In conjunction and with the simultaneous erosion of influence of organization

In conjunction and with the simultaneous erosion of

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In conjunction and with the simultaneous erosion of influence of organization such as international labour Organization (ILO), the United Nation Development Program (UNDP), and the United Nation Conference on Trade and Development (UNCTAD), which more fully represent the views of LDC delegates, it was inevitable that the neoconservative, free market challenge to the interventionist arguments of dependence theories would gather momentum. The central argument of the neoclassical counterrevolution is that underdevelopment results from poor resource allocation due to incorrect pricing policies and too much state intervention by overly active developing nation governments. According to them what is needed is not a reform of the international economic system, a restructuring of dualistic developing economies, an increase in foreign aid, attempts to control population growth, or a more effective developing planning system. Rather it is simply a matter of promoting free market and laissez faire economics within the context of permissive government that allows the magic of the market place and the invisible hand of market prices to guide resource allocation and stimulate economic development. They made emphasis to the Asian Tigers w hich embraces “free market” approach. The neoclassical counterrevolution can be categorise under three different approaches: 1. The free Market approach : it argues that markets alone are efficient- product markets provide the best signals for investments in new activities, labor markets respond to these new industries in appropriate ways; producers know best what to produce and how to produce it efficiently, and product and factor prices reflect accurate scarcity values of goods and resources now and in future. Competition is effective, if not perfect; technology is freely available and nearly costless to absorb information is also perfect and nearly costless to obtain. Under these circumstances, any government intervention in the economy is by definition distortionary and counterproductive. Free- market development economist have tended to assume that developing world markets are efficient and that whatever imperfections exist are of little consequence. 2. Public choice theory : this is also known as new political economy approach, it goes even further to argue that government can do nothing right. This is because public-choice theory assumes that politicians, bureaucrats, citizens and state act soley from a self-interested perspective, using their power and authority of government for their own selfish ends. Citizens use political influence to obtain special benefits from governments policies, politicians use government resources to consolidate and maintain positions of power and authority. Bureaucrats and public officials use their positions to extract bribes from rent seeking citizens and to operate protected business on the side. The net result is not only a misallocation of resources but also a general reduction in individual freedoms. The conclusion, therefore, is that minimal government is the best
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