(Neo)liberal Terms

Question 1

Key elements of Friedman’s theory include: (neoliberal)

Answer 1

Monetarism

Laissez-Faire Capitalism

Free Trade

Globalization

maximise their revenue and increase returns to shareholders.

Question 2

Key elements of Adam Smith’s theory include: (liberal)

Answer 2

Division of Labor

Invisible Hand

Free Markets

Value and Wealth

Moral Sentiments

Question 3

Key elements of Pierson and Keynes’ theory include: (liberal)

Answer 3

Government Aid only in mandatory circumstances

History matters (ripple effect)

Multiplier Effect

Cash Preference

Question 4

4 Core principles Thorsen discusses

Answer 4

Market liberalization

Privatization

Deregulation

Reduction of government spending

Question 5

Friedman’s Criticisms of Keynesianism

Answer 5

Moral Hazard: provision of welfare programs and bailouts during economic downturns can create moral hazard

Crowding Out Private Investment: government spending “crowds out” private investment.

Question 6

9 core policies

Answer 6

1. Deregulation
2. Trade liberalization
3. Fiscal Responsibility
4. Monetary policy
5. Tax cuts
6. Labor Market Flexibility
7. Privatization
8. Decentralization
9. Property rights

Question 7

What are the goals of neoliberalism

Answer 7

social issues

limited government intervention

nationalism (global perspective)

Question 8

Retrenchment of the public sector

Answer 8

process where the government reduces its spending, workforce, or services in the public sector

Question 9

Dependency theory

Answer 9

advanced nations continue to flourish at the expense of underdeveloped nations

Question 10

Rostow’s Five Stages of Economic Growth (Take Off Model)

Answer 10

1. Traditional Society
2. Preconditions for Take-Off
3. Take-Off
4. Maturity
5. High Consumption

Question 11

Criticism of Rostow’s 5 Stages

Answer 11

1. Eurocentrism
2. Linear Progression
3. Determinism

Question 12

Eurocentrism

Answer 12

Assumes all countries follow the same path as Western nations like Britain or the U.S.

Question 13

Linear Progression

Answer 13

Overlooks unique historical, cultural, and institutional differences among countries.

Question 14

Determinism

Answer 14

Assumes that all countries must industrialize to achieve economic growth and does not account for alternative paths or failures in development.

Question 15

Center-periphery thesis

Answer 15

stays underdeveloped and economically dependent on the center, while the center becomes richer and more powerful.

Question 16

Import Substitution Strategy (ISS)

Answer 16

a strategy under trade policy that abolishes the import of foreign products and encourages production in the domestic market.

Question 17

G77

Answer 17

a team of countries that helps smaller nations work together to get better deals and more help from the rest of the world

Question 18

Non-Aligned Movement (NAM)

Answer 18

a club of countries that didn’t want to pick sides between the U.S. and the Soviet Union during the Cold War. They chose to stay neutral and focused on peace and cooperation with other countries.

Question 19

Top-down ‘Shock Therapy’

Answer 19

quickly changing a country’s economy in a big and often harsh way

Question 20

Social Capital

Answer 20

refers to the importance of relationships and community in economic and social analysis.

Question 21

Washington Consensus

Answer 21

refers to a set of economic policies that emphasize free markets, privatization, and deregulation, which were popular in the 1980s and 1990s

Question 22

Modernization Theory

Answer 22

Asserts that economic development leads to democratization (according to Cheibub)

Question 23

Criticism of Modernization Theory

Answer 23

The theory oversimplifies the relationship between development and democracy.

Not all countries that experience economic growth transition to democracy (e.g., China, Singapore).

Political institutions and social structures may play a more significant role in democratization than purely economic factors.

Question 24

Core countries

Answer 24

Dominate the global economic system through capitalism and exploitation.

Question 25

Peripheral countries

Answer 25

Rely on the export of raw materials and are dependent on core countries for finished goods.

Question 26

The Mechanisms of Dependency

Answer 26

Unequal exchange in global trade

Foreign investment and multinational corporations exacerbate dependence.

International institutions (e.g., World Bank, IMF) reinforce dependency through structural adjustment programs.

Question 27

Criticism of Dependency Theory

Answer 27

Overemphasizes external forces and overlooks internal factors such as governance and policies.

Ignores cases where countries successfully broke out of dependency (e.g., South Korea, Taiwan).

Too deterministic, implying periphery countries are always destined to remain dependent.

Question 28

Structural Adjustment Programs (SAPs)

Answer 28

Economic policies imposed by the IMF and World Bank in exchange for loans to developing countries

(Key Components: Privatization of state-owned enterprises, trade liberalization, deregulation, and reducing government spending (austerity))

Question 29

Purpose of SAPs

Answer 29

To stabilize economies, reduce fiscal deficits, and promote growth by integrating into the global economy.

often benefited elites and multinational corporations.

Question 30

Criticism of SAPs

Answer 30

Economic: Failed to generate sustainable growth or alleviate poverty in many countries, especially in Sub-Saharan Africa and Latin America.

Social: Increased social unrest due to cutbacks in public spending and loss of jobs.

Political: Imposed without considering local contexts, undermining national sovereignty.