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Outline the key principles of Neoliberalism and its actual and prospective contribution to wealth and welfare in developing societies.

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Introduction

Outline the key principles of Neoliberalism and its actual and prospective contribution to wealth and welfare in developing societies. Counter-revolution was seen as a new vision of growth when it first comes out. In the mid 80s, the development if counter revolution was supported by the Western media and government aid agencies, also by some very influential international organisation, e.g. the World Bank Counter revolutionaries see themselves a better interpretation than the development economics. The development economy identify the problem of the developing countries in various way, it imply dual economics, labour surplus, low level equilibrium trap, unbalance growth, vicious cycle of poverty, big push industrialisation, foreign exchange bottlenecks and unequal exchange rate. However, counter revolutionaries claim the orthodox economics was unrealistic because of it assumption on people behaviour and technology implication in the industry. Also, it's said to be irrelevant, since it's main concern is with the allocative efficiency of given resources. These weakness means the development economics cannot address the problem of the growth aspect, neither it could deal with the problems of poverty and the distribution of income. Some counter revolutionaries believe that, the 3rd world exists only as a kind of collective psychological delusion. It's important to see how the counter revolutionaries interpret their view to the 3rd world to understand its policy concept. And their views on 3rd world derive from its continuing political engagement with the struggle against socialism. ...read more.

Middle

As a monopoly, the public sector is said to be fail to respond adequately to consumers preferences by insulate itself from the consumer demand. Also, many 3rd leaders may wish to strengthen their political power by influencing the economic performance, thus the country's development prospect. This means that when an economic decision was made, it's on the benefit for the politicians, not to the economy. And these are the factor causes other problem in the 3rd world countries, such as problem on foreign trade and industry, distortion of key prices (e.g. exchange rate) in the economy, which in turns causes balance of payment problems. The other main issue arise for counter revolutionaries are the practice for trade and aid policy. There are a few anomalies highlighted by counter-revolution. Some counter revolutionaries' claims that official aid has a regressive impact on world income distribution. It's theoretically possible according to Bauer, 'many tax payer in the donor cities are far poorer then many people in the 3rd world countries where, moreover, aid often benefits the prosperous rather than the needy.' Sometime, the aid is aimed to relief poverty in the recipient country, but the recipient country may resist it since they feel such attempts infringe its sovereignty. E.g., local farmers will suffer income lost if food aid was given to people free of charge, no one will spend money on the domestic food products. ...read more.

Conclusion

Further more, on average, 60% of the export of the 3rd world countries was of fuels, minerals or other primary commodities. And for the counter- revolutionaries' negative opinion on aids, in the case of India, Bangladesh and South Korea, aid merely creates what the counter- revolutionaries sees as dirigiste syndrome. When counter- revolution is implemented across Africa, it had failed in nearly all situations, per capita income down 10% over the period. They were not prepared for high-level market openness. In Philippines and Sri Lanka, there were mix results, but certainly not successful, causing economic growth fell, increase in poverty and unemployment. The most successful case of the counter-revolution policy is in South Korea, where it achieve falling inflation rate, GNP growth and income distribution improved, current account deficit narrowed and social welfare improved. But the success can be achieve only because they were not only looking at the macroeconomic in nature, but also consider social welfare. The unhelpfulness of the counter- revolution comes from its particularly strong preconception of the actions that need to be taken to promote development. That preconception is that development problems are problems of resources allocation. It has also been attacked for its simplistic accounts of the nature of 'real' markets in many developing countries and for their one - dimensional accounts of what motivates apparently isolated economic actors. Some policies and theories do have some merits, but they need to be accompanying by other policy to make it effective. ...read more.

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