heady growth rate, poverty remains widespread and about one third of population are living under the poverty line. Corruption has become a grass root in Cambodian culture that contributes to the unfair contribution of growth between the rich and the poor. The gap between the rich and poor is still high. According to the IMF report, the growth rate has fallen back by 2.7% in 2009 in response to the economic downturn. Both the garment and tourist industries were undermined by the global recession. In the first 5 months of 2009 for instance, clothing exports to the US, which is Cambodia’s dominant export market, dropped 27% from the same period of 2008. According to the Labor Ministry, around 93 garment and shoe factories closed in the first 11 months of 2009, resulting in the loss of 38,190 jobs and a further 60 factories employing 35,337 people were forced to temporarily suspend operations, The construction sector meanwhile was weakened by the bursting of a property bubble that undermined the banking system by boosting non performing loans. The IMF has expressed concerns over the deterioration in the health of the banking sector and has urged the central bank to strengthen its supervision of the financial system. Regarding Foreign Direct investment, Data from the UNCTAD indicate that FDI in 2008 was $815 mn. This was below the $867 mn level in 2007 and represented 37.9% of gross fixed capital formation. The total stock of FDI (book value) at the end of 2008 was $4.637 bn, which was equal to 41.5% of GDP and was 193.5% above the level of 2000. In summary, owing to the latest IMF consultation, In a press release on December 8 that outlined the highlights of the just released Article IV Consultation Report, the IMF noted that after a decade of high economic growth, the economy was undermined by the global economic downturn, which led to a reduction in garment exports, foreign direct investment inflows and tourist receipts. The economy was also restrained by the collapse of the property bubble, which slowed the construction sector and had negative implications for the banking sector. The economy contracted by an estimated 2.7% in 2009. The weak economy prompted a major fall in imports that narrowed the current account deficit, and stymied inflation. Growth was expected to resume in 2010 with an increase of 4.3% in response to a rebound in the global economy which will spur garment exports.
IMF is one of the institutions in the Breton Wood system. As we have already known that the IMF doesn’t make project loans and, in particular, it doesn’t make loan to finance population on family planning programs. The IMF loans are intended to help the borrower countries stabilize their economic situation and cover chronic deficit in their balance of payment. Generally, a country’s central bank is the borrower and recipient of the IMF funds. In the case of Cambodia, Cambodia has been one of the main recipients of the IMF technical assistances (TA) over the past decades. TA in Cambodia was delivered under the umbrella of the Technical Cooperation Assistance Program (TCAP). The content of the Cambodian TCAP was designed jointly by the authorities, other donors, and the IMF provided a comprehensive program of TA, covering key areas of reform related to economic policy, including fiscal and banking sectors, statistic and legal reform. Over a decade after signing of the Paris Peace Accord in 1991, Cambodia was still facing many major economic challenges. Tax revenues were very low, the banking system was fragile and a fundamental civil and administrative reform was necessary to improve good governance. In the fiscal area, TA aimed at (i) strengthening tax policy and administration including human resources and improving the design of the tax system;(ii) Strengthening customs administration in order to maximize the return from pre-shipment inspection, enhance enforcement capabilities, modernize and streamline procedures; and (iii) strengthening budget management to improve the quality of budget formulation and execution, along with the design and implementation of effective internal and external audits. These objectives were pursued mostly by three long term resident experts in budget management, customs administration, and tax administration and these three experts accounted for over half of total TA delivered under TCAP. In addition, the overall objective of TA in banking sector reform was to help create a robust and efficient banking system through bank relicensing, strengthening regulations, and improving bank supervision. TA in economic statistics was meant to strengthen the capacity to produce statistics for economic policy making and private investment planning by improving national accounts, price and foreign trade data, and balance of payments, government finance and money and banking statistic. The objective of TA in the legal area was to improve the financial sector legal framework. Three years after the start of the TCAP, the impact of TA in these different areas varies considerably. The banking sector reform has been largely deemed a success. The relicensing program implemented by the National Bank of Cambodia (NBC) revamped the banking system by reducing the number of banks from 31 to 17, helping to restore the banking sector soundness. In response, public confidence in the banking system appears to be gradually improving, reflected in a 22 per cent increase in the deposit base during 2002 and further gains in 2003.6 Furthermore, loan spreads narrowed in 2003 as competition in the market appears to be increasing. Besides TCAP, every year the IMF always conduct the annual article IV discussion with Cambodia. The discussion mainly covers the area of Macroeconomic and financial policies. According to the recent press release, as in August 30 to September 10, 2010, an IMF mission from Washington, D.C visited Cambodia. The IMF mission has projected that real GDP growth will reach 4.5% to 5% in 2010, a significant turnaround from 2009. However, significant risks continue to cloud growth prospects. The fragility of the global recovery exposes Cambodia’s narrow export base with its reliance on the U.S and European markets.
In the aftermath of global financial crisis, many challenges have been arising for the International Monetary Fund as well as Cambodian government to deal with. However, what the IMF have done for Cambodia are not anything new, for it has been working in Cambodia for quite a long time. Anyway, we can classify what the IMF has for and achieved in Cambodia into three main categories: surveillance, IMF-supported programs, and technical assistance/capacity building.
In the surveillance area, the IMF has monitored the financial and economic policies of Cambodia and provided necessary recommendation on macroeconomic and financial policy to the Royal government of Cambodia. In doing so, the IMF has kept track of Cambodia’s economic development and regularly consulted with the government of Cambodia in finding the solution to the problem. For instance, recently, through the surveillance activities in Cambodia, it has observe that the Cambodian banking system is being in problem as the result of global economic downturn, and therefore, it has recommended the RGC to strengthen it banking system. This recommendation was done through a mechanism that has been used by the IMF called Article IV Consultation. In that report of that consultation, the IMF’s executive director pointed out like this “Immediate priorities should include strict enforcement of the new asset classification regime, prompt implementation of corrective action plans, development of a comprehensive bank restructuring framework, and increased supervision capacity.”
Regarding the technical assistance/capacity building program, the IMF assists Cambodia as well as other low-and middle income countries to manage their economies effectively by providing practical guidance and training on how to upgrade institutions, and design appropriate macroeconomic, financial, and structural policies. In connection to such TA and capacity buildings, the IMF has made great achievements in Cambodia. For example, the IMF has
provided technical assistances to National Bank of Cambodia (NBC) in banking supervision, restructuring of banking system, balance of payment and monetary statistics, operation in foreign exchange and international reserve management, and information and computerization systems. Besides, the IMF has also helped the Ministry of Economy and Finance in fiscal policy management, and it has also assisted the Department of Custom and Excise in strengthening custom administration. Moreover, the IMF has also aided the Cambodian’s Ministry of Justice and the Ministry of Commerce to prepare insolvency law. Furthermore, the Ministry of Planning and the National Institute of Statistic has also received technical assistance from the IMF in preparation of national account and government’s finance statistics.
Relating to IMF-supported programs or lending programs, the IMF offers credit to the members who have trouble meeting their international payments and cannot find sufficient financing on affordable term. The main objective of this program is to help a country restore macroeconomic stability by rebuilding their international reserves, stabilizing their currency and paying for import. Cambodia like many other low-income countries has received a lot of concessional loan from IMF to develop their economy and reduce poverty. For instance, just to recall the year 1996, in that year the IMF provided a 41 million USD to the Royal government of Cambodia under the enhanced structural adjustment facility (ESAF) mechanism.
As mentioned in previous mini-compositions, the International Monetary Fund has played very important role in global financial system. Its primary role is to help member countries maintain exchange rate stability by providing short term loan to those countries that are in balance of payment difficulty due to trade deficits or other factors. It was created at the end of World War II with an aim to support the global economic structure and financial order. To accomplish this task, the IMF has actively assist Cambodia and many other member states, especially the developing ones, through surveillance, technical assistance/capacity building and supporting program. Despite many success has been made, there are still problem that can be considered as the obstacle for the IMF in Cambodia, but here I am going to raise only two main issues to discuss.
The first problem that challenge IMF is the negative consequence of global economic downturn that puts Cambodia’ economy in a dangerous place. As we have already known Cambodia economy depends heavily on garment, construction, and tourism sector. These sectors are the most hit by the crisis as they largely rely on foreign market and capital. For instance, according to a study conducted by the United Nations in Cambodia in 2009, about 20-30 percent of workers in garment sectors, construction sites and tourism sector have lost jobs since late 2008.
This make Cambodia’s economic growth rate to decline dramatically from double digits in the years prior to the crisis to only 0.1 percent in 2009. This reflect that the IMF, as well as other Multilateral Financial Institutions such as World Bank and Asian Development Bank, to work harder in order to help promote the Cambodian economy in the wake of the global economic downturn. This is not an easy task for the IMF to deal with because the countries, such are the
United States, which are the major financial contributors to this organization, are also in financial difficulty due to the impacts of the crisis.
The second problem is not related to any other factors, but it is because of the procedures of the IMF itself. Before providing loan to Cambodia or any other countries who are in demand for financial assistance, the IMF first demand Cambodia and those countries to make reform such as reducing public spending, devalue their national currency and privatization . These demands, to a large extend, are consider by the Cambodian government and other assistance recipient government as new burden on their economy rather than something that can help them out of the problem. Hence, those governments do not want to rely on the IMF, they seek to obtain financial assistance from other sources. For instance, instead of follow the demand by the IMF in the sector that the Royal government of Cambodia found not important but would actually harmful the Cambodia’s, the government would turn to seek the assistance from China instead.
Having experienced almost three decades of ravaged civil wars, Cambodia’s economy was greatly devastated. The Royal Government of Cambodia (RGC), with the technical and financial assistances from international development partners has been working very hard in reconstructing the war-torn economy. Among those development partners, the International Monetary Fund has also played a very active one. As we have discussed in the previous mini-compositions, the IMF has made significant contribution to the development of Cambodia.
Like other development partners, the IMF gets involve in the Cambodia’s development in three main mechanisms. First of all, the IMF has monitored the financial and economic policies of Cambodia and provided necessary recommendation on macroeconomic and financial policy to the government. Second, it assists Cambodia as well as other low income country to manage their economies effectively by providing practical guidance and training on how to upgrade institutions, and design appropriate macroeconomic, financial, and structural policies. Last but not least, the IMF offers credit to Cambodia and other members who have trouble meeting their international payments and cannot find sufficient financing on affordable term. The main objective of this program is to help a country restore macroeconomic stability by rebuilding their international reserves, stabilizing their currency and paying for import. Through these mechanisms, Cambodia and many other developing countries have benefited greatly from the IMF.
Though everyone agrees that the IMF provides a lot of benefit to recipient countries, many of them do not happy with the IMF. The problem is that the assistance that the IMF offers to Cambodia as well as other low income countries always comes along with conditions. In order to be able to receive IMF’s assistance, the recipient countries must agree with the IMF to accept the policies suggested by the IMF. Indeed, the policy suggested by the IMF are the ones already implemented successfully in some recipient countries. With this reason the IMF may expect that those policies must be plausible for every recipient country. However, in reality the same policy does not guarantee the same result for different country. Some policies might work well in some countries, but they might failed if applied to Cambodia or other countries else. For instance, one would expect that increase interest rate for deposit would increase the amount of deposit in financial institutions. Of course, this is true for those countries in which the financial or banking system is popular among the
people. However, in Cambodia this policy will never work, for the majority of Cambodian people do not deposit their money in banks, but they just keep their money at home instead. Based on this sense, some possible disagreements between the government and the IMF arise. This makes the Royal government of Cambodia and other recipient countries prefer the assistance from other development partner to the assistance from IMF. For instance, the Cambodian government values the assistance from China the most because when provides assistance to Cambodia, China does not link with any conditions.
In short, in spites of considerably succeed in various aspects of development in Cambodia, IMF has been faced and continues to face many challenges. However, the presence of IMF as the global financial governance is still very important.
Independence to Dependency Globalization impact on Jamaican Women
The impact of the globalization project on third world countries has been steadily escalating worldwide. Through this project, economies of nations across the globe have become more increasingly interconnected. While many countries, mostly those of the West, benefit significantly from this process, developing nations often do not enjoy the same benefits. Two years ago I took a cruise to the Caribbean and visited many of the islands. One of the countries that really stood out for me was Jamaica. Though the experience was unforgettable, I could not help but notice the extreme poverty in non-tourist areas. It is shocking to see what seems to be two completely different places on one small island. One side full of luxury and beauty, yet the other of hardships and struggle. Through Global Development Studies I learned more about the economic situation of the developing countries and gained a further understanding of the context of what I saw. As a result, my question for research is, while globalization has linked many countries, is its impact on women in developing countries, more specifically Jamaica, really beneficial? World organizations such as the IMF and World Bank, as well as that of transnational corporations (TNCs) in the area, have gained huge control over the economic operations of Jamaica over the last few decades. This shift of power has impacted the country as a whole, however, their impression has been felt most by Jamaican women. The creation of “Free Zones” has changed the way women live and are involved in the work force. The impact of globalization has affected every sector of Jamaican women’s lives. Economically, their suffering is worsened, as well, their health becomes endangered and finally the cultural impacts of the emerging corporations cause further consequences. The discourse of these inequalities and exploitations of these women has given rise for the reasoning to further research the subject in hopes to
make a better future. Though globalization has been proven to provide an increase of beneficial interactions globally, it ultimately proves to be extremely detrimental to Jamaican women.
Although the implementation of Structural Adjustment Programs (SAPS) was intended to bring economic prosperity to developing countries, the impact it had on Jamaican women proved otherwise. Bolles (1996) explains the effect that the national debt crisis had on the creation of Free Trade Zones (FTZs). After gaining independence, Jamaica’s economy was extremely unstable. As a result, the Jamaican government had to resort to borrowing loans from Western countries and, consequentially, this led to them falling into major debt. This caused the IMF and World Bank to be placed in control of all loans, and thus have the ability to implement SAPs. While this method was used to ease the debt of this developing country, it merely exacerbated the problem (Bolles 1996). Because of the immense foreign involvement, these programs proved to do very little in terms of economic prosperity. For example the Independent Evaluation Group (2001) explains that in 1985 external debt was still 180 percent of the GDP. Moreover, due to the pro-foreign investment nature of these programs, they ultimately led to the creation of Free Zones in Jamaica, which were largely gender specific. Transnational corporations were attracted to these countries taking part in SAPs because of the “race to the bottom” effect (Standings 1989). Standings explains that TNCs are attracted to these countries due do the weak labor laws in terms of wages, regulation and benefits. These companies also receive tax breaks from the government to further promote investment. As a result of this combination, Jamaican women suffered. Moreover, these zones are seen as ideal for major corporations due to the fact that, while technically unionization is allowed, there are absolutely no unions in free zones in Jamaica (Willmore 1993). This also relates back to the idea of racing to the bottom: the government of Jamaica would never back up their people in creating a union because the TNC would simply relocate to a country which would appeal to their wishes, thus making these female workers helpless (Willmore 1993). The Structural Adjustment Programs put in place through the increasing globalizing world are proved to be unfavorable for Jamaican women.
While the SAPs provided the admittance for the transnational corporations to create the Free Zones in Jamaica, the actions of the companies themselves in terms of wages and taxation further highlight the struggles felt by Jamaican women due to globalization. The gender specifics of the zones resulted in the corporations relying heavily on female labor and the feminization of labor (Bolles 1996). With the focus on export industries, low income women providing basic consumer goods began to suffer. This resulted in a shift to jobs in the labor force as a source of income. After the FTZs were introduced, an intense acceleration of women entering the garment industry was seen, with 90 percent of zone workers being female (Bolles 1996). These women were seen as flexible labor, and the corporations benefitted from their willingness to accept lower wages. Moghadem (1999) argues that women in developing countries are more apt to work in labor-intensive industries at wages lower than men in worse conditions due to the fact that there are so few opportunities for other employment. Moreover with extreme poverty many of these women are forced to find jobs to provide for their family, and as a result agree to accept the flexible wages of the FTZs. However, “individual” wages are paid rather than “family” wages. (Standings 1989) This means that the women are not being paid wages intended to support a family, rather they are given merely enough to get by for themselves. This raises a major issue, considering most of these women enter the labor force for the sole reason to support their family. Furthermore, the TNCs take advantage of the leniency in regulations given to them by the government. The film “Life and Debt” interviewed laborers in Jamaican free zones and complaints of unfair taxes were dominant. The issue of low wages and unwarranted taxes put forward by the transnational corporations negatively impact the women laborers in Jamaica.
Not only does the structural adjustment programs and transnational corporations have economic consequences, but, the health risks which coincide these free zones are also detrimental to women. The Structural Adjustment Programs were placed upon developing countries such as Jamaica with strict terms of how they are to be operated. Because these programs were firmly in place to produce economic progress, other public services such as healthcare and education were largely ignored during economic planning. Independent Evaluation Group (2001) stated that as a result of these SAPs, the standard of living worsened. Due to the lack of regulation by the local government, TNCs are able to cutback in regards to meeting preset standards. According to Bailey and Rickets (2003) many of the factories do not live up to the International Labor Organization Decent Work Agenda thus risking the workers health. Fuettes and Ehenreich (1998) explain how the health of employees is low on the priorities of the employers. With meeting quotas being the main priority of these companies, the women working as laborers are forced to endure long hours over tedious work with few breaks in order to obtain their pay. “Life and Debt” further corroborates this by displaying the workers working in cramped warehouses revealing the need to work meticulously in order to reach the days quotas. These women are forced to work up to 14 hours a day, often without over time in order to reach the weekly goals (Sparr 1994). As a result, the heavy impact on their bodies and minds, this often leads to early retirement among young workers. Unfortunately, the long hours are not the only method used to reach the quotas for the day. These Jamaican women have to endure verbal and often times physical abuse in the workplace (Bailey and Rickets 2003). Another major health issue is the lack of attention to following the standards set in place by the U.S. National Institute of Occupational Safety and Health (Fuettes and Ehenreich 1998). This results in these women working in hazardous conditions. For example there have been cases in textile industries, with such cramped warehouses and poor investment in proper air flow, lung disease has become an issue among workers. Furthermore, there are often open containers of carcinogenic acids and solvents that emit toxic fumes (Fuettes and Ehenreich 1998). There is also a lack of training among these employees and often times they are required to operate dangerous machinery, further causing risks to health. The hazardous and health threatening conditions further demonstrates the harmful effect of globalization on Jamaican women laborers.
Though the conditions of the free zones play a large role in expressing the health risks, the lack of benefits and protection for the workers is also a major factor. Because the free zones are under different regulation by the government, they are able to evade the rules in place for employee benefits. Many of the women are single mothers and depend on the pay checks to support their families, however, often times they do not get the entirety of their pay if they take sick days (Bailey and Ricketts 2003). This pushes women to work despite illness. Moreover, maternity leave is often not offered, or very little benefits is given with it, and this results in pregnant women working in hazardous conditions because they have no other choice. Since the employers are exclusively concerned about their own profits, they do not provide much in terms of health insurance (Bailey and Ricketts 2003). With the low wages to begin with, lack of health benefits makes gaining proper medical treatment extremely difficult for these women laborers. The lack of benefits provided is another aspect of the damaging impact of globalization on female workers in Jamaica.
In addition to the economic and health issues which arise from the Structural Adjustment Programs, there are cultural problems which are put in place as a result of globalization as well. In Caribbean culture, men are seen as the breadwinner, while women are expected to be the homemaker. These stereotypes result in the idea of a “glass ceiling”. This means that although women are pushed to work as much as possible, they can only move up so far, and in the case of Jamaican female workers, the ability to move
up is very limited. The creation of FTZs, while bringing women into the workforce, has also stigmatized them. Occupations in these zones are sex-stereotyped, with women in the least protected and lowest paid sectors (Bailey and Ricketts 2003). The Women’s Edge Coalition’s case study outlines how free trade impacted Jamaican women. They bring to attention that the impact is not gender neutral, and argue that women have been disproportionately affected in a negative way. The gender based differences of free trade in Jamaica cause further problems for the women.
Another cultural aspect that is brought to attention by globalization is the patriarchal control in Jamaica. In the free zones, males hold superior positions over females. Sexual harassment has become problematic in these corporations due to the little protection rights of workers. Often times, women feel as if they have no choice but to be submissive to their superiors or else their job would be in danger (Fuettes and Ehenreich 1998). Women, however, are not only victims within the Free Zones, but due to the early start times of the workers, rape while commuting has become an issue and fear amongst the workers (Bailey and Ricketts). Moreover, women are often used as subcontracted workers in the informal sector. While these women are able to maintain their household duties, they are subject to much more government inspection than male entrepreneurs and are less likely to succeed (Women’s Edge Coalition). The already male dominated society becomes even more unfavorable for women workers due to free trade.
Finally, familial obligations and issues arise from the effect of globalization on women working in Jamaica. As stated earlier, women in Jamaica are expected to head the household duties. As a result, they become reliant on their husbands. However, alcohol and cigarette addiction of these men can lead to domestic violence, and this is an issue many of these women face from their spouses (Fuettes and Ehenreich). Willmore (1993) explores this idea further by explaining that a large portion of young women in Jamaica often become single parents, and due to the usual familial situations have the highest unemployment rates. The importance of these women remaining at home make them finding suitable employment much more difficult, thus, they choose to work in the Free Zones, where cheap female labour is exploited. Furthermore, Fuettes and Ehenreich (1998) explain that “westernization” brought by these industries are often rejected by the families of these women. This results in a difficulty to re-assimilate after retirement, which often occurs at a young age. These familial concerns further support the idea of globalization’s negative impression on women in Jamaica.
Globalization has brought many changes to the newly independent Jamaica, and though these programs and investments are initially seen as positive contributions to the country, the women working in Jamaica are the ones who suffer as a result. With the standard of living decreasing amongst women laborers, the creation of Free Zones while initially seen as beneficial for the country’s economy has proved to be less helpful than perceived. This paper has shown that, through globalization, the country of Jamaica has lost much of their control over their own operations to external global institutions which are largely backed by western countries, and the trickle down effect from the governmental level has resulted in increasing women’s anguish. In order to create a long lasting change, the Jamaican government must be able to protect and improve the lives of their people without having to worry about the threat of international investment leaving as a result. Along with this, regulations in Free Zones must be kept up to standards and closely monitored. Not only should the developing country’s government regulate the operations, but it is also up to the transnational corporations themselves to maintain a standard sense of human rights within their factories and warehouses. While these changes would be beneficial, there are several issues that may stand in the way. The deeply rooted patriarchal society in which Jamaica exists poses a road block in gaining equality, and will result in a long process to overcome the issue. Moreover, while the idea of the transnational corporations monitoring themselves is a noble one, their main priority remains to be that of profit. This being said, they are most likely to make green washing efforts to elude the outside world rather than making fundamental changes to better the lives of their female employees. Finally, from an economic stance, no real change will be able to be made until the structural adjustment programs are reevaluated. The current SAPs are created so that the developing country can never truly escape debt and are continually dependent on the developed nations, and until this is changed, little can be done. While globalization is increasingly being seen as a positive change to the global structure, it will be a long process for women laborers to feel that change.