Neo-Liberalism in the Developing Economies

This essay explores the impact of Neo-Liberalism on developing economies. It discusses the origins, policies, and criticisms of Neo-Liberalism. The essay focuses on the neo-liberal revolution in 1980 and its impact on the economic growth of the developing nations.

Running head: NEO-LIBERALISM IN THE DEVELOPING ECONOMIES
Neo-Liberalism in the Developing Economies
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1NEO-LIBERALISM IN THE DEVELOPING ECONOMIES
Introduction:
Neo-liberalism is a policy model related to economics and social studies transferring
control of economic factors from the public sector to the private sector. It has originated from the
primary principles of neoclassical economics denoting that it is necessary for the governments to
limit subsidies, formulate reforms to tax regulations for diversifying tax base, minimise deficit
spending, restrict protectionists and open markets for up to trade. Moreover, it is involved in
abolishing fixed exchange rates, backing deregulation, permitting private property and
privatising state-run businesses (Antillano et al. 2016). It extends support to deregulation,
austerity, privatisation, austerity and highly minimised government spending. The concept of
neo-liberalism is related to laissez-faire economics, which is a policy prescribing minimum level
of governmental interference in the economic issues of society and individuals. It is characterised
primarily by the belief that increased economic growth would result in human progress,
confidence in free markets along with emphasising on restricted state interference. The current
essay would focus on the neo-liberal revolution in 1980 and its impact on the economic growth
of the developing nations.
Analysis:
A number of scholars, analysts and critics have used the term neo-liberalism for denoting
upspring of the ideas of the 19th century related to economic liberalism initiated in 1970s and
1980s. Such ideas advocate for considerable economic liberalisation and policies for extending
the abilities and rights of the private sector over the public sector, especially the closure of
governmental and state power over the economy (Ashworth 2014). The popularity and usage of
neo-liberalism has fallen steadily in the 1960s, which has gained popularity in 1980s again. It has

2NEO-LIBERALISM IN THE DEVELOPING ECONOMIES
been associated with the Chilean economic reforms issued on the part of Augusto Pinochet
(Becchio and Leghissa 2016). In that period, neo-liberalism has obtained an adversely slanted
connotation and the market reform critics used the same primarily. The meaning of the concept
shifted from an increased radical laissez-faire capitalist idea pools. In the modern world, the
support and popularity of neo-liberalism is divided. The approach is associated with different
economic policies initiated in the United Kingdom on the part of Margaret. Some analysts and
academics have attributed to the resurgence of neo-liberal economic theories in 1970s and 1980s
to financialisation and it indicates that the financial crisis of 2008 and 2009 is finally a result of
such an economic approach. In this essay, Philippines has been chosen as the developing nation
on which the effect of neo-liberal revolution on economic policy of the nation would be analysed
in this section.
For instance, in the Philippines, neo-liberalism first entered as structural adjustment
program imposed on the part of the World Bank in the early 1980s in the effort of the latter for
strengthening the capacity of the economy in servicing its massive external debt (Birch 2015).
The structural adjustment assisted in triggering the economic crisis of the early 1980s, in which
the contradictory effects have been magnified owing to the onset of the global recession. This
crisis was deemed to be the worst crisis of the nation since the Second World War; however, the
role of neo-liberal economics to precipitate has been shrouded by coinciding with the deep
political crisis triggered on the part of the Aquino assassination in August 1983. For majority of
the citizens of Philippines, Marcos was identified as the cause of both crises.
Firstly, it has been related to different high-powered technocrats and activist intellectuals
near to the administration of the nation and the individuals are influenced heavily by the
Thatcher and Reagan free-market experiments in Britain and United States (Chang and Grabel

3NEO-LIBERALISM IN THE DEVELOPING ECONOMIES
2014). These mainly comprise of the economist Bernie Villegas and Secretary of Finance of
Cory Aquino, Jesus Estanislao. Another significant centre of emergent neo-liberalism has been
the “University of the Philippines School of Economics”, which drafted the highly influential
anti-Marcos White Paper on the economy of Philippines in 1985.
Secondly, the intellectuals have conducted analysis, which has been in line with the
popular mood. This has assisted in identifying the economic loopholes of the nation, which has
become popular as crony capitalism or the utilisation of state agencies for advancing the private
interests of some close associates of the dictators (Connell and Dados 2014). The direct attack on
the Keynesian state in the form of the source of inefficiency, which has been the prominent
characteristic of Reaganism and Thatcherism, has been a subsidiary component in the case
designed for market freedom.
Thirdly, no credible alternatives to neo-liberalism have been present during that period.
Keynesian development that assisted the state role in the form of strategic factor in the initial
ascent phase to development has been compromised due to the personification in the dictatorship
of Marcos (Dardot and Laval 2014). As per the vision of the left in relation to nationalist
industrialisation or the national democratic economy, it has hardly gone beyond rhetorical
flourishes. This has gained popularity in the period before the uprising of EDSA owing to the
priority that the Communist Party emphasised on the anti-fascist struggle (Gilbert 2014). This
demanded underpayment of the view that national democracy has been the antechamber to
socialism for developing a broad front with anti-dictatorial elite components. After the uprising
of EDSA, the formation of an alternative has been detailed by the preoccupation of the Left with
the failure consequences of involving in the final act of the Marocos’ ouster.

4NEO-LIBERALISM IN THE DEVELOPING ECONOMIES
For instance, in case of Malaysia, it is imperative that there have been few deregulations
and privatisations that favour private interests in the late 1980s. However, this has been a
mistake in overestimating the effects of these policies. Petronas, the state oil organisation, has
been rated consistently as one of the leading organisations in East Asia. Moreover, it has been a
successful and leading innovative organisation in the entire East Asian region, which was a joint
venture undertaken by the state as well as a foreign automobile company, Mitsubishi (Gray et al.
2015). Mitsubishi has manufactured the Malaysian car, the Proton Saga. This car model that
controlled majority of the domestic market along with making profit for the producers has
assisted in minimising the sins of the industrial policy. These sins mainly include systematic plan
for manipulation of marketing incentives, strategic industrial targeting and discriminatory
treatment of tax related to the rivals along with compelling the local sourcing of components for
boosting the growth of local supplier sectors (Holborow 2015).
In case of Indonesia, the state has stayed the significant actor throughout 1980s and
1990s in the economy. The state enterprises have made contributions to nearly 30% of the
overall gross domestic product (GDP) of the nation and 40% of non-agricultural GDP. The
capital expenses in the form of percentage of government budget have been 47% in Indonesia,
while in case of Thailand; the figure has been increased by 23% to 33%. In opposition, in the
Philippines, the technocrats of the nation have pushed capital expenses down as a proportion of
the national budget from 26% to 16%. As government is the largest investor in any nation, this
significant decline in capital outlays, since the neighbouring nations increased or maintained the
same, which did not have adverse impact on economic performance (Nelson 2014). The
neighbouring nations of the Philippines have enjoyed growth rate between 6% and 10%, while
Philippines have experienced annual growth rate between 1% and 2%.

5NEO-LIBERALISM IN THE DEVELOPING ECONOMIES
Therefore, the neo-liberal technocrats of the Philippines have been dazzled to the point of
envy by the performance of the neighbouring nations; however, they did not identify the reason
accurately. According to them, they blamed the market for the adverse outcomes, when the
actual reason was the state. Although few liberalisations have been going on in the economies of
the neighbouring nations, it has been selective liberalisation that has been pursued in the context
of strategic protectionism that the state has driven. The intention was to strengthen the industrial
structure of the economy (Otero 2018).
Hence, it could be stated that ideas bring consequences and there have been evidence of
lack of efforts to make Philippines a newly industrialising nation within 2000 owing to the
slogan via globalisation. This implies the increased integration of the nation into the production
areas and international market via liberalisation related to radical trade and investment (Petras
and Veltmeyer 2016).
Even though liberalism and neo-liberalism have some certain common points, they tend
to differ from each other in a number of ways. Both the concepts have originated from the
classical liberalism in the 19th century that supported laissez-faire economics and the freedom of
individuals in contrast to an overpowering government (Petras 2018). Liberalism could be
deemed in the form of a political philosophy holding liberty to an increased standard. It assists in
explaining all economic, social and political aspects of the society that take into account
toleration, governmental role, freedom to act and others. On the other hand, neo-liberalism
places more concentration on the markets, which implies that the concept extends support to
deregulation. This would result to the end of protectionism as well as freeing up the markets.
Hence, neo-liberalism is considered as an economical concept.

6NEO-LIBERALISM IN THE DEVELOPING ECONOMIES
Despite the popularity of the neo-liberalism, this concept has received certain criticisms
from the different global analysts as well as the political spectrum. The concentration on
economic efficiency has the potential of other influential dynamics. For instance, by analysis of
the performance of a system related to public transit, which is entirely economically efficient, it
might result in the rights of the staffs considered as an impediment to performance. According to
some critics, the growth of neo-liberalism has enabled the growth of an anti-corporatist
movement, which implies that the effect of organisations have gone against the welfare of
democracy as well as society (Scheuerman 2017).
Moreover, neo-liberalism has received political criticism as well as opposition. Initially,
the globalisation concept has been viewed as unfavourable, since it could hamper sovereign
nations of their own rights to self-determination. Secondly, as per these critics, the substituting
government-owned organisations having private ones could result in minimisation of efficiency.
Moreover, according to the critics, although there might be increase in productivity owing to
neo-liberalism, it might not be sustainable due to the limited global geographical space.
Moreover, the opponents of neo-liberalism have stated that the concept is anti-democratic which
could result in social injustice and exploitation and this might criminalise poverty (Venugopal
2015). This is because the citizens residing in the urban areas are growingly deprived of the
power for shaping the primary conditions of daily life, which are shaped exclusively by the
organisations associated with the competitive economy. Moreover, the deregulation of the labour
market results in flexibility and casualty of labour along with higher informal employment as
well as significant rise in occupational diseases and industrial accidents.
Conclusion:

7NEO-LIBERALISM IN THE DEVELOPING ECONOMIES
Based on the above discussion, it could be found that neo-liberalism is a policy model
related to economics and social studies transferring control of economic factors from the public
sector to the private sector. It has originated from the primary principles of neoclassical
economics denoting that it is necessary for the governments to limit subsidies, formulate reforms
to tax regulations for diversifying tax base, minimise deficit spending, restrict protectionists and
open markets for up to trade.
The approach is associated with different economic policies initiated in the United
Kingdom on the part of Margaret. Some analysts and academics have attributed to the resurgence
of neo-liberal economic theories in 1970s and 1980s to financialisation and it indicates that the
financial crisis of 2008 and 2009 is finally a result of such an economic approach. Despite the
popularity of the neo-liberalism, this concept has received certain criticisms from the different
global analysts as well as the political spectrum. The concentration on economic efficiency has
the potential of other influential dynamics. For instance, by analysis of the performance of a
system related to public transit, which is entirely economically efficient, it might result in the
rights of the staffs considered as an impediment to performance. Thus, the opponents of neo-
liberalism have stated that the concept is anti-democratic which could result in social injustice
and exploitation and this might criminalise poverty.

8NEO-LIBERALISM IN THE DEVELOPING ECONOMIES
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