The IMF and Its Effects on Developing Latin American Countries: Positive or Negative?

Abstract

This paper explores the role of the IMF and its effects on developing Latin American countries. By the end, I intend to offer substantial support for the following hypothesis: Through the study of GDP growth rates and poverty and income distribution rates in developing Latin American countries, it can be proven that International Monetary Fund loans are economically beneficial with respect to growth rates; however, the social implications of structural adjustment programs have severe negative effects that outweigh those economic benefits. The core of this paper discuses the IMFs implementation of structural adjustment programs and the far reaching adverse effects that they impose on the poor of developing Latin American countries. The research shows two things. Through an analysis of data from twelve different developing Latin American countries, I was able to show positive relationships and correlations between IMF loans and GDP growth rates. However, I was not able provide positive or significant statistical support for the second portion of my hypothesis. But, that does not mean that there is not any correlation at all. The majority of this paper focuses on how structural adjustment programs have negative effects on developing Latin American Countries, citing specific examples from countries such as Argentina and Columbia. After seeing the negative effects of structural adjustment programs, as well as realizing that IMF support is a necessary evil for most of these countries, it is evident that there is a need for a solution. I offer possible solutions through IMF reform. Overall, one of the most fundamental changes needs to come in the area of IMF governance and IMF voting rights. The people of these countries should have a voice in decisions that effect them above all others.