Conflict between Reformers and the Populists in Developing Countries

The Conflict of Ideologies

In many developing countries that are undertaking large-scale reforms in their economies, there is a conflict between reformers and populists among the policymaking elite on the kind of policies that have to be pursued for the economic welfare of the citizens. While the reformers want neoliberal and globalist policies to be implemented that would integrate these economies into the global economy and reap the benefits of foreign investment and greater share for the free markets, the populists want the countries to put welfare of the citizens first in the assumption that neoliberal policies work only for the privileged and the wealthy. The key aspect here is the ideological divide over whether neoliberal policies favor the skilled and the educated apart from the elites and leave those who are less privileged behind. In other words, the conflict is between those who believe that free markets and neoliberal policies benefit everybody and those who believe that handing out freebies and subsidies is the only way to bring those who are left out in the neoliberal paradigm up to the level of those who are benefiting from the reforms.

The Case of India as an Example of the Conflict

This conflict and divide between the reformers and the populists can be seen best in the way India has taken hesitant steps on the road to liberalization and economic reforms. Ever since the country started liberalizing in the 1990s, there has been a tendency to take one-step forward and two steps backward, as the reformers have been stymied by the populists in their attempts to introduce neoliberal reforms and globalize the economy. Often, this manifests itself in the manner of the reformers opening up a particular sector for foreign competition or undertaking reforms in the public sector enterprises only to be met with vociferous opposition to their attempts that result in stalled reforms and setbacks. A case in point is the recent passage of several populist schemes aimed ostensibly at the poor and the needy. While one does not dispute the fact that these schemes are needed to lift the poor out of poverty, the fact remains that India already doles out subsidies in a manner that exceeds the subsidies of many other countries. The key aspect here is that despite all these subsidies and sops, the underprivileged have not benefited which raises serious questions about the way in which these subsidies and welfare schemes and the populist policies are implemented.

Global Ideological Clash and the Present Situation

The other aspect about the conflict between the reformers and the populists is the manner in which the prevailing global situation affects the fortunes of these two opposing camps. For instance, when the world was divided into the Socialist camp led by the erstwhile USSR or the Soviet Union and the US led capitalist camp, many developing countries allied themselves with either of the two superpowers and followed socialism or capitalism. However, the fall of the Soviet Union pushed many socialist countries towards capitalism and for the decades of the 1990s and the 2000s, it seemed that capitalism had won the ideological battle. Of course, this was short-lived as the global economic crisis of 2008 proved that capitalism was also vulnerable to excesses and that the growth of the previous two decades was an illusion. Therefore, the situation in many developing countries at the moment is a state of confusion over reforms and populism and it is our view that it would take some time before equilibrium is established between the competing camps of reformers and populists. It would be safe to say that the present out of balance world is likely to persist being in a state of crisis for some time to come as the developing countries look towards the US and the Europe for the kind of economic ideology that has to be followed.

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The article is Written By “Prachi Juneja” and Reviewed By Management Study Guide Content Team. MSG Content Team comprises experienced Faculty Member, Professionals and Subject Matter Experts. To Know more, click on About Us. The use of this material is free for learning and education purpose. Please reference authorship of content used, including link(s) to and the content page url.

Managerial Economics