Topic 1: Neoliberalism Flashcards
What did it become in the 1980s?
It replaced modernisation theory to be the “official” approach to development.
How is it similar to modernisation theory and what makes it different?
It agrees that obstacles to development are internal to the country, however it focuses on the economic institutions and policies that are seen as holding the free market back.
What do developing countries need to do to develop?
Embrace the free market - removing obstacles allows capitalism to generate development:
Capitalism generates wealth which will then trickle down through society.
Where was it first adopted, and who popularised it?
First adopted in Pinochet’s Chile but was popularised by Thatcher and Reagan.
What is its perspective on the State?
The State’s role must be reduced as its interference disrupts the market and the balance between supply and demand.
What policies do neoliberals believe in?
1 - Privatisation - generates dynamism and efficiency.
2 - Cut state subsidies that keep prices low.
3 - Removing parastatal institutions.
4 - Cut state spending - make the state less important in the economy.
5 - Cut taxes - incentive to be entrepreneurial.
6 - Free trade - remove tariffs and barriers.
7 - Integrate into the global economy.
How are neoliberal policies imposed globally?
Through IMF SAPs.
What is the Washington Consensus?
The agreement between the IMF and World Bank that these neoliberal policies, and liberal democratic systems, are a development strategy.
How can some MEDCs be accused of hypocrisy?
The EU and the USA have tariffs and trade barriers to protect their own agriculture and industries.
What do advocates of neoliberalism claim?
Opening up the free market is the reason for growth in countries, such as China and India, yet the reason other countries haven’t experienced growth is because they have not fully implemented neoliberal policies.
What do opponents of neoliberalism contest?
That, over the last 30 years, growth has stagnated and has only worked at a very slow pace for some countries.
Further, there is a contradiction: imposing free markets requires a strong state that has to undermine its role.
What did the Centre for Economic Policy and Research assess about the impact of neoliberalism?
They found that development was greater in the period before 1980. Eg, infant mortality fell faster in the 1960s and 1970s than 1980-2000.
Weisbrot (2001) said that there is no evidence to suggest that the Washington Consensus is the best route for development.
