Neo-liberalism refers to a set of economic policies that have become common worldwide, for the last two and half decades. The trend of neo-liberalism has been imposed by various organizations, particularly by some of the powerful financial institutions in the world, such as the IMF and the World Bank (Amin 53).
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Neo-liberal economic and development policies have been implemented in many regions of the world, specifically for poverty reduction and development purposes. In that case, the initial agenda behind these policies was tailored mostly with regard to the needs of international capital and this, it was argued, was intended to benefit all segments of the society including the less-fortunate.
In essence, the final outcomes realized from various mechanisms of the framework would see the poor being the major beneficiaries of the approach. However, the outcomes have failed to meet the intended expectations, as it is evident from various regions where neo-liberal approaches have been applied with the aim of reducing poverty and improving the living standards of people. This report examines some of the main impacts of neo-liberal development approach on poor countries.
Neo-liberalism draws mixed reactions from different people. While it is thought to facilitate developments in various parts of the world, the main beneficiaries of the trend are a minority of the global population. More obviously, while some people tend to view it as a driving force for economical change in the society, others would rather not appreciate it, owing to the many nightmares associated with the policies.
In the U.S. for instance, neo-liberalism is seen as a major contributor in the destruction of welfare programs, among other social problems. With the advance of high levels of unemployment and poverty in most developing nations, it is obviously apparent that neo-liberal policies have failed to deliver to the global society.
In fact, very little economic success has been realized through its seemingly promising development proposals. Unlike the best intentions behind the plan in connection with poverty, the approach has paved way for economic failures rather than success, in many developing countries (Haslam, Schafer and Beaudet 17).
Neo-liberal policies have offered neither advancements nor stabilization to the economy of poor states. Over the years, the high volume capital flow usually enforced by the stability policies has continued to propel frequent economical crises thus exposing developing countries to new threats and risks.
Another notable impact of this approach to poor countries is that it has succeeded in eliminating barriers in developing countries, while maintaining these barriers in the developed states through the liberalization of international trade (Meier and Stiglitz 35).
Another certain impact of these policies is evident in the fact that, they are operated at the expense of the poor countries while benefiting the developing countries. This explains the presumption of majority of people in the global society that the trend has only succeeded in widening the gap between the rich and the poor in the society. This contradicts the primary goal of the approach which is to reduce poverty in developing countries.
There is strong evidence from literature on the way neo-liberal development policies have continued to inflict negative impacts to poor countries as a result of economic inequality. For instance, with the financial reforms and foreign trade, poor countries have never been lucky to escape the wrath of negative productivity in all segments of the economy.
Some of the main issues here would include deterioration of national industries, lack of employment opportunities, loss of workers’ rights and labor market destabilization. All these outcomes have negatively influenced the economy of developing countries, thus contributing to high costs of living.
Difficulty access of basic services and increasing commodity prices are common in many regions where neo-liberal approach has been implemented. In this regard, the policies have actually succeeded in increasing poverty levels in some regions while limiting development efforts in others.
There has been an increase in globalization in the modern era, where implementation of neo-liberal policies and structures has been a dominant effort in addressing the economical issues affecting the global populations nowadays (Haque 205). The application of alternative production factors, as castigated by neo-liberal policies has increased exponentially in the last few decades and even though this has had its own benefits to the overall growth of productivity, it has brought along serious implications to the global labor market.
The increase in diverse technological production factors and facilities has led to decreased employment and reduced employee income and benefits.
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And it is for these reasons why the stabilizing policies of neo-liberal approach have failed to maintain stability of economies in poor countries. Moreover, the work-force has failed to flow from minimal productivity to increased productivity as it had earlier on been anticipated by the policy makers behind the approach. This however has contributed to high levels of unemployment in poor countries.
Neo-liberal development policies have also had great impact to the agricultural sectors of poor and developing countries. One significant effect of these policies in relevance to agriculture can be observed in the WTO agreements that do accompany these policies. Most of these agreements are targeted on liberalization of foreign trade in agricultural products and this has facilitated the drop of tariffs in the sector (Murat 97).
More importantly, there have also been modifications in systems supporting agriculture in poor countries, courtesy of the trade liberalization measures. These measures have continued to spell competitive agricultural strategies between developed and developing countries.
This way, neo-liberal development policies may have contributed to growth in agricultural productivity, but they have failed to offer employment opportunities in many poor countries thus contributing to high population of the unemployed, as poor peasants migrate to urban centers in search of greener pastures.
In conclusion, neo-liberal policies are yet to achieve their goals as far as the issue of eradicating poverty in poor countries is concerned. Over the years, the approach has achieved very little success in addressing the issue of poverty currently affecting many developing countries.
Amin, Ash. “An institutionalist perspective on regional economic development.” Reading Economic Geography 17. 2 (1999): 48-58. Print.
Haslam Paul, Schafer Jessica and Beaudet Pierre. Introduction to International Development, Oxford: Oxford University Press, 2012. Print.
Haque, Shamsul. “The fate of sustainable development under neo-liberal regimes in developing countries.” International Political Science Review 20. 2 (1999): 197 – 218. Print.
Meier, Gerald and Stiglitz Joseph. Frontiers of Development Economics: The Future in Perspective, United Kingdom: Taylor & Francis, 2002. Print.
Murat, Ozturk. “Neo-liberalism and Poverty in Turkey.” International Journal of Technology and Development Studies 1. 1 (2011): 88-121. Print.