Issue 108 - Introduction - How Neoliberlism Fails to Alleviate Poverty

introduction how neoliberalism fails to alleviate poverty

Globally, we have the resources to eradicate poverty and hunger, both in rural and urban communities. However, this can only be achieved by moving away from the current neoliberal economic model, which advocates market-based solutions to poverty with minimal interference by governments

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The push for expanded foreign direct investment into poor countries and increased exports is based on the false premise that the revenues generated will “trickle down” to the poor. This is the basis of the poverty alleviation approaches of international financial institutions like the World Bank and trade bodies including the World Trade Organization.
This kind of growth-oriented development has the primary goal of creating markets and wealth for the largest transnational corporations, the richest countries and the elite. Simultaneously, this approach impedes regulation by national governments and wipes out domestic industries and vulnerable small-scale businesses. Local communities are disempowered and left with polluted rivers, diminished forests and degraded land. In short, this kind of development is profitable for corporations and governments but is often devastating for rural, natural resource dependent communities. This section provides a few examples of neoliberal schemes that claim to reduce poverty, but in fact have just the opposite effect, in no small part due to their damaging impacts on the environment. Trade liberalization, promoted by organizations like the World Trade Organization (WTO), exploits natural resources and increases rural poverty.

Development aid, through governments and international financial institutions (IFIs) like the World Bank and IMF, promotes policies and projects that hurt the poor and the environment alike. Transnational corporations, the biggest winners of the neoliberal agenda, have been key to the push for socially and environmentally damaging industrialized and geneticallymodified agriculture around the world. They are now profiting from various ‘poverty alleviation' partnerships with United Nations agencies with the not-so-hidden agenda of gaining access to new markets. The privatization of natural resources and services, pushed by the corporate, trade and IFI lobbies, decreases people's access to and control over natural resources and increases poverty. Policies to implement the Millennium Development Goals, however welcome, are doomed to fail in the long run as they leave the current environmentally and socially exploitative system intact.