Download Lecture 8: Why do developing countries adopt the

WHY DO DEVELOPING COUNTRIES ADOPT
THE WASHINGTON CONSENSUS?
Points covered in this lecture:
- South Africa’s apartheid system
- The ANC’s Freedom Charter
- Why did South Africa adopt free market
reform (‘Washington Consensus’)?
APARTHEID
‘Separateness’ along racial lines
South Africa’s multiethnic society:
- 20% ‘whites’/’Europeans’ (Afrikaners/
British)
- 10% ‘coloureds’
- 70% Africans
EXAMPLES OF DISCRIMINATION
1913: Land Act (‘Homelands’)
1923: Natives Act
1927: Immorality Act
1936: Land Act
SOME IMPORTANT DATES
1910: Union of South Africa
1948: NP election victory
1960: Sharpville massacres
1976: Soweto uprisings (reaction to 1974
Education Act)
MORE DATES
1960s-80s: increasing isolation of S. Africa
from international community (sanctions,
boycotts, etc.)
1994: elections with universal suffrage
bring Nelson Mandela to presidency
ANC’S FREEDOM CHARTER (1955)
http://www.anc.org.za/ancdocs/history/charter.html
“The mineral wealth beneath the soil, the banks
and monopoly industry shall be transferred to
the ownership of the people as a whole”.
“Restrictions of land ownership on a racial basis
shall be ended, and all the land re-divided
amongst those who work…”.
WHAT HAPPENED?
The post-apartheid government embraced a
free-market policy.
Why?
Does this confirm the ‘race to the bottom’
hypothesis?
-
Declining value of the Rand
Indebtedness
Capital flight
Increasing health costs (HIV)
IMF LOAN AND CONDITIONALITIES
1993: S. Africa borrows from IMF
Conditions of loan:
- financial liberalization
- trade liberalization
- Privatization/cuts in budget deficit
(The ‘Washington Consensus’)
HIV AND INTELLECTUAL PROPERTY
1997: Medicines Act (compulsory licensing)
US threatens trade sanctions
Pharmaceutical companies’ legal action
Did S. Africa contravene TRIPS?
WHY DID US DROP ITS OPPOSITION?
a)
b)
c)
Domestic pressure on Clinton/Gore
International awareness of ‘profitsbefore-life’ policy of US.
US compulsory licensing (anthrax)
THE NATIONAL DEBT
2009: S. Africa’s public debt = 29.5% of GDP.
The post-apartheid government inherited a
national debt of US$ 20.9bn. Paying it off
meant channeling money away from other
areas (health, education, housing, etc.)
INTRODUCTION TO HISTORICAL INJUSTICE
Why should the post-apartheid government pays
the debts bequeathed to it by its predecessor?
Post-apartheid government owed money to
international banks, other governments,
international organizations (e.g. IMF) who had
all lent money to the apartheid regime.