Lecture 5.docx

4 Pages

International Development Studies
Course Code
Anne- Emanuelle Birn

This preview shows page 1. Sign up to view the full 4 pages of the document.
POLB90 – Lecture 5 – October 12 , 2010 Key Terms - Neoclassical economics - Neoliberalism - The Washington Consensus - Austerity and shock therapy - Structural Adjustment - Liberalization  Debt Crisis o Dev countries borrowed increasing sums of money (encouraged by the IMF and WB) for projects to revitalize ISI o Also inflationary pressures in th IS, not much confidence in the dollar or bank industry  In 1979, there was a dramatic increase in interest rates (bc of Nixon)  More debt for dev countries  Brazil, Africa’s debt doubled  75.1-600 + bullion in debt  Drop of 10-20% in income, reduced spending as well o Africa was not on Volker’s radar screen rd o 3 W could not pay debts  Debt Crisis and ISI o Adverse intl economic circumstances had accentuated the problems of ISI countries  You needed to draw greater surplus from the suburbs to free up labour in the urban areas  Increase in usage of marketing boards o Farmers pool their products so they can get a guaranteed rate so they can cover their costs of inputs  Infrastructure was focused of the needs of whites, therefore many peasants were not a part of the market because they did not have access to roads, transportation etc o Neoliberalism  S countries were trying to get a large stimulus package so they can get their own banks going  Why didn’t all the indebted countries get together united?  Washington Consensus o Neoliberalism was strongly advocated by  US exec branch  Intl institutions  Washington based think tanks  Regional dev banks  Conditionality o IMF and WB would gladly hand out money based on countries agreeing to adopt neoliberalism  They eventually turned into policy makers  Had strict guidelines and timelines  Sovereignty o Does conditionality reduce the sovereighnty of dev countries>  IMF WB said that the policies  Were correct  Would ensure that loans would be paid back  Others believed it was another form of colonialism  Neoclassical Economics o Paradigm that emphasies on Smith’s economic thought with new proponents  Individual rationality  You don’t need a govt rep or planner determining economic policy or what is good for the individual; they have their own ability to make choices in the market  Mutually beneficial exchanges (trade)  Ability to promote peace  Market relations are the sum of rational individual decisions to trade  Neoliberalism o Development is best left to market forces  Market forces o See slide o Operates as the invisible hand, and reconciles all of society o What do you need to make rational decisions  Education  Resources  Perfect Information  Benefits to products  Cheapest price  How long they last  Neoliberalism mean for dev policy? o Differences b/w people etc will be removed, and if the market is left to itself, it will be left to overall social harmony o Yet policies themselves were the problem  Thatcher believed that there was no
More Less
Unlock Document

Only page 1 are available for preview. Some parts have been intentionally blurred.

Unlock Document
You're Reading a Preview

Unlock to view full version

Unlock Document

Log In


Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.