Neo-liberalism and globalization Flashcards
when did neo-liberalism emerge in development?
1980s-1990s
what policy was created from neoliberalism?
washington consensus
what are the core arguments of neoliberalism?
- TINA: There Is No Alternative
economic growth through markets (vs. state) for dev - inequalities: inherent and not problematic
what are the origins of neoliberalism?
- oil + debt crisis in developing world caused by state intervention (‘bad policies’)
- rise of conservative politicians (Thatcher, Reagan)
what is sovereign debt?
owed by gov to private lenders (LA) or IFIs (Africa)
what is odious debt?
illegitimate debt inccured by dictatorships for unprofitable prestige projects/personal gain
what is unsustainable debt?
debt exceeding:
150% of value of exports pr
250% of gov revenue
how did the debt crisis emerge?
economic decline -> oil crisis -> skyrocketing prices -> worsening terms of trade -> rising debts with commercial banks -> recycling petrodollars -> leans provided -> unable to pay (rescheduling)
what was the response to the debt crisis?
IMF bailouts for BoP support and restructuring loans with conditionality
= policy-based lending
conditions:
(a) open economy (free trade)
(b) export-oriented (vs ISI)
(c) structural adjustment programs (SAPs)
what are structural adjustment programs (SAPs)?
Washington consensus is one of them
-restructuring economy for more market; less state
What is the Washington Consensus
a SAP
2 pronged approach:
(1) stabilization = less gov expenditure + devalue currency
(2) policy reforms towards market economy (open economy, export orientation, investment)
What are concrete measures of the Washington Consensus
- liberalizing markets
- privatization of state-owned companies
- budget cuts
- deregulation
- ending subsidies
what are arguments supporting implementing SAPs?
- correction of failed statist policies (unsustainable BoPs, budget deficits, non-competitive exports, no incentives)
- restructuring to renew economic growth
- Williamson: ??
what are the arguments against implementing SAPs?
- no 1 recipe for all (different resource endowments)
- budget cuts -> income inequality
- dictated by developing govs
- Lost Decade for Development (1980s)
what was the outcome of the Washington Consensus?
not effective
- post-washington consensus emerged -> marco-economic stability + more state role
what are the different aspects of globalization?
- economic
- cultural
- political
what are the economic aspects of globalization?
- increased trade
- increased capital mobility
- increased MNC activity
- uneven spread
- FDI
…
According to Collier, what is an economic aspect of globalization
the bottom billion experienced the negative econ effects of globalization
- decreased share in world trade
- drained human capital
- capital flows outwards (low capital inflow)
- > poor governance
- > high perceived risk for investment
- bottom billion can’t compete and break into world market
- poor timing
what factors may affect the effect of globalization on the south
- diversification of econ
- industries with potential to be scaled up
- skilled and educated labour force
- innovation through investments in edu + tech
- well-developed infrastructure
- historical timing (Collier niche)
- human capital investments
what are the cultural aspects of globalization
multiple views
what are the different views of the cultural effect of globalization?
- homogenization (+ve = lib dem; -ve = MNCs role)
- polarization (resistance) (clash of civilization) (new views will develop)
- hybridization (blending)
what are the political effects of globalization?
- the role of the state
- evidence: increase in transnational actors (MNCs, NGOs) + increase in intergov orgs to limit states nad regulate
- govs lose a autonomy; narrow options for policy range (IFI decisions, MNCs - decide to invest/withdraw, int forums, non-gov orgs as watchdogs)
- double bind
what is the double bind?
states increasingly need to compete with other actors but also have a downsized state with SAPs
“states must do more with less”
what is the debate within the effect of globalization on politics?
- state relevance
1. declinist position
2. remain relevant
3. to certain extent
what are the arguments for states being in a declinist position in the int world?
- all important decisions are made by IFIs, MNCs, IOs…
- end of methodological territorialism
- also have weaker position but state adjusting (changing) towards the multi-layer governance that is forming
what are the arguments for states remaining relevant in the int world?
still have power over:
- use of force
- regulate border (trade and migration)
- taxation ability
what are the arguments for states being important to extent they set terms of their integration in the int world?
- set terms for their integration into world market and admitting MNCs
- depend on strength and quality of state institutions
- remain relevant
what are the arguments for states being important to the extent they set terms of their integration in the int world?
- set terms for their integration into world market and admitting MNCs
- depend on strength and quality of state institutions
- remain relevant
According to Ezrow, what are the best ways to cope with globalization?
- strong state institutions
(administrative, judicial, political, financial institutions) - emphasizing education (investing, improve labour productivity, absorption of tech capacity)
- collective investments in social insurance (protect from volatility, safety nets, access to credits…)
- regulate transnational and econ actors and set terms of their involvement
