Advantages and Disadvantages of Neoliberalism/Neoliberal Economic policy in General and the case of Ethiopia in Particular

Abstract

Introduction: The same dictionary describes Neoliberalism also, which is said to be “a modified or revived form of traditional liberalism, [especially] one based on belief in free market capitalism and the rights of the individual” (Oxford English Dictionary 1989a). Currently because of the age of globalization, the world is becoming to be conceived as a village. One of the major projects of globalization is the integration of the political economy of the less developed regions in to the global political economic order. Accordingly, during the past few decades the continent of Africa has been trying to integrate itself in to the international political economy either forcefully or by consent. Generally, it is obvious that the main theme of neoliberalist is a fundamentalist view of “leaving everything for the market and the private investors with no interference of the government on the economy except keeping law and order. Historical Background of Neoliberalism: Now a day, world is integrated and became a village. The driving force of this integration is the ideology of Neoliberalism. Under this integration states are recommended or forced to open up their markets to foreign companies competitions, to minimize the role of the government in the economy including minimizing the government expense for social security and social goods, to create fertile grounds for the market to be the only means to distribute the wealth of a nation and the prices of goods and services to be determined based on the principles of demand and supply (Tewdros, 2011: iii). According to Saad-Filho and Johnston (2005:1), “we live in the age of neoliberalism”. The policy of “neoliberalism can be traced to the late 1960‟s and early 1970s as a particular strategic response to the crisis of Keynesianism” (Fassil, 2008:506). It was started in 1960s by a group of professors from Chicago University mainly by Milton Friedman. Milton Friedman (1912-2006) was an American economist, statistician and author who taught at the University of Chicago for more than three decades. It is an ideology based on economic liberalism. The ideology favors economic that minimize the role of the state in the management of an economy and advocates a greater role for private business sector (Teshome, 2012:385).