Neoliberalism, also called free market economy, is a set of economic policies that became widespread in the last 25 years. The concept neoliberalism, have been imposed by financial institutions that fall under the Bretton Woods such as the International Monetary Fund (IMF), World Trade Organization (WTO) and World Bank (Martinez & Garcia, 1996). One of the famous economists published a book called “The Wealth of Nations” in which he said in it that free trade is the best way to develop nations economies (Martinez & Garcia, 1996). He and other economists also encouraged the removal of government intervention in economic matters, no restrictions on manufacturing, removing borders and barriers between nations, and no taxes (Martinez & Garcia, 1996). The main goal of the economic globalization was to reduce poverty and inequality in the poorest regions. However, the effects of the neoliberal policies on people all over the world has been devastating (MIT, 2000).
The neoliberal policies have benefited some people in generating great wealth for them, but controversially, the policies have failed to benefit the people who live in extreme poverty and those people are the most in need for financial support (Makwana, 2006). In the last 2 to 3 decades, the wealth disparity between nations as well as within nations has increased. Currently, one out of every 5 children in the United States is in a state of poverty, continual hunger, insecurity and lack of health care (MIT, 2000). This situation is becoming even more desperate. Between 1960 and 1980, the developing countries’ economic growth was 3.2 percent. Then it dropped significantly to 0.7 percent between 1980 and 2000, and this is the period when neoliberalism was dominating the economic globalization. At the same time, China did not follow the neoliberal economic policies, and its annual economic growth grew to over 8 percent (Makwana, 2006).
Moreover, the government economists used the annual economic growth to measure the progress in the developing countries. While we know the economic growth has benefits, the evidences show that those benefits did not trickle the 986 million people living in extreme poverty who represent 18% of the world population (Makwana, 2006). Therefore, both of the benefits of economic growth and the poverty levels have proved to be impossible because of the insufficient statistical measurement applied (Makwana, 2006). The economic growth is perfect for the corporations because it helped them in increasing their profits, productions, economic activities and political influence (Makwana, 2006). However, this has caused the inequality to grow more across the globe and the inability of the poor people to afford the high market prices.
Neoliberalism applies political forces to the advantage of the powerful and wealth at the expense of other nations. The North American Free Trade Agreement (NAFTA) is an example of free market that...