Liberalism for World Development

Hubert H. Humprey stated that liberalism, above all, means emancipation - emancipation from one's fears, his inadequacies, from prejudice, from discrimination, from poverty. That could not be further from the truth in the world of economy.

Collaboration and agreements among countries are very important in today’s world development. Economies that have remained closed from the rest of the world have not been able to attain and sustain growth. Many developing countries have gained competitive advantages and growth by implementing open market and trade liberalization.

Only through liberalism can economic potential be unleashed. Trace back to origin of liberalism, the Italian merchants wanted more freedom and rights and encouraged free trade in order to move towards a more liberal, innovative system. We will show you that free trade and innovation are the only viable and compatible models for development. We will also show that inevitably the world is moving towards embracing the liberal model.

South Korea and Chile are two countries that transformed their economies from the poorest to the one of the best performers. They were both politically ruled under authoritarian regime but later on they all adopted liberal economy.

In South Korea, post economic reform, their economy went to another level. GDP hits $1 trillion in 2007. South Korea is one of the fastest growing economies in the world, a huge contrast to its northern neighbor. In Chile poverty was reduced to half post the reform. It’s the first nation in South America to win membership in the Organization of Economic Cooperation and Development, an organization restricted to the world's richest and best-run countries

What exactly have they done?

They certainly have done few things right. They transformed to a free market economy, simplified business regulations, strengthened property rights, eased tax burdens, increased access to credit and foreign sources. In addition to that they reduced the cost of exporting and importing, made barriers for international trades minimum.

Can’t we develop without liberalism?

The answer is yes! However to what extent? Let’s take a look at the case of South Korea. The country was ruled by autocrats for almost 3 decades and it had made a good progress from poverty to a state of welfare. However at one point the growth stopped and the economy was hurt by political upheavals. Why? Because it is inevitable that people want to feel liberated from all strict restrictions and decide what’s best for them. Economic development can only reach a certain point under authoritarian regime. Korea managed to continuously improve its economy due to the political and economic reform. As a result Korea has become a much more democratic society and its economy has become more innovative and diversified. We can conclude that when the government had a strict system of control, it was difficult to succeed without the support of the state, now the government is smaller and intervenes less; people feel they can become successful.

Why is the notion of creativity and innovation is only possible in a liberal environment? Because one can force people to work harder but one can't order them to think better or be more creative. That change has to take place inside people's heads. It goes without saying that one can’t create an innovative economy without civil liberties.

The Trend
In the last two decades, a large number of developing countries have adopted economic reforms and trade liberalization. The reform took place in the 1980s and gained momentum during the 1990s most notably in Asia, Latin America and Africa. Major developments from economic reform have come from liberalization of trade and privatization.
The world has become more interconnected than ever. There are 350 Free Trade Agreements among countries. On average Foreign Direct Investment accounts for 6% of a country’s GDP. Export volume in 2008 is 46% of one’s GDP. The economic interdependence, the increasing roles of international organizations and non-state actors shape the world as it is today. Therefore liberalism is more relevant than ever.

Conclusion
In 1967, President Nyerere of Tanzania proclaimed that in order to maintain independence and freedom the country to be self-reliant in every possible way and avoid depending upon other countries for assistance. Tanzanians can live well without depending on help from outside if they use their land properly.
This gave rise to all important industrial enterprises being placed under government control and they often brute force which caused distrust and bitterness among the people. As a result there’s a sharp decline in workers’ morale hence lower productivity. Consequently they only produced for their own needs and smuggled their crops into richer, more liberal neighboring countries like Kenya, where prices usually were many times higher than the controlled domestic prices. In a few years the country had gone from the greatest exporter to the greatest importer of food in Africa. Tanzania is now a democratic country. Economic reform gave result to positive growth in GDP. Access to primary education is improving and child mortality has declined more than a third since 2000.

With this we have proven that liberalism is the most compatible model for world development from the economic point of view. We have also shown that for the development to be sustainable, Liberalism is the most compatible model because it fosters creativity, innovation and promotion of welfare. My colleague Amanda will present the topic from social point of view.