Question 1
- The presence of several conditions that inhibit investment- The implementation of neoliberal reforms faces challenges of inflation and high interest rates alongside other challenges. In most cases, the assumption that the two are the only factors that hinder the effectiveness of the reforms implemented in various countries results in the failure of the neoliberal reforms (Rapley, 1996). Authorities embark on activities that seek to lower the two conditions. However, the presence of other conditions makes their engagements less effective. Amongst the known conditions is the action of private investors awaiting the government to make the first move for them to invest. Another condition is demand compression. Governments enact this measure to free goods for export. However, it may end up causing undesirable consequences. For example, Niger’s measures of demand compression resulted in a recession instead of increasing goods for export.
- Failure of privatization to work under some circumstances- At times, privatization fails to offer the desired results due to its selective nature. Government-owned firms are willing to engage themselves in the production of goods and services that confer benefits to many people. For example, the Banque Ivorienne de Development funded several successful private firms, although it suffered bankruptcy (Rapley, 1996). On the contrary, private firms are only willing to invest in production that promises good returns in the future. They ignore sectors that may be important to the nation but embrace the profitable ones.
- Failure of trade liberalization under some circumstances- Trade liberalization negatively affects economies if it is not implemented with the necessary level of discrimination. For example, the imposition of quotas by first-world countries leads to a tenfold loss amongst third-world countries (Rapley, 1996). The revenue lost due to protectionism is by far larger than what third world countries gain from the foreign aid offered by the first world countries.
Question 2
The moral critique of structural adjustments explores the moral issues that arise due to structural adjustments in various countries. Rapley explains that a significant majority of the countries that have pursued structural adjustments have experienced issues that arouse the question of the morality of the courses of action (Rapley, 1996). He explains that, in most cases, the measures implemented are consequential for some people but beneficial to others. For example, some people get rich during the implementation stage, while others face increased poverty, malnutrition, and reduced purchasing ability. For this reason, governments are supposed to check on the structural adjustments being implemented. Doing so can ensure fairness for all as opposed to benefitting some at the expense of others.
Rapley also explains the perspectives of other people regarding the morality of structural adjustments. Amongst the group of people he explores are the leftists. He explains that leftist theorists condemn income inequality for the negative effects it causes on the economy (Rapley, 1996). They posit that there cannot be a trade-off between welfarism and economic growth. Another group of persons consists of those who argue for the implementation of structural adjustments. They postulate that it is incorrect to blame structural adjustments for the negative events affecting various countries. They believe that some ills observed in the last two decades would have been worse if structural adjustments had not been implemented. They also explain that the inequality in wealth distribution caused by structural adjustments is a precursor for economic development in the long-term. For this reason, structural adjustments may be considered important engagements in securing the welfare of future generations.
Reference
Rapley, J. (1996). Neoclassical Reform in Practice. Understanding development: Theory and practice in the third world. Psychology Press.
