POSC311:Politics of Developing Nations
Spring, 1999

 

THE NEOLIBERAL APPROACH TO ECONOMIC DEVELOPMENT

This approach is now (1999) dominant in the world, although there is criticism of the results of applying neoliberal policies indiscriminately in Third World countries.

Reasons for Dominance of Neoliberal Approach

The Neoliberal Model Remove

 

CRITICISM OF NEOLIBERAL APPROACH

Supports continued core dominance of Third World, working through IMF, World Bank and other international mechanisms (Has strong assumption that stability is good for all) [This is the core of the Dependency Criticism: ie. neoliberalism promotes continuing inequality]

New loans are used to pay off old loans, and even then the conditions for getting new loans are that Third World leaders carry out "structural adjustments." This situation definitely benefits and enriches lenders, but doesn't necessarily bring development.

Structural adjustments have led to (permanent?) increased inequality within the Third World nations. (Economic Growth is pursued at cost of social equity.)

Accepts short term worsening of gap between those at the top and those at the bottom of society. This is considered acceptable because it will better the economic position of those most likely to invest, and investment is the key to growth. (Those at bottom of society are not likely to be major capital investors in the economy in any case.)[may lead to political demand probs.]

Has led to failed development projects, feminization of poverty, environmental destruction

Approach is ethnocentric. But conditions today are different from those when West was developing (much stronger demand for equality, and much more participation). Ignores and devalues indigenous cultural and historical factors.

Assumption that economic growth and free enterprise policies will automatically be accompanied by political democracy has not proved to be correct.

Although neoliberalism stresses the private sector, it sometimes seems dependent on strongly authoritarian governments for implementation.

Neoliberalism at times seems to reward extreme individualism, while neglecting possible social costs.

Institutionalist criticism of economic neoliberalism is that it ignores cultural and historical factors: factors which have a crucial impact on political, social, and economic change in every country