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Neoliberal Revolution

Neoliberal Revolution

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Neoliberal Revolution

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  1. Neoliberal Revolution

  2. What is neo-liberalism?

  3. Development agenda focused on switching economies towards free-markets with minimal role for the state. • 1) Trade liberalization • 2) Reduce public spending • 3)Privatization • 4)De-regulation of economy • 5)Foreign investment • 6)Property rights and market-based interest rates • 7) Capital market liberalization

  4. Why did it emerge?

  5. Stag-flation in the west • Critique of Keynesian economics: • Depression is not due to structural crises • Nanny state and problem of getting prices right • Development economists mis-diagnosed the problem • Development economics is intellectually corrupt • Developing economies are not special

  6. Why did it become dominant in LDCs?

  7. OPEC prices of oil jump from $3 to $12 in 1973 • Expensive development projects • Petro-dollars in private banks • Loans to LDCs • Defaulting by Mexico in 1980, debt crisis

  8. What is the Washington Consensus?

  9. Policies and reforms imposed on debtor nations in the form of cross-conditionality • Three components of Econ Reform Programs • 1)Economic liberalization • 2) Macro-economic stabilization • 3)Privatization • Shock therapy in Russia

  10. What are the problems with neoliberal policies according to Stiglitz?

  11. Privatiztaion in context of monopoly • State withdrawal without presence of market substitute • Markets are not perfect esp in LDCs. • Lack of adequate social safety net • Timing and sequence (eg new jobs are not created over night after losses due to privatization).

  12. Problem of corruption and how reforms are administered • Trade liberalization has not served interests of LDCs( agriculture, maritime, construction) • Does not acknowledge that development requires systemic transformation of society • Overlooks important reforms (land reforms, financial market regulations, poverty alleviation) and over-emphasis on inflation