Neoliberalism Key Terms

Question 1

Law of Accumulation

Answer 1

• There is a constant need to reinvest profits back into business to remain competitive, infers growth potential is infinite

Question 2

Comparative Advantage

Answer 2

• Specializing in commodities that a country can produce efficiently

Question 3

The Invisible Hand

Answer 3

• Coined by Adam Smith, markets are self-regulating and there is little need for external intervention from the government

Question 4

Keynesianism

Answer 4

• John Maynard Keynes, Markets require regular state intervention, but should be as minimal as possible, state’s role is to correct market failures

Question 5

Modernization Theory

Answer 5

• model of development which emphasizes capitalism

Question 6

Dependency Theory

Answer 6

• Resource flow from periphery to core creates interdependency as core depends on periphery for raw resources, and periphery depends on core for value-added goods

Question 7

Import Substitution

Answer 7

• Countries put up protectionist barriers to build domestic industries, barriers are removed later to encourage competitiveness on a global level

Question 8

Neoliberalism

Answer 8

• An ideology and set of policies for capitalism that promotes no state-intervention in markets