Relacoes Internacionais e Desenvolvimento A. Pereira pri 5058 Lecture 5

Tensions in the politics of reform

• Neoliberal reformers sometimes used tactics for building political support that undermined the logic of their economic policies. For example, President Carlos Menem (1989-1999) in Argentina allowed governors to run fiscal deficits in the provinces in order to retain their loyalty, and President Cardoso in Brazil (1995-2002) used public resources to buy political support for a second term in Congress.
• Sometimes candidates campaigned against neoliberal reform and then implemented it once elected (i.e. Menem in 1989, Fujimori in 1990).

Some positive results of neoliberal reforms

• Some resumption of growth
• Relative price stability
• Fiscal imbalances often corrected
• Mitigation of debt crisis
• Increase in exports
• Improved services in some sectors (i.e. telecommunications)

Some negative results of neoliberal reforms

• Low growth
• Little improvement in firm management and productivity
• Widening inequality – emergence of new super-rich elite
• Little poverty reduction
• Financial and economic volatility
• Environmental and social deterioration
• Decline in state capacity – state disintegration

• The

World Inequality Report 2018, by F. Alvaredo, L. Chancel, T. Piketty, E. Saez and G Zucman and released by the World Inequality Database

From the World Inequality Report 2018

• Figure E10
• Rising global income inequality is not inevitable in the future

Conclusion

• It is important to distinguish between neoliberal theory, prescription and practice.
• Part of the appeal of neoliberalism is that it seems to fit the “common sense” perceptions of many in business and it also appeared to be a solution to the crisis of the ISI model and the debt crisis.
• In some sectors the replacement of state allocation of goods and services by markets appeared to work well (i.e. telecommunications). In others it did not.
• In some countries privatizations were dominated by a small coterie of oligarchs (Argentina, Russia) whereas in others private ownership was more broadly shared.