Menu

Discuss the following statement economic restructuring in the Third World was essential and structural adjustment and conditionalities were the right policies

0 Comment

In their conception of things, the state is needed to define property rights, act as a custodian of the public good (or work for what was known as the common good) and regulate markets so that optimal conditions are met (Cooper amp. Packard, 1997). However, with the dawn of the 20th century, there was an overriding emphasis on the primacy of the markets over the state where development was concerned and this reached its zenith starting with the Thatcher administration in England and the Reagan presidency in the United States. The thinking during the 1980’s and subsequent decades went along the lines of the government is the problem and less government is better government. The implication (of this school of thought known as neo-liberalism) was that markets could be relied upon to solve economic problems and since market mechanisms are efficient in allocating resources and making optimal use of capital, they should be left alone free from governmental intervention. This was the dominant thinking in the West ever since World War Two ended and accelerated during the 1980’s (Cowen amp. Shenton, 1996).Turning to the issue of the developing countries and whether they should let the state tower over the economy or whether they should let the market forces determine the developmental agenda, a survey of the literature would find that those countries that have adopted a mixture of the state and market approach have done well for themselves whereas those that have relied on a single approach of either pursuing a centrally planned economy or a completely market oriented economy have somehow failed to achieve the developmental goals set for themselves (Martinussen, 1997). The reasons for this would be discussed in detail later in this paper. Suffice to say that many countries that followed the Bretton Woods dictated model of development that emphasized privatisation, deregulation and opening up of their markets for foreign investment