Economics
  • ISSN: 2155-7950
  • Journal of Business and Economics

Market Economy and Its Role in Poverty in Africa: Myths and Realities

 
 
Wilfred Lajul
(Philosophy Department, College of Humanities and Social Sciences, Makerere University, Uganda)
 
 
Abstract: This paper discusses the claim that free market economy is the solution for poverty in developing countries. Lazonick disagrees with this claim arguing, market economists’ tendency to see developed markets in labor, capital and products as causes rather than consequences of economic development is misleading (2003, p. 14). The hypothesis is that for economic development to take place, much more than free market economy is required. The 2009 United Nations Report on the World Social Situation confirms that, “The empirical evidence derived from the outcomes of economic liberalization indicates that excessive reliance on markets and the private sector carries high risks” (2009, p. 111). The fundamental problem according to Lazonick is that Western economists lack a theory of economic development that can explain the successful growth of the wealthy nations (2003, p. 14). The question is whether the market economy is the solution or the cause of poverty in developing economies. Consequently, the myths and realities of free market economy are discussed; analyzing the link between market economy and poverty in the world in general, with specific reference to Sub-Saharan Africa. The hope is to derive an economic philosophy that can propel development in developing countries without relying solely on the free market economic principles.
 
 
Key words: Africa; markets; economy; poverty
 
JEL codes: A10, A11, A12, A13, A14




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