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Being a developing country, this government is presented with the opportunity to choose which economic model to champion.

The Neoliberal Option

The narrative of internationalized capitalism, as espoused by Thomas Friedman, is that globalization is inevitable and thus all counties will ultimately don the laissez-faire ‘Golden Straightjacket’. This entailed privatization of state-owned enterprises, maintains low inflation, reduction of government, liberalize trade, deregulation, floating the dollar, balance the budget and privatization.[1] It will become apparent that this concept excuses many side-affects of such an economic theory.

According to neoliberalism, despite the goal of achieving national self-sufficiency, nationalization will lead to ruin.[2] The concerns of globalization, among many, are de-industrialization, labour exploitation, and the localized alternative is unfounded. The first is considered to be a ‘pauper labour argument’, which claims that high-income economies cannot compete with low wage mass Chinese workers.[3] This anti-competitive mindset refuses to realize that China is benefiting from high-income countries that make goods and services the Chinese wish to buy and vice-versa. Trade is not a zero-sum game, but is mutually enriching.[4] In regards to labour, it is proposed that the success of developing countries is built on exploitation.[5] This is considered to be unfair, as it will establish industry and force the economy to experience rapid growth and ultimately liberate the rural peasantry and offer social mobility.[6] The imposition of protectionism and trade union bargaining power will block industrialization and lead to unemployment.[7] Finally, localization is viewed as ‘new millennium collectivism’, which will see four major consequences. Firstly, subsistence farming risk harvest failure, localized economies will destroy the surrounding environment, downward efficiency due to a lack of competition and finally a collapse in trade.[8] Essentially, nationalization is considered utopian and thus will lead to mutually assured impoverishment and tyranny.[9]

As explained above, neoliberalism will excuse any misfortune, including labour exploitation, as long the result is an improved economy.

The Economic Nationalist Alternative

Despite the neoliberal declarations, they have proven to be a failure themselves. By lowering tariffs, nations suffered from a stagnating economy and growth lower than the days of protectionism.[10] Essentially, nationalism has seen developing countries advance by using protection, subsides and other government interventions, as seen in Singapore, India, China and South Korea.[11]

For instance, independent South Korea developed their own policy: high levels of tariffs and non-tariff barrier, public ownership of large segments of banking and industry, export subsides, domestic-content requirements, patent and copyright infringements and restrictions on capital flows.[12] India also gained economic success via protectionism, by imposing server restrictions on foreign investment, entry and ownership restrictions, and performance requirements.[13]

The examples of the Asian Financial crisis and Chile exemplify this argument. Those Asian nations that resisted neoliberalism, not only survived the crash relatively unscathed, but also are now thriving.[14] Contrastingly, neoliberal Chile lost its manufacturing ability and is now reliant on natural-resources-based exports and cannot move towards higher-productivity activities and thus suffers from a limited of prosperity.[15]

Conclusion

In conclusion, the argument of neoliberalism is an inversion of reality. It espouses the worldview of a benevolent tyranny, for it promotes the creed of the greater good. Comparatively, countries that resisted such economics and retained national independence, are further advanced and can survive and recover from global financial crisis much better than their neoliberal counterparts. Therefore, I will strongly suggest the nationalist approach.

[1] Ha-Joon Chang, (2008) Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism, New York: Bloomsbury Press, Chapter 1. p. 20.

[2] Martin Wolf, (2004), Why Globalisation Works, New Haven and London: Yale University Press, Chapter 10. p. 174.

[3] Martin Wolf, (2004), Why Globalisation Works, New Haven and London: Yale University Press, Chapter 10. p. 175.

[4] Martin Wolf, (2004), Why Globalisation Works, New Haven and London: Yale University Press, Chapter 10. p. 180.

[5] Martin Wolf, (2004), Why Globalisation Works, New Haven and London: Yale University Press, Chapter 10. p. 185.

[6] Martin Wolf, (2004), Why Globalisation Works, New Haven and London: Yale University Press, Chapter 10. p. 185.

[7] Martin Wolf, (2004), Why Globalisation Works, New Haven and London: Yale University Press, Chapter 10. p. 187.

[8] Martin Wolf, (2004), Why Globalisation Works, New Haven and London: Yale University Press, Chapter 10. p. 195-198.

[9] Martin Wolf, (2004), Why Globalisation Works, New Haven and London: Yale University Press, Chapter 10. p. 199.

[10] Martin Wolf, (2004), Why Globalisation Works, New Haven and London: Yale University Press, Chapter 10. p.199.

[11] Ha-Joon Chang, (2008) Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism, New York: Bloomsbury Press, Chapter 1. p. 29-30.

[12] Dani Rodrik, (2001), “Trading in Illusions”, Foreign Policy, Issue 123, March/April. p.59.

[13] Ha-Joon Chang, (2008) Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism, New York: Bloomsbury Press, Chapter 1. p. 30.

[14] Ha-Joon Chang, (2008) Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism, New York: Bloomsbury Press, Chapter 1. p. 29.

[15] Ha-Joon Chang, (2008) Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism, New York: Bloomsbury Press, Chapter 1. p. 31.

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