This paper examines the role of the neo-liberalism approach to development in Latin America. The paper aims to establish whether the approach has facilitated the attainment of the developmental goals of the Latin American region. Through literature review, the study finds out that the neo-liberalism approach has attained a certain degree of progress in the Latin American region. However, the overwhelming evidence emerges in support of alternative development approaches.
This realization is made after it is established that neo-liberalism has contributed towards retarded economic growth, political instability and other social ills in the continent.
The paper finally concludes that seeking alternative approaches to growth is necessary if the Latin American region is to achieve further progress. Introduction Neo-liberalism is a market led model to social and economic policies premised on the neoclassical theories of economics, which aim to utilize maximally the private sector in choosing the economic, political and social priorities of a state.
The aim of the model is to shift risks from the public corporate to individuals.
This indicates that the primary role of the approach is to increase efficiency premised on the belief that governments were not in a position to attain such a goal (Cohen, 2007). The neo-liberalism approach was introduced in the Latin American continent to achieve the benefits associated with it on theory. After decades of applying the approach, the Latin American region still finds itself lagging behind in terms of economic and social growth and development. This leads to a host of queries regarding to what would have gone wrong.
Research questions This paper examines the following research questions: Has the neo-liberalism approach facilitated economic growth in the Latin American region? Has neo-liberalism led to political instability in the Latin American region? Has neo-liberalism failed to achieve its goals in the Latin America continent? If neo-liberalism has failed, are there alternatives to replace it? Literature review Neo-liberalism was first applied in Latin America at the turn of the new century. Latin America chose to offer a ground in which the forces of neo-liberalism contentions squared off.
Such lead to a construction of both resistance and seeking of alternatives. The neoliberal dispensation adopted in the 1990’s in Latin America led to serious setbacks. For instance, the huge inequalities, which characterize Latin America, point to this position. Though neo-liberalism was not the cause of the inequality problem, it served to exacerbate the gap (Sader, 2008). The neoliberal model was imposed in Latin America. Towards privatization condition was give n requiring that successive governments in the continent should defeat and disarm the earlier left wing movements and any organized labor groups.
During this time, the developmentally agenda was premised on the import substitution model. This model was particularly used in Argentina, Mexico, and Brazil; however, the model was also in use in countries like Columbia, Chile, Peru, Costa Rica and Uruguay (Sader, 2008). The model was heavily doctored in a way, which encouraged wide political projects based on the ideology of strengthening the working class and trade unions with backing from local parties and national blocs submerged in the context of nationalistic identities and ideologies.
Instead of leading to the sought after development, the neoliberal agenda turned tragic as countries in the Latin American region became engaged in military coups time and time again beginning at the 1960’s (Sader, 2008). The combination between military coups and the neoliberal growth models led to adrift in the balance of power in reference to the social classes in the region. In countries like Chile, Uruguay and Argentina, it was near impossible attempting to privatize national industries. Simply put, the state governments had to suppress the nationals into accepting the sell-outs.
Initially, states offered a certain degree of protection as they regulated local markets and thus guaranteed the social well-being of the population. However, privatization became necessary to clear the path for the neoliberal agenda. Argentina suffices as the best example in this line of thinking as illustrated by the complete transfer of public resources to the private sector followed by the abolition of the hard fought for social rights. In a nutshell, the neoliberal model was dismantling the norms in Latin America.
At the turn of the 1990’s, neo-liberalism had taken its toll in the Latin American continent. Its effects were fraught throughout the political spectrum. Originally, the program was implemented in Chile, later, Peru, Mexico, Bolivia followed suit (Sader, 2008). One stark reality that emerges is rested on the failure of the neo-liberalism model to consolidate the required social forces for sustenance. This meant there was constant instability paving way for a host of crises right from its onset. This finds support in the Mexico crisis of1994, the Brazil crisis of 1999 and the Argentina crisis of 2002.
These nations were ravaged by astounding levels of inflation, which were however controlled at a significantly high cost. The effects of hyperinflation are quite adverse as for instance, economic growth of a region or a state comes under paralysis. Instead of achieving the expected growth and development in the Latin American countries, adverse effects like, stagnating economies, growing wealth gaps, spiraling public deficits, expropriation of individual rights (in reference to employment and labor unionization) took precedence. Further to this, the general population’s rights were curtailed.
However, the growth of the public debts negatively exposed the Latin American economies. The poor economic performance led to the ouster of Alberto Fujimori in Peru, Menem in Argentina, Henrique Fernando Cardoso in Brazil, Gonzalo Sanchez in Bolivia, among others (Sader, 2008). The neoliberal model of growth encouraged the internationalization of economies. This pushed the corporate elites into striking an alliance with international capital. Towards achieving the neoliberal agenda, the pro neo-liberalists supported military dictatorships in the southern Cone.
The support was extended even to guerillas as far as they were in support of the export-oriented model (Sader, 2008). The adherence to the neoliberal policies meant that gains made in reference to trade unionism had to be reversed. This also affected the leftwing forces as they were equally disabled by the neoliberal agenda. This was further worsened following the collapse of the former Soviet Union. Labor unions like the Brazilian Workers Party (PT) the Nicaraguan Frente Sandinista and the Uruguayan Frente Amplio evolved into parties in order to camouflage from being phased out by the respective governments.
They occupied a central wing to achieve their goals. However, left wing groupings such as the VPR and ALN in Brazil, the PRT-ERP in Argentina and the MIR in Chile were dissolved (Sader, 2008). The political ideologies in Latin America became remodeled on the lines of the neoliberal policies. The emerging new world order further reinforced the neoliberal hegemony. Popular forces were abandoned as the former nationalists and social democrats got sucked into the neo-liberal agenda. However, this group has continued to pressure the leaders into discarding the policies in favor of more socialistic ones.
This group argues that neo-liberalism has disabled the state from performing its functions as ideally expected. The group’s militancy against neo-liberalism is premised on the wholesale privatization of state resources and expropriation of individual rights with particular reference to formal employment, education and health. The overthrow of the neoliberal government of Sanchez de Lozada was down to the agitations brought forth by disgruntled elements based on advances by the government to privatize water (Sader, 2008). The neoliberal agenda remained committed to creating polarity between the public and the market sector.
Ne-liberalism is committed to the extension of market relations. Initially, the state was connected with the social aspect of humanity. However, at the advent of neo-liberalism, the state was required to divorce with this aspect, leading to a critical clash in the process (Sader, 2008). Chile was among the first nations to support neo-liberalism in the Latin American continent. Augusto Pinochet offered support to the approach during his 17-year reign. However, successive governments after the overthrow of the dictator did not introduce significant changes into the system.
Against suggestions that neo-liberalism was anti-growth, much was attained in Chile. For instance, in the year 2009, the United Nations Development Report ranked Chile as a country characterized y high quality of life, highly competitive, political stability, high levels of globalization, low perceptions on corruption, economic freedom and low poverty levels. However, it should be noted that Chile remained a country with rampant wealth disparities with a distorted nature of distribution of resources (Cohen, 2007).
Between the period of 1930 and 1970, a good number of Latin American countries used the import substitution model to put up own industries which contributed into a reduction of dependency levels. The other effect was on urbanization. The urban centers witnessed a growing population as a result of the increasing number of the working class. Protests by left-wing parties and trade unions grew due to economic crises. The economic crises and the theoretical prospects of the model were the major reason why leaders chose to implement neo-liberal approaches.
In the end, neo-liberalism contributed to informal unemployment, urban unemployment, urban poverty and insecurity (Fischer, Ratna and Carlos, 2002). As unemployment and insecurity grew, the rich segment of the society continued to become richer. At this time, the poor sections of the society continued to be poorer. However, in some countries wealth creation increased following the introduction of the neoliberal policies. Despite the increase, instate wealth, the distribution remained inequitable. In turn, inequality contributed to political instability across the continent.
Inequality breeds discontent and despair among the poor, this leads to formation of groups, which engage in criminal activities. Some groups end up forming feeder groups to rebel gangs. It is thus no surprise that political overthrows were rampant in Latin America. As Ong (2006) observes oopponents of neo-liberalism argue that liberalisation and globalisation play a big role in subverting a state’s ability of self-determination. As a result, states are reduced to speculators in the bigger globe. The approach leads to negative economic consequences like inequality and contributes towards the deterioration of people’s living standards.
Neo-liberalism distorts power by reducing the one held by governments and transferring t into corporations. This in turn facilitates the transfer of benefits from the poor to the wealthy. Neo-liberalism creates struggles both at the social and local fronts as reflected by the inability of citizens to chart their own destiny. Deregulation predisposes states and citizens to cyclical movements of economic forces. This sums it all that neo-liberalism has led to more harm than good. The neoliberal policies brewed a war between different stakeholders at the state level to jostle for positions of controlling the countries.
On the one hand, is the elected leadership, o the other hand are the social movements. Social movements include rural movements, trade unions and employees in the education and health sectors of the public. However, governments like the Brazilian one attempted to adopt social oriented measures to gain popular citizenry support. Others include Nicaragua, Argentina and Uruguay though to a lesser extent. These countries’ policies remain friendly in reference to allowing for open economies as opposed to other states in the region (Sader, 2008).
In Latin America, there are two groups of countries, one in favor, and the other group against integration at a regional level Costa Rica. Peru, Mexico, Chile have entered integration deals individually while Paraguay, Brazil, Uruguay, Venezuela, Ecuador, Nicaragua, Cuba and Bolivia remain more keen on integration (Sader, 2008). Venezuela, Bolivia, Cuba and Ecuador have taken big steps towards the establishment of an alternative growth model to the neoliberal approach. The four countries have proposed the ‘Bolivarian Alternative for the Americas’ to tackling continent’s issues.
This has expanded to incorporate Haiti, Honduras and Nicaragua. In addition, ALBA has attempted to reduce the efficacy of the neoliberal model by insisting on fair trade. This calls for shunning of trade regulations based on the WTO and market rate norms. The trade practices between Cuba and Venezuela in which case a form of barter trade takes place serves as a strong pointer to the proposed way in the region. In the trade between the two, Cuba swaps oil with education services from Venezuela (Sader, 2008). Analysis of findings It thus emerges that neo-liberalism performed dismally in the Latin American continent.
This aside, the consequences were lethal in reference to the instability emerging from the model of development. When economies are performing poorly, the masses suffer and loose faith in governments. The neoliberal agenda as established leaned on silencing the public if the model was to turn out a success. This explains why governments had to curtail the freedoms of citizens as exhibited by the suppression of labor and left wing unions. However, this is tantamount to breeding discontent in the populations. Simply put, these measures sowed the seeds of discord in any nation.
It was thus not surprising that the instability generated in the Latin American countries was largely due to the focus on the neoliberal policies of development. The neo-liberal approach stands accused for playing a huge role in the emergence and recurrence of dictatorship in the region. States, which supported the approach, were encouraged and offered support to suppress popular opinion on country or state governance. This contributes directly to promotion of dictatorial tendencies. This further aggravates the political instability associated with repressive regimes since; such contributes to sowing seeds of discontent in populations.
The repressive regimes further contributed to the loss of gains made in regards to trade unionism as such were discouraged. However, groups have formed in these countries to fight for their rights especially in reference to basic needs. A case in point is captured in Brazil where in 2002, landless peasants ganged up in resistance to privatization of water in Cochabamba. This contributes towards creating social and political unrest in these countries. As a result, neo-liberalism was directly responsible for political instability in the region.
It is established in the paper that the neoliberal model of growth has painstakingly failed o advance the developmental agenda of the Latin American continent. This implies that seeking alternative measures is the only promising way out f this fiasco. True to this, some countries like Paraguay, Brazil, Uruguay, Venezuela, Ecuador, Nicaragua, Cuba and Bolivia remain focused on integrating at a regional level. This points that neo-liberalism has failed in the Latin American continent and as a result, the search for alternative models of growth remains in top gear.
The forms of integration shown by some of the Latin American country appear to be the best alternative to enable the region achieve the desired growth as opposed to borrowing models of growth from the West. The fact that the region is well endowed with natural resources like oil puts it at a driving seat if integration is allowed to thrive. Countries opposed to the neoliberal agenda have chosen to ally with the protagonists of the United States of America like the People’s Republic of China and Russia. Limitation This paper solely relies on works of other scholars as it is based on literature review.
Literature is of invaluable contribution to studies. This is held because literature forms the basis upon which studies are carried out. However, literature may be subject to subjectivity especially if the authors/researchers fail to remain objective. Nevertheless, this paper has reviewed four works to ensure that the reviewed literature does not raise inconsistencies. The paper though, heavily focuses on the works of Sader. Based on this, the paper is a useful contribution to the discourse on the neo-liberalism approach and development in Latin America.
Conclusion This paper concludes that neo-liberalism is not the appropriate development model in the Latin American region. This is based on the realization that the developmental approach has occasioned a number of adverse outcomes as enumerated in the literature review. However, in countries like Chile, the developmental record has been impressive. Despite this, the overall rating of the approach is poor as indicated that even in Chile, its adverse effects like widening the gap between the rich and the poor remains clearly manifested.
It is thus not surprising that measures like integration are being sought by countries from the Latin American region. If the neoliberal approach was good as earlier expected then the Latin American countries would have achieved the desired development long ago. Instead, after decades of using the approach, negative effects such as political instability, social and economic problems have reared their ugly faces repeatedly. It is thus held that seeking alternatives to the neo-liberal approach is in the best interests of the Latin American countries.
Reference List Cohen, J. N. (2007). “The Impact of Neoliberalism, Political Institutions and Financial Autonomy on Economic Development, 1980–2003” Dissertation, Department of Sociology, Princeton University. Fischer, S. , Ratna, S. & Carlos, A. (2002). “Modern Hyper- and High Inflations” Journal of Economic Literature: 837–880. Ong, A. (2006). Neoliberalism as Exception: Mutations in Citizenship and Sovereignty. Duke University Press. Sader, E. (2008). The Weakest Link? Neoliberalism in Latin America. New Left Review, 52.