Neo-colonialism in disguise. Development Aid of IMF and World Bank

Term Paper, 2017
10 Pages, Grade: 1,0
Neema Li (Author)


Table of Content

1 Introduction

2 Better Development Through Better Policy?
2.1 Modernization Theory
2.2 Dependency Theory
2.3 Neoliberalism and Market Development

3 Lessons Learned?
3.1 Poultry Imports in Ghana – Prevention or Production of Poverty?
3.2 The Economic Partnership Agreement (EPA) – Hope for change?

4 Conclusion

5 References

1 Introduction

The development aid can be traced back to strategic and historical donor considerations. Aside from vastly expanding the arena of ideological rivalry during the cold war, the 1940s saw the beginning of the independence movement among former colonies. Independence encouraged new donors to build aid programmes as a continuation of their colonial obligations in the 1950s. In the 1960s, the principal donors agreed to set up the International Development Association (IDA) under the control of the World Bank, which was quickly established as financially the most significant source of concessional assistance (Browne 1997: 3ff.). As the World Bank, the International Monetary Fund (IMF) is an institution of the UN system, which shares the same goal of raising living standards in their member countries and focusing on long-term economic development and poverty reduction (IMF 2017).

Development aid is, besides the colonial debt, often legitimized by the humanitarian obligation to help the people in need and thereby allows aid institutions to work almost unquestioningly and unproblematically in so called developing countries (Kothari 2005: 62f.). The designation of ‘development’ as ‘good’ with the differentiation of the ‘bad colonialism’ seems to bear no resemblance to the perceived inequalities and exploitations of empire. But the ‘new imperialism’ can already be recognized in the designation ‘development’. The concept of ‘development’ conveys a hierarchy of the world through the juxtaposition of ‘developed’ and ‘underdeveloped’ and a power asymmetry through the unequal share of resources for development (Schlauß & Schicho 2014: 10ff.).

In this paper, entitled Neo-colonialism in Disguise – Development Aid of IMF and World Bank, the mechanisms of neo-colonial rule under the pretext of development aid will be analysed. In the following second chapter, the development theories will be explained, followed by a presentation of the practical implementation of two examples, the poultry import in Ghana and the Economic Partnership Agreement (EPA) between Europe and West Africa. Finally, the theory and practice of development will be reflected in the conclusion.

2 Better Development Through Better Policy?

At first, I want to take a look back to the major development theories that have dominated the development path in Africa over the past five independence decades and analyse the inherent power asymmetries.

2.1 Modernization Theory

The modernization theory, which dominated the praxis of development aid during the 1950s and 1960s argues, that development involves facilitating the post-colonial world along the path to progress towards modernity to catch up economically with the northern countries (Sylvester 1999: 706), as a form of global homogenisation (Greig, Hulme & Turner 2007: 79). It is assumed, that the existence of extreme poverty in poorer countries is a consequence of endogenous forces, caused by the lack of certain developmental ingredients in the traditional social structure. The mechanisms which had given rise to development in the northern countries should be used to help promote development in the southern countries through exogenous assistance. The past observations relating to Western culture and development shall be used to predict and promote future development in other countries (Greig et al. 2007). Though, this idea has encountered a range of criticisms in which the modernization theory is construed as ‘westernization’ and ‘ethnocentric’ and assumed to ignore issues of power and inequalities within and between societies (Webster 1984: 55).

2.2 Dependency Theory

The dependency theory arises from the criticism of modernization theory in the 1960s and 1970s. Contrary to modernization theory, dependency theory views development from the perspective of the impact of exogenous forces on the non-western countries. Capitalism is understood as a world system that contains an inherent duality of industrial countries as the core and non-industrial countries as the periphery. Dependency is defined as a situation in which certain countries have their economy conditioned by the development and expansion of others. Thus, the possibility of development is determined by the relationship of exploitation that exists between core and periphery (Frank 1975: 41). The core accumulates its resources for modern development through exploiting periphery countries, consequently under developing them. Increasingly throughout the twentieth century, terms of trade moved against primary products in favour of technologically more sophisticated goods. This unequal exchange acted as a further drain on the surpluses of the periphery and inhibited the process of capital accumulation (International Labour Office 2004: 30). For the dependency theorists, the experience of the developed countries cannot be used as a model to follow because it is their development which causes underdevelopment in the non-industrial countries.

2.3 Neoliberalism and Market Development

By the late 1980s, the developmental path of neoliberalism was promoted as the only path pointing in the direction to greater inequality and freedom. The central argument in this theory is, that underdevelopment results from poor resource allocation due to incorrect pricing policies and too much state intervention by developing nation governments. The neoliberals argue that through the promotion of free markets, free trade and the elimination of excessive government controls, economic growth and efficiency of the market will be stimulated. Contrary to the claims of the dependency theorists, the liberals argue for the promotion of free markets that allow the rules of market policies to guide resource allocation and stimulate development (Taylor 1997: 148). Neoliberalism was supported by the IMF and the World Bank which sought to restructure the economies of the poorer nations and undertake the interrelated tasks of meeting debt obligations, liberalizing economies and encouraging greater openness to international trade. They offer Structural Adjustment Programmes (SAPs) which determine tighter fiscal control and liberal economic reforms within poorer countries (Nhema & Zinyame 2016: 157).

The SAPs were harshly criticized, because these austerity measures caused political, social and economic havoc in most of the African country economies (Easterly 2002: 362) which resulted in increasing poverty rates (Fosu 2014: 46). In response to that, since the late 1990s, significant changes were made by the IMF and World Bank. They moved away from the one size fits all strategy of the SAPs and seek to ensure reforms owned by the recipient countries instead of the IMF or World Bank. Further, they declared prioritisation of poverty reduction. The granting of loans required that governments prepare national poverty reduction strategies in consultation with their civil societies (Nhema & Zinyame 2016: 157). The new strategy secures a greater participation in and country ownership of programmes and is meeting policy aspirations of the poor with a focus on agriculture (UNCTAD 2002: 10).

3 Lessons Learned?

As it seems, in a response to several criticisms, SAPs started to integrate the lessons learned and shifted towards a more flexible and participative approach. At first glance, this modification of the SAPs was successful, even if the new approach appeared to continue to be based on the premise that liberalization holds the key to fast growth (UNCTAD 2002: 6). The poverty rate was truly decreasing (Fous 2014: 46). But have the promises regarding to more and equal participation of recipient governments and citizens been kept? Obviously not, as many examples proof (see for example Sharma 2005; Paasch, Garbens & Hirsch 2007). To elucidate the still existing neocolonial exploitation of the global south, I want to explain the machinations of the IWF based on the example of poultry import in Ghana.


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Neo-colonialism in disguise. Development Aid of IMF and World Bank
Korea University, Seoul  (Social Science)
Sociology and Gloabal Governance
Catalog Number
ISBN (eBook)
neo-colonialism, development, world, bank
Quote paper
Neema Li (Author), 2017, Neo-colonialism in disguise. Development Aid of IMF and World Bank, Munich, GRIN Verlag,


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