the global south and neo-liberalism

Neoliberalism is a series of strategies that have been used to stimulate markets in different regions and international trade. The word "global south" has come to refer to the third world or the developed world in general. This covers countries from Latin America, Africa, and Asia. In this Article, we will analyze the effect of neoliberal policies in these regions and assess whether or not the nations formed as a result of these policies. Therefore, the aim of this essay is to determine whether neo-liberalism policies are good for human development or if they, in fact, have a negative effect on development as explored in these regions. We also aim to discuss any alternative policies that might have been implemented in the region in place of neo-liberal policies. Also in discussion is globalization, how it has come to be today and its effect on neo-liberalism.



Keywords: Neo-liberalism, globalization, developing countries, developed countries, human development





















Neo-liberalism in the Global South



Ecuador

Ecuador, located in South America is a former Spanish colony but has long since attained its independence. Like most other countries in the Latin America, the Spanish colonies retained the legacy of their colonial masters (racial division and an exploitation of natural resources) way after their independence (Gamso, 2010, p.19). Prior to the discovery of oil in 1960’s Ecuador majorly relied on agricultural products such as bananas, cocoa and coffee for export (Gamso,2010, p.20). The economy however, shifted wholly to an oil based economy in the next decade following the discovery of oil by a U.S oil consortium companies. It was this reliance on oil that later set the stage for structural adjustments. The story of Ecuador is a tale involving an adherence to neoliberal policies and a series of structural adjustments which by all means two decades later should have improved the livelihood of the people in this region but that has however not been the case. Ecuador forms an ideal case scenario to test the effectiveness of neoliberal policies on human development.

The neo liberal policies were simply the free market policies that existed before the second world war. Neoliberal policies generally reduce government’s intervention in the market and encourage privatization and foreign business investments in a country (Siddiqui,2012, p.21). They also encourage reduction of tariffs in international trade and limit restrictions between borders with an overall aim of integration and human development (Siddiqui,2012, p.29). However, deployment of these policies often result in catastrophic effects especially for developing nations as we’ll see later on. This essay tries to look into these neo-liberalism and the negative effects it has had for developing nations. This thesis therefore stands as, “The negative impact of neo-liberal development policies on human development in the global south.”

Most mainstream economists constantly get obsessed with the lofty and rising GDP of such developing nations as India that have instituted neo-liberal reforms but concerns have been raised on the actual living conditions of the people in the region. It has been estimated that over 46% of children less than three are malnourished yet the country is home to many billionaires (Siddiqui,2012, p.30). Such are the reasons that warrant a look at these policies and their negative impact on human development in the global south.

Sources Discussion

Siddiqui, K. (2012). Developing Countries' Experience with Neo-liberalism and Globalisation.

The author explores the experiences of the various countries that have adopted the neo-liberalism policies and their progress to date. He discusses the role of IMF/ World Bank in the circumstances that often entangle this people. The author also discusses neo-liberalism, free trade and globalization. He describes the origins of neo-liberalism and what neo-liberalism really stands for - A self-governing market economy without state interference. He says that neoliberalists argue that a self-governing market economy driven by profits and self-interests is best because it is likely to achieve a delicate balance where neither seller nor buyer can take or give more than what is ought without hurting the other. Siddiqui however reminds us, that such a scenario suggests rational thinking for all parties involved which isn’t always the case. The implied competitive nature he continues, is also done away with by the large MNC’s that dominate the market. The main beneficiary he concludes from these policies are MNC’s and their home states in the core nations. This is his main argument. He believes that neo-liberalism policies are not good for developing nations and that while, the IMF and the World Bank might already know this, he doesn’t understand why they are still pushing for these policies. He depicts scenarios where, countries, especially in the Latin America are moving away from these policies and seeking alternative solutions for human development because of the negative impact on economic and social development in these countries. This source is useful as an introductory into neo-liberalism and globalization and how all the other items such as technology and MNC’s are linked to it. I hope to incorporate information from this discussion on the origins of neo-liberalism, neo-liberalism, MNC’s and globalization in my research paper.

Gamso, J. (2010). Political economy of Ecuador in the neoliberal era of development.

This source exhaustively discusses the developments in Ecuador and shows us the developments from the time of independence to the time of oil discovery. It also shows the state of the economy in times before the neoliberal policy institutions and the times after that. It describes the crises the nation underwent: the earthquakes, the floods and the economic crashes in the 1980’s where social spending increased more than the returns from agricultural exports and the oil business. The subsequent loans to cater for social spending, talks with the IMF and introduction of the austerity/structural adjustment policies, the crash in oil prices to the point where the nation had no income to service their loans or spend on its citizens which forced them into borrowing more amounts of money and the further institution of neoliberal policies (neoliberal policies: deregulation, liberalization, privatization). Austerity policies (neo-liberal policies) were instituted as a condition for receiving these loans. Multiple regimes came and went seeing to the further addition of loans, structural adjustments followed in suit and so was the subsequent weakening of their currency, inflation, increased tax on food items, gas and the removal of subsidies. Living conditions deteriorated as people moved from rural areas to urban areas in search for employment opportunities since agriculture was not feasible anymore. A large percentage began living at or below the poverty line. In 2007 when Correa came into power a new constitution was implemented that has helped improve the lives of the people of Ecuador. This source is integral in that it provides adequate background for the country in discussion. The author’s intent for this source was to disapprove neoliberal policies as a method for human development. I plan to use the information on how neo-liberal policies have impacted human development in Ecuador both as an example on the negative effect on human development for these policies and as a country historical profile in the research essay.

European Report on Development 2015

The report covers areas on development such as social development and the economy. It mentions the policies that have been instituted to ensure better livelihood for the people of Ecuador. It is relevant to our essay because it presents evidence on the development that has occurred in Ecuador since the institution of these new policies and shows how the past policies on neo-liberalism have failed to provide a better life for the people. The main argument in this essay lies in the presentation of facts concerning the development in Ecuador showing that livelihood in Ecuador has improved since the new constitution was passed in 2008 and a new president elected in 2006. The institution of new policies, governed by a new constitution that has facilitated change in the financial and social sectors. This includes reduction in poverty, low inequality ratios, provision of social security for over 50% of employees in the country. Allowances for the poor and credit extension based on these allowances. Free education for primary and university level, removal of entrance fee for students, increase in healthcare facilities and a revision of contracts with oil companies in the region as per the power provided by new constitution that no company should obtain more earnings than the government. This has created more income for the government and allowed spending on social amenities. Further revision of the national budget has helped remove interest groups as beneficiaries of the oil merchandise and thus channeling the capital into the national budget. The above represents the information I plan to use in my research paper. This source is useful in providing evidence as to the economic growth experienced with the institution of the new policies thereby acknowledging that the past one’s failed in providing better living standards for the people.

Essay Development and Structure.

Introduction:

Neo-liberalism in the global south – discussion on neo-liberalism, its origins/rise,

(Kotz , 2008) - ) Provides the history of neo-liberalism, the relationship between financialization and rise of neo-liberalism

What it is and how it has been effected in the world.

The implications it has had for both the core countries, semi-periphery and the periphery countries.

Globalization, what it is, how it has been realized in the past, how it is being realized now.

Its impact in the core, semi-periphery and periphery countries.

(Verma, Upadhayay, & Bajpai, 2008)- States how the developing nations did not benefit from the booming free trade. Their economies developed very slowly or deteriorated.

The role of the IMF/World Bank and MNC’s in neo-liberalism will also be discussed.

(Siddiqui,2012)- Discusses the IMF, World Bank, MNC’s, neo-liberalism and globalization.

Case Study

Case study scenario from Ecuador.

First is the historical profile of the country with its economic development history.

The role of the colonial masters in Ecuador and how that impacted them.

(Leornard, 2006) – Shows how the colonial masters did not promote economic independence or economic sufficiency in the areas they colonized. This often lead to formation of trading blocs.

Their trade history.

The discovery of oil, its impact on their economy,

the drop in oil prices, it impacts and the eventual dollarization of their currency and what it meant for the people.

(Bates, 2007) – Discusses the structural adjustment introduced and how the impact to the people. Poverty, reduction in agriculture and immigration.

Mention of the living condition of people during these days. (Bates, 2007)

Political stability of the nation and the feeling of the people towards neoliberal policies.

(Gamso,2010)- Discusses the living conditions and the history of the nation.

Alternative policies in the country-

Other policies that have been introduced in the country to foster human development since 2007

(Nehring, 2012)- discusses the introduction of newer reforms and a new constitution. Plans to improve human living standards in the country and institution of ministries to carry out these policies.

election of Correa as president.

The reforms in social sector via the new constitution to promote good living- the aim behind the new constitution.

The improvement of the social sector in poverty reduction, inequality, education and health. Reforms in the economic sector aimed to increase national budget.

(European Report on Development, 2014)- Discusses further on in improvement of the social sector and on the reforms.

Conclusion

Restate the problem: “The negative impact of neoliberal development policies on human development in the global south.”

Findings –The state of the economies, the living conditions (poverty levels), the inequality ratios in education, employment. Health and infrastructure.

Recommendation- Abolition of neoliberal policies.











Bibliography

Bates, D. C. (2007). The Barbecho crisis, la plaga del Banco, and international migration: structural adjustment in Ecuador's southern Amazon. Latin American Perspectives, 34(3), 108-122.

European Report on Development,. (2014). European Report on Development 2015. Retrieved from https://ec.europa.eu/europeaid/sites/devco/files/erd5-country-illustration-ecuador-2015_en.pdf

Gamso, J. (2010). Political economy of Ecuador in the neoliberal era of development.

Kotz, D. M. (2008, May). Neo-liberalism and financialization. In paper written for the conference in honour of Jane D'arista at the Political Economy Research Institute, University of Massachussets, May (pp. 2-3)

Leonard, T. (2006). Encyclopedia of the developing world (1st ed., p. 262). New York [u.a.]: Routledge.

Nehring, R. (2012). Social Protection in Ecuador: A New Vision for Inclusive Growth (No. 28). International Policy Centre for Inclusive Growth.

Siddiqui, K. (2012). Developing Countries' Experience with Neo-liberalism and Globalisation. Research in Applied Economics, 4(4), 12.

Verma, S., Upadhayay, Y., & Bajpai, A. (2008). Globalisation at the crossroads (1st ed.). New Delhi: Sarup & Sons