With these foundations of neocolonialism, in the 1980s a new international trade and financial system emerged. This system accounts for a vast source of neocolonization pressure today. We’ll explore that system in this section. We’ll also explore three other systems that have developed over the last 70 years: foreign assistance, humanitarian aid, and international development. They each have a complex relationship with global inequality.

The Globalization of Trade and Financial Systems

The international trade and financial systems introduced earlier were catapulted into existence after World War II at the Bretton Woods Conference. Leaders of the United States, Canada, Western European countries, Australia, and Japan sensed the political instability that led to the war was due to a failure in dealing with economic problems after World War I. So a system of global monetary management was created requiring that payments between countries be defined in relation to the U.S. dollar.

While the Bretton Woods monetary system ended by 1973, two institutions that were created from that system continued. The International Monetary Fund (IMF) was established to bridge temporary imbalances of payments between countries. It is today an organization of 189 member countries that works to achieve sustainable growth and prosperity by supporting economic policies that promote financial stability and monetary cooperation. They monitor exchange rates and provide loans to nations in debt.

The World Bank, an international development bank, was created to meet the need for post-World War II reconstruction and development of Europe, offering loans to rebuild countries devastated by World War II. Today, the World Bank focuses on development, particularly with infrastructure such as dams, electrical grids, irrigation systems, and roads.

IMF and World Bank loans come with strings attached. The organizations require loan conditions of borrowing countries, often requiring them to adopt certain economic policies. These policies are based on neoliberalism, a political and economic ideology that emphasizes free trade, and a minimal government role in the economy and in spending.

According to the IMF and the World Bank, these “Structural Adjustment Programs” (SAPs), will spur economic growth and help poor countries pay back their loans. However, their actual consequences can be devastating for poor people. Often called austerity measures, the policies might be opening their national economy to foreign competitors, cutting food subsidies, lowering wages, cutting funding for public schools, or cutting social services for the poor.

In Mexico, for example, SAPs eliminated food subsidies, causing the price of staple foods like tortillas, beans, bread, and dehydrated milk to skyrocket. In a period of 6 years, minimum wage was also cut in half. Predictably, malnutrition increased (McMichael 2017). Because SAPs targeted government spending to support low-income people, the burden of structural adjustment fell primarily on the lower classes and women.

This economic relationship is called the debt regime, a system of global governance that empowers wealthy countries, through the IMF and the World Bank, to impose economic and social policies on indebted nations. In 1989, James Grant, the executive director of UNICEF, put it this way: “…the rich get the loans and the poor get the debts” (McMichael 2017).

Watch a 3:22-minute clip of the documentary “(Jamaica) IMF Decimating One Country After Another” [Streaming Video] (figure 5.6). Produced in 2001, it explores Jamaica’s experience with SAPs imposed by the IMF and World Bank. As you watch, consider these questions: How does the IMF influence Jamaica’s economic policies? What are the implications for Jamaican democracy?

https://youtu.be/YoIJPwfsbqg

Beyond the economic and social consequences within low-income countries, the start of the debt regime also marked the rise of a new system of global power. In it, the former colonial powers like the United States and Western European countries are able to impose economic and social policies on their former colonies.

Foreign Assistance, Humanitarian Aid, and International Development

Building in parallel to international trade and financial systems over the past 60 years has been foreign assistance, humanitarian aid, and international development. Foreign assistance is aid given by a national government to countries in need. It supports global peace, security, and development efforts, and it provides relief during times of crisis. Often this foreign assistance promotes the global leadership of the donating country and is prompted by strategic, economic, and moral interests.

Humanitarian aid efforts alleviate suffering and mitigate the effects of disaster. They are provided by governments and NGOs for a short-term period until longer-term help can be provided by local governments or other institutions. The unhoused, refugees, and victims of natural disasters, wars, and famines are all considered recipients of humanitarian aid. Often humanitarian aid and foreign aid are provided simultaneously and in concert with each other, as they each are designed as short-term aid (figure 5.7).

In early 2022, as Russia invaded Ukraine, almost immediately humanitarian agencies and governments positioned themselves to provide assistance to refugees and victims of what many feared would become a full-scale war. This response is the result of centuries of moral worldview and humanitarian action.

Philosophies of humanitarian action stem from many belief systems: the Islamic tradition of zakat; the concept of Christian charity; and ideas of ethical wartime conduct as outlined by the Chinese, Greeks, and Romans. Humanitarian aid carries with it a lot of cultural and political influence. One of the earliest occurrences of modern foreign assistance existed in response to the Northern Chinese Famine of 1876 to 1879.

News arrived in England of the suffering in the area, which prompted Roman Catholic and Protestant churches to send missionaries for relief. The Chinese government feared the missionaries would leverage the crisis to spread Christianity and adopt and Christianize orphaned children. So, in response, they competed with the missionaries by increasing their assistance (Rysaback-Smith 2015).

The first major U.S. aid program took place shortly after World War II to support Europe in rebuilding infrastructure, stabilizing the region, and strengthening the economy. In the decades after the war, there was a significant increase in the number of aid agencies as nations realized that there was a need for an established and organized system for international assistance. The United Nations was the first permanent international organization with the mandate to protect vulnerable populations and maintain peace (Rysaback-Smith 2015).

A set of international security bodies has evolved since the 1960s that is related to militarism and policing. These bodies have a dual role of supporting the implementation of humanitarian ideals and defending national interests. One example is the North Atlantic Treaty Organization (NATO), an intergovernmental military alliance between 28 European states, the United States, and Canada. It was set up in the aftermath of World War II, with member states agreeing to defend each other against attacks by third parties. The United Nations Department of Peacekeeping Operations is another example; it works to protect civilians, prevent conflict, reduce violence, and strengthen security for countries in turmoil.

As the industry of humanitarian aid grew, it began to focus on what were then termed “Third World” countries. Soon the ideas of development and underdevelopment began to be a focus of international organizations, sparking the industry of international development (Rysaback-Smith 2015).

International development refers to the government agencies, non-governmental organizations, philanthropic private businesses, individuals, and their actions working to address poverty and inequality, at a global scale. When John F. Kennedy was president of the United States, he was looking for ways to promote rapid economic development in the “Third World.” Economists serving as his advisors promoted a theory that could be used to challenge Marxist ideologies and repel communist advances that were of concern at the time. From this perspective the organizations Alliance for Progress in Latin America, the Peace Corps, Food for Peace, and USAID were established. Kennedy declared the 1960s the “Development Decade” and increased the budget for foreign assistance significantly.

In Chapter 4 we wrote that the term “development” had connotations of superiority and expressed an ethnocentric view of other nations and their cultures. We’ll continue to refer to it here to discuss the industry that has developed around its meaning. Humanitarian aid and foreign assistance differs from development work in that development seeks to address the underlying socioeconomic factors that may have led to a crisis or emergency.

A number of global organizations were shaped to support this era of foreign assistance, humanitarian aid, and development. Often they have a mixed mission that touches all three initiatives. Nearly all governments of the richer nations dedicate funding to foreign assistance, humanitarian aid, and development.

Today, many of the largest U.S. projects are guided with strategic direction from the USAID and the Department of State. USAID’s stated mission is to promote democratic values abroad and advance a free, peaceful, and prosperous world. Their in-country missions manage partnerships with organizations and act as de facto diplomats for democracy abroad.

The U.S. government also directs and funds development initiatives through NGOs abroad. Agencies such as the Centers for Disease Control (CDC) and the Department of Defense implement the goals of the larger U.S. development initiatives.

Internationally based organizations dedicated to foreign assistance, humanitarian aid, and development include European Civil Protection and Humanitarian Aid Operations, the European Council (ECHO), the United Nations, the World Health Organization (WHO), the International Committee of the Red Cross (ICRC), Oxfam, and Doctors Without Borders. They also include think tanks such as the Council on Foreign Relations and the European Council on Foreign Relations.

On the surface, history tells that these initiatives were sparked in response to global inequality and suffering. It is unmistakable they have helped with global poverty reduction, human rights, and emergency relief, and still do. But the story becomes more complex when we see how they are closely linked to economic global power and continued ideologies of colonialism.

Licenses and Attributions for Globalization, Inequality, and the Development Age

Open Content, Original

“Globalization, Inequality, and the Development Age” by Aimee Samara Krouskop is licensed under CC BY-SA 4.0.

Open Content, Shared Previously

Figure 5.7. “Ukraine: Life a Daily Struggle for IDPs” by EU Civil Protection and Humanitarian Aid is licensed under CC BY-ND 2.0.

All Rights Reserved Content

Figure 5.6. “(Jamaica) IMF Decimating One Country After Another” by Soliloquy Monologues is licensed under the Standard YouTube License.