DEVELOPMENT THEORIES
DVA3701
PREPARATORY NOTES
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Table of contents
Explain the history and characteristics of neoliberalism ------------------------------------------- 1
Discuss the impact of structural adjustment programs on Africa.--------------------------------2-3
Discuss other forms of impact of neoliberalism on Africa ----------------------------------------- 4
References 5
Outline the characteristics of neoliberalism and then discuss its impact on Africa
Neoliberalism in the African context was initiated through the imposition of Structural
Adjustment Programs (SAPs) from the early 1980s; which essentially transformed the
state’s role into a gatekeeper of the neoliberal project and market; attempting to ensure
a stable investment climate and keeping in check those marginalized by neoliberalism
(Peck and Tickell 2002; Afena 2010). Globalization also refers to worldwide processes
of interaction and integration among the people, companies, and governments of
different nations that have intensified since the late 1980s, driven in part by international
trade and investment and aided by information technology that make the world more
integrated and therefore interdependent (Murphy and Carmody 2015). As globalization
is a much broader and more multi-dimensional process than the transnational economic
transactions that undergrid neoliberalism, the connections between globalization and
neoliberalism are not straight-forward (Litonjua, 2008; Heron, 2008.Decades after
implementing neoliberalism, many African countries have yet to make any considerable
progress. Most African economists, inspired by the Bretton Woods institutions and the
Paris and London Clubs, presume that African societies are experiencing similar
problems, and therefore require a similar solution. The International Financial
Institutions (IFIs) and scholars who favour the neoliberal policy thrust continue to insist
that there is no alternative to neoliberalism, even in diverse African societies with
different eco-cultural realities from the Western provenance of this programme.
Trends in diverse African societies show a wholesale borrowing of the neoliberal policy
thrust. The objectives of neoliberalism are largely the same for most African countries
because the underlying assumption is that African societies are the same, experiencing
similar problems and require similar solutions. Neoliberalists identified the reasons for
the economic failure of most African states to include the overvaluation of local
currencies, state regulation of the import licensing system, subsidisation of oil products
and various social sectors of the economy, inefficient state-owned enterprises and
corruption. It was claimed that the primary cause of the failures was over-regulation of
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the African economies, which did not allow the interplay of market forces to efficiently
allocate resources (Konings, 2011). Given the reasons that the IFIs gave for African
economic failures, the policy thrust of the neoliberal programme became the reduction
in the role of the state through a reliance on market forces. The conditionalities have
been applied rather uniformly and mechanically by various African countries regardless
of prevailing socio-cultural conditions within each country. Externally introduced
neoliberal policies have been put forward as the only credible recipe for African
progress. Even though for some three decades, the implementation of the neoliberal
programme instruments has resulted in worsening economic woes in most African
societies, the proponents of the programme insist that there are no alternatives to it.
State (2010) explains that even when the flaws of the neoliberal programme are
acknowledged, most of the blame is instead placed on African countries, which are
accused of either not having the ‘political will’ or creating the ‘enabling environment’
necessary for the successful implementation of the programme. But we hold that the
failures of neoliberalism in Africa are neither due to lack of adequate knowledge of how
to implement it nor the political will to do so. Journal of Economic and Allied Research,
2016, 1(1): 42—52 but because the programme is being deployed, without due
modification, to social settings for which it is not suited. We invoke the complexity theory
to anchor our position that only a pathways approach, based on local social form, holds
the promise for any progress, not just in the global south but anywhere else.
Neoliberalism is an economic theory which also claim to sort what is needed from the
politics and the state “.Neoliberalism is a theory of political economic practices
proposing that human wellbeing can best be advanced by the maximisation of
entrepreneurial freedoms within an institutional individual rights ,individual liberty
,unencumbered markets and free trade” ‘Harvey 2007;22Tha state must be set up to
support and protect these things neoliberalism has been conveyed to the global south
largely through the “Bretton Woods Institution”, the world bank ,the IMF ,the world Trade
Organization which succeeded the general agreement on tariffs of trade. Neoliberalism
is a philosophy, more so an ideology that is one of the main causes of inequality all
around the world. The Guardian describes it as: “neoliberalism sees competition as the
defining characteristic of human relations” (Monbiot 2016). It is theory of political
economic practices that proposes that human well-being can best be advanced by
liberating individual entrepreneurial freedoms and skills within an institutional framework
characterized by strong private property rights, free markets, and free trade.” (Harvey
2005:2). Deregulation of markets, privatization and fiscal austerity have been called one
of the main mechanisms behind the ideology. They are aimed at giving more money to
those of a higher social status, in hopes that that will in turn reflect on the middle-poor
class, resulting in wealth properly distributing between the three. However, that has not
happened, leading the world to even more class inequality. David Harvey, in his book
named “A Brief History of Neoliberalism”, states: “and it makes it all too clear why those
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of wealth and power so avidly support certain conceptions of rights and freedoms while
seeking to persuade us of their universality and goodness” (Harvey 2005:38). And
indeed, it became clear. It became clear that the wealthy used this economic philosophy
to attract more money to their businesses and industries; that they have minimized the
costs of production and maximized the prices in order to simply earn more income.
The neoliberal strategies employed by the northern powers since 1980s have helped to
bring about something of what we call globalisation in the sense that globalisation is
associated with increasing freedom of trade ,increasingly ease access of transnational
corporation to national economies and continuation of political domination by the elites
of the north. Neoliberalism has indeed been highly influential, one only need to
remember that the structural adjustment programmes imposed by the IMF and World
bank were neoliberal recipes in most respects ,Moreover the policies of privatisation
followed from London ,Brasilia to Moscow are essentially neoliberal. Neoliberalism has
been dominant Ideology within the globalisation project.
In economic terms Neoliberalism has not been very successful in producing growth in
economies but it has been a huge success from the stand point of the upper class both
in restoring old elite sand producing new elites in the countries such as India, China and
Russia Harvey 2007 :34.This was not done through growth but through privatisation
,financialization and management of cries through strategies such as interest rates
manipulation, structural adjustment strategies and bailouts of banks .In addition many
state programmes of redistribution ended up funding the rich.Harvry 2007 :35-39t
The implementation and outcomes of structural adjustment programmes (SAPs),
promoted by the International Monetary Fund and the World Bank to help countries all
around the world overcome their economic crises, have generated significant
controversy. The SAPs’ impact on the economic development and levels of corruption
of those countries are of special concern. Regarding corruption, the literature presents
two main positions: one, the anti-corruption discourse legitimises and justifies the need
for SPAs. Two, SAPs do not actually reduce corruption, but they exacerbate it.
Contextual conditions and interactions of SAPs with other policies make it difficult to
establish a direct causal relationship between SAPs and levels of corruption, but studies
show that aspects associated with those economic reforms have exacerbated
corruption risks.
Since the late 1950s the International Monetary Fund have been imposing monetarism
(neo-classical economic theory based economic policies) as a condition for lending
money to less developed societies facing problems with their balance of payment. What
makes of monetarist strategies a main issue for developing societies during the 1980s
and the 1990s, is that the World Bank adopted as its main policy imposing monetarist
economic policies on less developed countries. Therefore, since the late 1970s-1980s
