Neoliberalism, as an economic and political philosophy, significantly damaged industries in the Global South by enforcing policies that prioritized deregulation, privatization, and free trade.

These policies, often imposed through international financial institutions like the World Bank and the International Monetary Fund (IMF), dismantled state-led development models and exposed nascent industries to global competition they couldn't possibly win.

The End of State-Led Development

Following decolonization, many countries in the Global South adopted state-led development strategies. These strategies were designed to build strong, diversified economies by protecting domestic industries with tariffs and subsidies, and by nationalizing key sectors like energy and telecommunications. This approach, often referred to as import-substitution industrialization (ISI), aimed to reduce dependence on colonial powers and create self-sufficient, modern economies. While not without flaws, these policies led to significant industrial growth in many developing nations throughout the mid-20th century.

However, in the 1980s, a severe debt crisis swept the Global South. To get loans and assistance, many countries were forced to accept Structural Adjustment Programs (SAPs) from the IMF and the World Bank. These programs were a direct application of neoliberal principles and came with strict conditions:

• Privatization of state-owned enterprises: This forced governments to sell off national assets, often at bargain prices, to multinational corporations.

• Deregulation: The elimination of labor laws, environmental protections, and price controls.

• Trade liberalization: The forced removal of tariffs and other trade barriers.

These conditions effectively ended the state-led development model that had been working to build up domestic industries.

The Consequences of Trade Liberalization

The most devastating effect of neoliberalism on industries in the Global South was trade liberalization. The removal of tariffs meant that cheap, mass-produced goods from industrialized countries could flood local markets. Domestic industries, which were often smaller and less efficient, could not compete with the low prices and scale of multinational corporations. This led to a rapid process of de-industrialization in many countries.

A key argument of neoliberalism, based on the theory of comparative advantage, was that these countries should specialize in producing what they were best at, usually raw materials and agricultural goods, and trade for everything else. This argument, however, ignored the fact that the prices of raw materials are highly volatile and tend to fall over time, while the prices of manufactured goods and technology rise. This effectively locked many nations into a cycle of poverty and dependence, where they were forced to export cheap goods and import expensive ones.

For example, countries that had built up domestic textile or food-processing industries found them collapsing. The influx of cheap, subsidized agricultural products from the U.S. and Europe, for instance, devastated local farmers in Mexico, Ghana, and other nations, leading to mass unemployment and a rural-to-urban migration crisis.

The Role of Financialization and Capital Flows

Neoliberalism also pushed for the deregulation of capital markets, which allowed for the free flow of capital in and out of developing countries. While this was touted as a way to attract foreign investment, it also made these economies extremely vulnerable to sudden capital flight. When an economic or political crisis hit, foreign investors would pull their money out of the country, leading to a collapse of the currency and a financial crisis. This was a key factor in the Asian Financial Crisis of 1997-98 and other similar crises around the globe.

This financialization also led to a new form of "accumulation by dispossession," as described by Marxist geographer David Harvey. With neoliberal policies in place, wealthy elites and multinational corporations could acquire public assets and resources, previously held by the state, for a fraction of their value. This included land, infrastructure, and natural resources, which were then exploited for private profit, further concentrating wealth in the hands of a few and dispossessing local populations.

In conclusion, what often goes unexamined is how neoliberalism systematically dismantled the industrial foundations of many nations in the Global South. By forcing them to abandon protective policies and open their economies to unequal global competition, it reversed decades of hard-won economic progress, leaving many countries with an economic model that was structurally dependent and vulnerable to global market forces.