies were aimed, among other things, to reinforce the role of exports as a central axis to achieve economic growth.  One of the main conclusions is the evidence that, even though economic adjustment programs have a theoretical ground in its design, one of the main problems for their implementation and success is related to the nature of export.  As long as the less developed nations persist in exporting raw materials and mainly products from the primary sector -or manufactured goods, with important restrictions in major markets of the world, and a persistent decline in terms of trade,  adjustment programs cannot result in sustainable levels of economic growth. 

Development theory:  Globalization

            For the purposes of this study, the concept of globalization will be based on the inferences of Dean Baker, Gerald Epstein and Robert Pollin.[2]  These authors recognize that globalization is not something exactly new and they emphasize the relative and different effects that this phenomenon is having in different areas of the world.  A compressed summary of his basic approach toward globalization establishes two principal meanings:

a)  As a phenomenon it implies that a greater interdependence exists among different regions and countries of the world in terms of finances, trade and communications.  This dissertation will work with the international trade links in two ways:  (a) among Latin American countries; and (b) from Latin American nations with their main international trade partners;

b)      As a theory of economic development one of its major assumptions is that a greater level of integration is taking place among different regions of the world, and that this integration is having an important impact on economic growth and social indicators.

According to Klein and Pauly, the fundamental premise of globalization is that an increasing degree of integration among societies plays a crucial role in most types of social and economic changes.  This premise is widely accepted.  However, there is much less consensus on its fundamental organizing principles and laws of motion.  Neoclassical economic theories that are based on comparative advantage (Klein, Pauly and Voisin 1985), international relations approaches that stress geopolitics (Keohane 1993, and Thompson 1991), and world-systems perspectives that emphasize “unequal exchange” (Amin 1989; Frank 1979; Wallerstein 1991) offer contrasting models of the international system.

            Particularly Baker, Epstein and Klein,  agree in recognizing that the theory of globalization emerges from the global mechanisms of greater integration with particular emphasis on the sphere of communications and economic transactions.  In this sense, this perspective is similar to the world-systems approach.  However, one of the most important characteristics of the globalization position is its focus and emphasis on cultural aspects and their communication worldwide.  In addition to technological, financial and political ties, globalization scholars argue that modern elements for development interpretation are the cultural and economic links among nations.  In this cultural communication, one of the most important factors is the increasing flexibility of technology to connect people around the world. [3]

            Following the main arguments from Keohane, Voicin, Thompson, Moore and Maddison, the main aspects of the theory of globalization can be delineated as follows:

a)  To recognize that global communications systems are gaining an increasing importance every day, and through this process all nations are interacting much more frequently and easily, not only at the governmental level, but also within the citizenry;

b)  Even though the main communications systems are operating among the more developed nations, these mechanisms are also spreading in their use to less developed nations.  This fact will increase the possibility that marginal groups in poor nations can communicate and interact within a global context using the new technology, and therefore can integrate themselves with the “global village,” which represents the current scenario in worldwide communications and transactions;[4]

c)  In terms of economic activities, the new technological advances in communication are becoming more accessible to local and small businesses.  This situation is creating a completely new environment for carrying out economic transactions, utilizing productive resources, equipment, trading products, and taking advantage of “virtual monetary mechanisms.”  From a cultural perspective, the new communication products are unifying patterns of communications around the world, at least in terms of economic transactions under current conditions;

d)  The concept of minorities within particular nations is being affected by these new patterns of communication.  Even though these minorities are not completely integrated into the new world system of communications, the powerful business and political elites in each country are a part of this interaction around the world.  Ultimately, the business and political elite continue to be the decision makers in developing nations;

e)  Social and economic elements are determinant circumstances which affect the standards of living of every particular nation.[5]  Social aspects will be considered in this study concerning the specific impacts that social and economic variables can have on social indicators in the Latin American region during the period 1960-1995.

            Specifically Robert Pollin, Gerald Epstein, and Michael Moore emphasize that the main assumptions of the theory of globalization can be summarized in three principal points.  First, cultural and economic factors are the determining aspect in every society.  Second,  under current global conditions, and when we are studying a particular system -i.e., financial or trade sphere- it is not as important as previously thought to use the nation-state category as a unit of analysis, since global communications and international ties are making this category less useful.  Third, with more standardization in technological advances, more and more social sectors will be able to connect themselves with other groups around the world, which implies faster and easier communications and economic transactions. This situation will affect the dominant and non-dominant groups from each nation.[6]

            Sunkel and Carlsson underline that, in more specific terms, globalization theory implies a key element concerning integration  -integration regarding international trade, the international financial system, technology and communications, and cultural values from the more developed countries (DeMar 1992; Carlsson 1995).  Economic integration at the systemic level -among countries- means stronger worldwide relationships.  At the subsystemic level -within individual countries- it implies social and economic integration from the different social sectors (Sunkel 1995).  At the systemic level there are some nations which are able to achieve more integration into the new world economic conditions than other countries.  At the subsystemic level there are some social sectors which integrate themselves into the new economic dynamic derived especially from the economic growth, and sectors which become more marginalized in social terms (Sunkel 1995; Paul 1996; Scholte 1996).

            Lubbers claims that even though the term globalization in recent years has been utilized, especially following the technological revolution in communications[7] and the creation of cyberspace, the first major argument on “Globalization of the Markets” can be found in a 1983 article by Theodore Levitt in the Harvard Business Review.[8]  The functionalist aspect of the globalization concept is what distinguishes it from the mere notion of internationalization, which refers to a quantitative process but not necessarily to an epochal shift of a more qualitative kind. 

            According to Peter Dickens, globalization processes are qualitatively different from internationalization processes.  They involve not merely the geographical extension of economic activity across national boundaries, that is internationalization, but also and more importantly, the functional integration of such internationally dispersed activities.  The current proces of globalization produces a new global-functional unity.[9]

            Following the basis shown by Porters and Held, the theory of globalization coincides with some elements of the theory of modernization.  One aspect is that both theories state that the main direction of development should be that which was undertaken by the United States and Europe.  These schools hold that the main patterns of communication and the tools to achieve better standards of living originated in those more developed areas.  The modernization perspective differs from the globalization approach in that the former follows a more normative position -stating how the development issue should be solved.  The latter reinforces its character as a “positive” perspective rather than a normative claim.[10]

            Globalization theories emphasize cultural and economic factors as the main determinants which affect the social and political conditions of nations, which is similar to the “comprehensive social school” of Max Weber’s theories.[11]  From this perspective, the systems of values, beliefs, and the pattern of identity of the dominant and the subordinate groups within a society are important elements to explain national characteristics in economic and social terms.[12]  For the globalization position, this statement from the  Weberian theory from the 1920s must apply to current world conditions especially in terms of  the diffusion and transference of cultural values through communication systems that are increasingly affecting many social groups in all nations.

            Based on the aforementioned elements, it is clear that the globalization and world-systems theories take a global perspective as the unit of analysis, rather than focusing strictly on the nation-state as was the case in the modernization and dependency schools.  The contrasting point between world-systems theory and globalization is that the first contains certain neo-Marxist elements, while the second bases its theoretical foundations on the structural and functionalist sociological movement.  Therefore, the globalization approach tends more toward a gradual transition rather than a violent or revolutionary transformation.  For the globalist authors, the gradual changes in societies become a reality when different social groups adapt themselves to current innovations, particularly in the areas of cultural communication and the economic sphere. [13]

            The globalization and world-systems theories take into account the most recent economic changes in world structure and relations that have occurred in the last two decades; for example:  a)  In March 1973, the governments of the more developed nations, began to operate more flexible mechanisms in terms of exchange rate control.  This situation allowed for a faster movement of capital among the world’s financial centers, international banks, and stock markets; b)  Especially since 1976 trade transactions base their speculations on the future value of the products, which is reinforced through the more flexible use of modern technology in information, computers, and in communication systems;  c)  The computer revolution of the eighties made it possible to carry out faster calculations and transactions regarding exchange rates values and investments, which was reinforced by the general use of the fax machine; d) During the nineties the main feature is the Internet system which allows the achievement of more rapid and expansive communication.  The Internet is increasingly creating conditions to reinvigorate the character of  the “virtual economy” in several specific markets. 

            Under current conditions, the main aspects under study from the globalization perspective are:  a)  new concepts, definitions and empirical evidence for hypotheses concerning cultural variables and their change at the national, regional and global level;  b)  specific ways to adapt the principles of  “comprehensive sociology” to the current “global village” atmosphere; c)  interaction among the different levels of power from nation to nation and from particular social systems which are operating around the world;  d)  how new patterns of communication are affecting minorities within each society; e)  the concept of autonomy of state in the face of increasingly flexible communication tools and international economic ties, which render obsolete the previous unilateral effectiveness of national economic decisions; and f)  how regionalism and multilateralism agreements are affecting global economic and social integration.    

Globalization and network analysis concerning economics of development

            Based on the section of literature review dealing with globalization, this is a theory whose aim includes the interpretation of the current events on the international sphere.  These events are characterized by (a)  increasing worldwide active communication systems; and (b) increasing fluent economic conditions, especially those circumstances and factors regarding mobility of financial resources and trade. 

Through this process of globalization, the assumption is that more nations are depending on worldwide conditions in terms of communication, the international financial system, and trade.  Therefore the world scenario is more integrated in international economic transactions (Sunkel: 1995; Carlsson: 1995; Scholte 1995).   This study will take into account circumstances, units of analysis and their relationships in terms of the international economic environment and specific conditions within countries.  On the external level -or systemic approach-, the unit of analysis will be countries; at the domestic or internal conditions within nations -sub-systemic approach- the units of analysis will be those corresponding to national variables of economic growth. 

            Torres Ocampo accentuates that, in terms of the globalization process that is taking place under current worldwide economic conditions, two main topics in international political economy are: (a) the structure of the international economic system; and (b) how this structure has changed.[14]  They  can be addressed through the application of the theory of globalization from the development perspective. 

This globalization approach suggests that the structure of the global system, and the roles that countries play within the international division of trade and labor, is crucial in understanding a wide array of social, political, and economic changes within particular countries.  The basic claim is that international connections, roles, and relationships are important variables in any analysis which tries to explain various dimensions of development -economic growth, for example- and trade among countries.[15]

            Smith and White support the concept that network analysis models are powerful tools for formally describing and testing theories of complex interactive systems.  For example, the five empirical components addressed by the various theories of international economic systems are:  (a) the constituent economies of states (or cities, and regions) that produce, distribute, consume and exchange exports and imports; (b) links or directed flows between these economies at the country level, and international policies that regulate or deregulate these flows; (c) the political-economic networks formed by these links or flows; (d) the positions occupied by constituent economies in these networks; and (e) the structure of these networks as patterns of flows between positions (Smith 1992).

            Network analysis models of the international economic system are equipped to map each of the last configurations.  If performed at multiple time-points, network analysis also enables researchers to examine change in each of these components as well.  Conceivably, it could lead to empirical tests of alternative theoretical models of the global system (Smith 1992).

            The network analysis model can also be a means for identifying empirical data using the concepts of different scenarios and actors within their dynamic pattern of relationships.  For example, Ronald Burt in his studies concerning “structural holes”[16] has analyzed the relationships that are derived from centralization as a characteristic of the system which is affecting each one of the actors’ positions.  In Burt’s studies we can see the potential for the application of network analysis models to enterprises working in the international market in terms of the actual globalization process.

            Studies in terms of social institutions within local areas can be found in the work of Roberto de Leon in his book “The Left Coast City.”[17]  In this work de Leon applies multiple regression models to the study of social and political groups in San Francisco, California, from 1989 to 1993.

            Related to a theoretical level and in reference to institutions and particular conditions of political power within more developed countries, we have the work of Anthony Giddens, “Consequences of Modernity”.[18]  In this work, Giddens studied the processes of economic and social transformations derived from globalization in more developed cities.  His main argument is that we are presently experiencing an “extreme modernization” instead of a “post-modernism”  stage in world relations, particularly with regard to institutions of international trade.

            Network analysis models are particularly appropriate in testing globalization aspects that stress the importance of the global economic exchange in terms of exports and imports.  Wallerstein (1991), Frank (1979), and others have attempted to provide sophisticated historical descriptions of the origin, operation, and organization of the modern global economy.  Unlike early concepts of dependency (Frank 1969; and Chilcote 1974) that underline the particular two-way relationships between core and periphery countries, the globalization and world system approaches stress the importance of capturing the unity and structure of a hierarchic, differentiated world economic system.  Here the major references are trade, financial, technological, and communication links operating at a world level (Smith 1992 and Evans 1992).

            The main areas under dispute concerning the globalization theory and network analysis models are related to four main aspects:  (a) The fact that countries can have more than three levels of placement:  core, semiperiphery, and periphery countries (Schott 1986); (b) The positional characteristics of several countries in terms of sharing the same patterns of relationships can be related to the “clique” characteristics from the network analysis models (Snyder 1989); (c) Even inside the same position from the network analysis model, i.e. the periphery position, the features of countries can have a lot of variation in terms of the size of their economies, internal effective demand, export structure, and level of historical and/or current economic growth (Smith 1992); and (d) There is strong evidence that the patterns of economic concentration among nations especially in the fields of international trade and financial systems, are related to the dependent development patterns claimed by the neostructuralist authors (Cardoso 1992).

            Concerning the relationships between exports and economic growth, one of the main positions is the neoliberal one.[19] According to this position, promotion of exports, through several macroeconomic measures, including devaluation or depreciation of currencies, was necessary in order to achieve better standards of economic growth following the “outside approach”[20]  (World Bank 1995), especially for economies of developing countries who were facing the external debt problem.  Complementary to this promotion of exports and the aims of increasing economic production, it was necessary for countries to undertake fiscal policies to control governmental deficit, and to keep inflation in check.

            Devaluation or depreciation of  currencies to promote exports to a more competitive level resulted in the impoverishment of middle class sectors and worsening social indicators of those social classes already living below the poverty level (Cardoso, 1992).[21]  This set of macroeconomic measures reduced the internal effective demand preventing this internal market from being a dynamic force in the  encouragement of economic growth (Cardoso, Dos Santos 1992).[22]  Nevertheless, the World Bank and the International Monetary Fund expect that the positive effects from economic growth, more competitive standards of exports, and higher levels of investment will also be beneficial to the lower classes within the next 5-7 years (World Bank 1995).[23]

            Khan, Mohsin, Villanueva and Delano have studied the relationship between export leading policies and economic growth in 23 developing countries.  Their study, which focused on the period 1975 to 1987, found that the rate of growth of per capita income was significantly higher and had a positive effect from (a) the export component in national economies; and (b) the national investment rate -the formation of fixed capital.  These authors also concluded that monetary expansion within macroeconomic systems has a negative impact on economic growth.[24]

            The aforementioned results are not universally accepted.  In a study concerning economic growth and exports, Helliner took into consideration underdeveloped countries mainly from the sub-Saharan region of Africa, during the period 1960-1980.  He was not able to find any significant statistical relationship between changes in exports and economic growth.  Even more, the relationship was negative.[25] However, in this case we need to evaluate whether the countries of Sub-Saharan Africa were really implementing an export leading policy during this time period, whether they were restructuring their agricultural export pattern, and whether these countries were able to compensate for the two oil price shocks of 1973 and 1979.

            Michaely claims that the positive relationship between economic growth and exports expansion within the GNP is stronger as countries have a higher degree of economic and social development, and it is less significant, almost nonexistent, in poor countries.[26]  In the  more developed countries we have better market conditions which include more production in terms of added value,[27] more expansion in the internal or domestic demand, and a greater institutional efficiency framework.[28]

            In terms of social effectiveness from Latin American governments, the World Bank and the Inter-American Development Bank propose to carry out economic adjustment agendas.  They expect that as a natural consequence of economic growth, more opportunities and better standards of living will be available for each nation’s population.  During the nineties, however, international organizations have been trying to implement specific programs with focus on the most marginal social groups.  The Economic Commission for Latin America and the Caribbean have presented a set of considerations and policy measures to take into account more the structural economic problems of the region, looking to implement a social policy with economic growth and equity.

Major theoretical foundations of economic adjustment programs

            Conditions to carry out the economic adjustment programs existed in many middle income countries by the end of the seventies.  In 1979 many small nations had difficulty surviving the second oil price increase after the first in October, 1973.  By the end of the 1970s, there were fewer financial resources in the international bank system to continue the lending cycle which had spiraled many developing nations into large national debts as in 1974. [29]

            At the beginning of the 1970s, as a result of the increase of in prices engineered by the Organization of Oil Export Countries in October 1973, those nations who lacked the capacity to produce oil had sufficient international financial resources to avoid the pain of economic adjustment.  At this time, private international banks were maintaining significant levels of liquidity and were willing to lend to developing nations.  These resources generated the problem of external debt and, in immediate terms, they solved the problem of lack of money for many underdeveloped nations.[30]

            At the end of the seventies, the international scenario was characterized by the fact that international financial resources were not readily available, the more developed nations were facing recession in their economic systems, and the international prices of commodities -which are the most important exports from many developing nations- were falling in international markets.[31]

            In summary, the general situation of middle income countries worldwide at the beginning of the eighties was characterized by:  a) dealing with the recession of the more developed nations; b)  facing a lack of financial resources in the private international bank system for continued loan opportunities; and c)  grappling with the need for monetary funds to compensate for the second oil price increase and the already contracted external debt duties.[32]

            These factors forced many nations to negotiate with international institutions for financial assistance, especially with the International Bank for Development and Reconstruction, the World Bank -WB- and the International Monetary Found -IMF-.  These international organizations formulated several terms for lending money to nations.  These terms were known as “conditionality”, and they established the main framework for macroeconomic decisions to be implemented at a national level.  This conditionality was a prerequisite to be carried out in order for a nation to become eligible to borrow financial resources and as a means of guarantee for the payment of previously contracted debt.

            In general terms and based on the theoretical  foundations of macroeconomics, the main characteristics of borrowing nations were:

            a)  A significant deficit in the balance of payments, mainly because of instabilities which  occurred in the trade balance -more imports with less exports.  One of the main factors affecting this situation was the low price of exports due to the economic recession in the more developed nations.  In addition, the higher interest rates in the United States automatically increased debt duties.  It is important to consider here, as a complementary but not less significant fact, that many middle income countries need to import equipment and several means of production from the more developed nations;[33]

            b)  High levels of unemployment derived not only from structural economic limitations within each nation, but also from the fact that investments from the private and public sectors were at lower levels than in previous years;[34]

            c)  High levels of inflation which in turn did not allow for stability in the  implementation of productive processes from private and public sectors.  It also did not breed confidence in international transactions, but created an environment of uncertainty.  In addition, many nations were facing decreasing levels of international monetary reserves;

            d) Significant levels of governmental fiscal deficit, which was one of the main factors in causing a rise in inflationary rates in the domestic market.  Because governments were receiving lower amounts of taxes, they printed domestic currency and created the internal debt problem, which increased the amount of money at the local level and therefore increased the level of inflation.[35]

            This general picture and the interaction of its elements can be analyzed according to a macroeconomic perspective.  From this point of view it is possible to say that the higher the level of production of a particular country, the higher is the tendency to increase its imports.  When economic growth is low, imports have a tendency to also be low.  With a low level of economic growth, a positive situation can be seen in the balance of trade, because exports usually are higher than imports; however, in the case of a stagnant economy, higher levels of unemployment are unavoidable.  The opposite situation is evident when there are higher levels of economic growth.  In this case, there are lower levels of unemployment, but usually this condition has negative results in the balance of trade since a stronger economy tends to yield more imports than exports. [36]

            When a country has the two “extreme” conditions of either high level economic growth, or low level economic production, there are clear choices in terms of macroeconomic prescriptions.  When the levels of national production are low, there are positive results in the balance of trade and negative effects on the employment variable.  In this case it is necessary to implement expansionary fiscal and monetary policies which will decrease, at least temporarily, the level of taxation, and provide more money to the national system.  All that is being done in this case is to “push” the economy.  As a result of these actions it is expected that the balance of trade will decrease, but levels of employment will increase.[37]

            When the economy of a country is experiencing high levels of economic growth, it has negative numbers in the balance of trade and favorable numbers in terms of unemployment.  In this case, it is important to implement fiscal and monetary contractionary policies, such as increasing taxes, and reducing the amount of money available in the national economic system.  Another measure consists of increasing the interest rate, which makes lending more difficult and reduces the total output of the national economy.  As a result, there will be better figures from the balance of trade, even when we expect to have relatively more unemployment.  The contractionary fiscal and monetary policies aim to avoid an “overheating” of the economy.[38]

            In both “extreme” conditions there is no controversy concerning the macroeconomic dispositions.  However, problems arise in a case where there is an economic system such as those of the small economies of developing countries, which can be characterized in the following manner:

            a) Small economies in which market mechanisms are not working “normally” according to macroeconomic models of more developed nations;

            b)  High levels of inflation mainly due to the printing of new money by the government; [39]

            c)  High levels of unemployment combined with a negative situation in the balance of trade.

            With these characteristics, many underdeveloped nations faced an environment of stagflation, that is to say inflation with economic recession and thus unemployment.  In addition they had negative numbers in the balance of trade.  Here lies the controversy.  If expansionary fiscal and monetary policies are applied, the economy is being “pushed,” and thus the problem of unemployment is solved to some extent, yet the balance of trade deteriorates.  If the contractionary fiscal and monetary policies are applied, the balance of trade problem is solved, but there will be an increase in unemployment.[40]

            In order to solve this problem, it is important to realize the significant limitations of traditional fiscal and monetary approaches.  The solution provided through the terms of conditionality of  international organizations mainly consisted of the following aspects:

            a)  To promote exports as a means to improve both the balance of trade and the current levels of employment, avoiding the unilateral approach of the application of traditional fiscal and monetary policies alone;

            b)  To reduce governmental fiscal deficits.  Indeed, at the beginning of the eighties, the IMF established a governmental deficit limit of 3 percent of the gross national product in a particular country;

            c)  To generate revenues for the government based on indirect taxes, that is to say taxes on consumption rather than taxes on income and property.  By implementing this measure an even larger reduction in imports was expected;

            d)  To depreciate and devaluate national currencies to stimulate investment and to improve conditions in international reserves.[41]

            All of these terms were factors in generating positive results in terms of controlling inflation, obtaining better results from the trade balance, and increasing employment in some sectors of economic activity.  The main problem could be identified in an increase in the number of people living below the poverty level and within conditions of social marginality, due largely to the following principal causes.  First, an increase in taxes was supported by social sectors which depended on wages and salaries, because they did not have significant levels of property in fixed factors of production. In addition to this circumstance it is necessary to keep in mind that, even before the adjustment process, a significant part of society was already living under high levels of unemployment.[42]

            Second, concerning the trade liberalization processes, the contraction in import levels tended to elevate the prices of basic goods mainly because imports are not only constituted by luxury products, but also of technological products that were indispensable in many cases in national production spheres.[43]  In many underdeveloped nations, their industrial capacity of production is usually aimed at producing terminal goods, instead of intermediate products, such as fertilizers, machinery, and equipment parts.

            Third, in developing nations conditions of high competitiveness and open market economies do not exist as in more developed nations.  This made it possible for functional monopolies to act within the conditions of the domestic market of a particular nation.  Therefore, the distortion in prices of several goods was affected by the speculation of a few suppliers of a particular product.  This situation is a distortion of the free price movement due basically to supply and demand mechanisms.  Again, the result was an even larger contraction in the levels of effective internal demand, and thus another factor which increased poverty levels.[44]

            Broader conditions of marginality are defined as the fact that poor sectors are living in the margin of regular economic mechanisms in the domestic market, because they have needs but they do not have the economic capacity to acquire the products to satisfy them.  This condition of marginality can be compensated for by the mechanisms of the marginal or informal economy in the urban centers, or by the activities of peasant economy in rural areas, by which families in the countryside can take advantage of family work and can produce for self-sustainment in terms of basic food production.[45]

            With a basis in the aforementioned elements, the basic foundations for explaining the implementation of economic and social adjustment programs in developing countries are apparent.  These measures attempted to solve problems in the national accounts, but they actually increased the conditions of poverty in these nations.  These programs of economic adjustment can be studied as “pragmatic” dispositions, and they can be interpreted in a more concrete sense using the theories of world-systems and globalization.  This analysis is possible because these programs were a response to national conditions which were in turn greatly influenced by the international economic state. 

            Factors from the foreign arena in applying economic adjustment measures included inflationary pressures from the devaluation of currencies, the higher costs of oil, the significant degree of high external vulnerability, especially in small economies, and the low level of value-added for the main exports of agricultural products, which in turn are largely affected by the fact that they are not essential products and they depend on weather conditions for production.[46]   These elements lead to the consideration that to have higher degrees in successfulness concerning the results of the economic adjustment processes it is important to change the structure of export for many developing countries.

Bibliography

Alexander, R.  Financiamiento externo, deuda y transformacion productiva.  (San Salvador, El Salvador:  UCLA, 1990).

Baker, D. et. al. Globalization and progressive economic policy.  (Cambridge, U.K.: Cambridge University Press, 2001).

Bulmer-Thomas, V.  Studies in the economics of Central America.  (London:  MacMillan Press, 1992).

Coatsworth, J. Central America and the United States.  (New York:  Twayne Publishers, 1994).

Fisher, S.  Macroeconomics.  (New York:  MacMillan, 2001).

Keith, N.  New perspectives on social class and socioeconomic development in the periphery.  (New York:  Greenwood Press, 1990).

Khan, B., Mohsin, T., Villanueva, J., and Delano, K.  “Macroeconomic policies and long-term growth:  A conceptual and empirical review,”  IMF Working paper, International Monetary Fund, March, 1991

Kouri, P.  Debt, stabilization and development.  (New York:  Basil Blackwell, 1999).

Krugman, P.  Pop internationalism.  (Cambridge, Massachusetts: The MIT Press, 1997).

Krugman, P. Rethinking international trade.  (Cambridge, Mass.: MIT press, 1990).

Levitt, T.  The marketing imagination.  (New York:  The Free Press, 1986).

Martinez, M.  Democracias de fachada.  (San Jose, Costa Rica:  FLACSO, 2000).

Michaely, M.  “Exports and growth an empirical investigation”, Journal of Development Economics, 4: 1, 1992.

Ragan, J.  Principles of economics. (New York: Harcourt Brace Jovanovich, Publs., 1991).

Saca, N.  Politica de estabilization y deuda externa.  (San Salvador, El Salvador:  UCA, 1991).

Sethuraman, V.  The urban informal sector in developing countries.  (Geneva:  International Labour Office, 1991).

Torres-Rivas, Las democracias posibles, Op. Cit.

Vuskovic, P.  Pequeños países periféricos en America Latina.  (Managua, Nicaragua:  CRIES, 2001)

Walther Ted.  The world economy.  (New York:  John Wiley & Sons, Inc. 2002).

-------------------------0-------------------------