The Evolution of Development Theory and Tourism - Tourism and Development: Concepts and Issues - page 49

moved in the direction of neoliberalism (Brohman, 1996b). The development
of economic neoliberalism was a reaction against the policies of strong state
intervention, including those promoted by structural dependency theorists.
Economic neoliberalism, also referred to as globalisation, focuses on free
trade and limited state involvement in the global economy. The neoliberal
'counterrevolution' was dedicated to counteracting the impact Keynesianism
had on development theory (Brohman, 1996b). Economic neoliberalism
gained popularity following the oil crisis in the early 1970s and the subse-
quent restructuring of international capitalism which led to a redefinition of
the role of the state and, thus, the end of Keynesianism and the welfare state
(Schuurman, 1993). The rise of conservative governments in the US, Canada,
Britain and West Germany in the 1980s continued to influence this revolu-
tion in thinking (Todaro, 1994). Neoliberalism draws on neoclassical eco-
nomic theory which 'treats people as atomistic individuals who are bound
together only through market forces' (Brohman, 1995: 297). It also has roots
in the work of Adam Smith and his principle of laissez-faire and David
Ricardo's theory of comparative advantage, which both call for a minimalist
approach to state involvement in economic transactions (Brohman, 1996b).
The movement favours supply-side macroeconomics, free competitive mar-
kets and the privatisation of state enterprises. It has also been referred to as
the 'Washington Consensus', where globalisation is seen as a process of inter-
national integration (Klak, 1998: 3). Developing countries are encouraged to
welcome private investors from developed countries. As outlined by Lal
(1985: 36), the problems of developing countries are not due to market prob-
lems but to 'irrational government interventions', including foreign trade
controls, price controls and inflationary financing of fiscal deficits. The
resulting shift placed new emphasis on 'supply-side factors, private invest-
ment, market-led growth and outward development while turning away
from older developmentalist policies based in demand stimulation, import
substitution, state intervention and centralized development planning'
(Brohmam, 1996b: 27).
The Washington Consensus refers to a set of policy recommendations
linked to agencies such as the World Bank and the IMF which include: fiscal
discipline; redirection of public expenditures; tax reform; financial liberalisa-
tion; adopting a single competitive exchange rate; trade liberalisation; elimi-
nating barriers to foreign investment; privatisation of state-owned enterprises;
deregulating market entry and competition; and ensuring property rights
(Storey, 2005). International lending agencies would provide loans to struc-
turally adjust receiving economies to follow the Washington Consensus.
Early structural adjustment models of development formed part of the mod-
ernisation paradigm and focused on mechanisms in the economy which
would transform a subsistence agricultural society to a modern urbanised
society (see Lewis, 1954, unlimited supplies of labour theory). Chenery and
Syrquin's (1975) comparative studies (cross section and longitudinal) on