STRUCTURAL ADJUSTMENT Meaning and
Definition
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Structural adjustment refers to a set of economic policies and reforms implemented by governments, often upon the advice or conditionality of international financial institutions such as the International Monetary Fund (IMF) or the World Bank, in order to address macroeconomic imbalances and promote sustainable economic growth.
This policy framework typically involves a series of measures aimed at restructuring and transforming a country's economic system. Such measures may include fiscal consolidation, trade liberalization, deregulation, privatization, currency devaluation, reduction of public subsidies, and social sector reforms. The objective of structural adjustment is to enhance efficiency, competitiveness, and productivity by removing barriers to economic activities and promoting market-oriented policies.
Structural adjustment programs are frequently implemented in response to economic crises, high levels of debt, or chronic macroeconomic imbalances. Advocates of this approach argue that it leads to improved economic performance, increased foreign investment, and poverty reduction. However, critics argue that these policies can also exacerbate social inequalities, reduce public services and welfare, and create economic hardships for marginalized populations.
Overall, structural adjustment is a comprehensive economic reform package that aims to reshape a country's economy to make it more market-driven, efficient, and competitive. The effectiveness and social impacts of these policies remain subjects of debate among economists and policymakers.
Etymology of STRUCTURAL ADJUSTMENT
The term "structural adjustment" has its roots in the fields of economics and development.
The word "structural" refers to the fundamental or underlying aspects of a system or organization, while "adjustment" implies a modification or adaptation.
In the 1970s and 1980s, many developing countries faced economic challenges such as high levels of debt, inflation, inefficiencies, and imbalances. In response, international financial institutions, such as the International Monetary Fund (IMF) and the World Bank, started implementing economic programs to address these issues. These programs aimed to make fundamental changes or adjustments to the structure of these economies, including policies related to market liberalization, privatization, fiscal reforms, and currency devaluation.
The word "structural adjustment" emerged in the context of these programs, which were often referred to as "structural adjustment programs" or "structural adjustment policies".
