**4. Neo-liberal trends and effects on global South cities**

The word Neo-liberalism etymologically is an amalgam of two words, namely 'Neo' which means 'new' and 'liberalism.' which connotes 'freedom and without let'. The simple literal translation is that it is a new and revived form of liberal political economic thinking. Impliedly, this definition suggest that there was a time liberal ideology ruled the political-economic thinking of the world; and with time got replaced by other ideological thinking, and has come back into the political-economic thinking with the new christened name- Neo-liberalism [10–13]. Proponents of this perspective see Neo-liberalism as a revived form of liberalism.

Another perspective of looking at Neo-liberalism is akin to the concept of 'Neoconservatism' which descended from and shares a lot of similarities with conservatism but represent a different thoughts altogether [14–16]. The implication of this school of thought is that neo-liberalism, albeit, share the same roots and similarities with liberalism it comes with a lot of embellishments to give it an independent school of thought. The key question is what is the essential thrust of Neo-liberalism thinking? What are its trends and how does it affect global south cities?

#### **4.1 What is neo-liberalism?**

The concept of neo-liberalism is fraught with polemics and varying interpretations in the literature that it defies uniform and integrated definition. These divergent opinions inhere from the fact that most literature discourse of neo-liberalism is largely approached from the point of critiques rather than an attempt at definition, description and postulations. The heterogeneity of opinions notwithstanding,

**39**

pursuit and property rights.

**4.2 What are Neoliberal trends and effects in global South?**

There is no doubt that we live in a globalized world, with various nation states linked together in such a way that the world is seen as a global village [23, 24]. The implication is that what happens in one region generate in some ways a ripple effects in other regions of the world. The neo-liberal thinking which was developed in the global west has since permeated and shaped the political and economic thinking in other regions especially in the global south. For instance, the major institutional

*Future Planning of Global South Cities with Inclusive Informal Economic Growth in Perspective*

neo-liberalism shares certain coherent characteristics, strands of thought and ideol-

The roots of Neo-liberalism can be traced to the realm of political-economy. As a successor to classical liberalism, it shares the belief that the best way to efficiently allocate resources is to leave it in the hands of free market forces. As Munck [17] rightly observes, neo-liberalism is an economic philosophy which believes that the best way to allocates resources is to give free reign to market forces and individual liberty to economic pursuit. Consequently, neo-liberals advocate for less government interference in economic activities as it undermines the fine logic of distributional efficiency of the market. A more concise definitions of Neo-liberalism were

*Neo-liberalism is in the first instance a theory of political economic practices that proposes that human well-being can best be advanced by liberating individual entrepreneurial freedoms and skills within an institutional framework characterized by strong private property rights, free markets and free trade ([18], p. 2).*

*Neo-liberalism is commonly thought of as a political philosophy giving priority to* 

Implicit in these definitions is that Neo-liberalism advocates for and promotes the freedom and liberty of individuals to pursue entrepreneurial activities, free exchange of goods and services and own private property. Inherent in these definitions is that the state should act as umpire and provide the necessary enabling environment for the individuals to actualize their potentials. Given this ensuing analysis, it is axiomatic therefore to conclude that modern day capitalism and the accompanying democratic philosophy is underpinned by Neo-liberal ideology. It is pertinent to note that neo-liberal thinking has evolved overtime with various prototypes at display in its shelf. These varying typologies descend from the literature polarization of the understanding of the role of the state in economic activities and the degree to which it should intervene. From the time of Adam Smith, who was the proponent of *classical liberalism* (believes that the state should steer clear from meddling into economic activities) and John Maynard Keynes, who is the father of *macroeconomics* and a firm believer that state should run the economy, other economists pitch their tents in between these polar ends. In the same vein, Neo-liberalism has various categorizations according to the limit of state's role in economic activities. Some extreme Neoliberals believe that the state should be abolished completely, they are referred to as 'anarcho capitalism,' while some others believe that there is need for a strong state whose role is to safeguard individual liberty and property rights [20–22]. The latter is referred to as *classical liberalism.* In a nutshell, Neo-liberalism is a political ideology that believes in the free reign of market forces as a best means of allocating resources with the role of state being to provide the enabling environment to protect individual freedom to economic

*individual freedom and the right to private property ([19], p. 224).*

*DOI: http://dx.doi.org/10.5772/intechopen.89145*

given by Harvey [18] and Blomgren [19] thus:

ogy that give it a unique characterization in the literature.

#### *Future Planning of Global South Cities with Inclusive Informal Economic Growth in Perspective DOI: http://dx.doi.org/10.5772/intechopen.89145*

neo-liberalism shares certain coherent characteristics, strands of thought and ideology that give it a unique characterization in the literature.

The roots of Neo-liberalism can be traced to the realm of political-economy. As a successor to classical liberalism, it shares the belief that the best way to efficiently allocate resources is to leave it in the hands of free market forces. As Munck [17] rightly observes, neo-liberalism is an economic philosophy which believes that the best way to allocates resources is to give free reign to market forces and individual liberty to economic pursuit. Consequently, neo-liberals advocate for less government interference in economic activities as it undermines the fine logic of distributional efficiency of the market. A more concise definitions of Neo-liberalism were given by Harvey [18] and Blomgren [19] thus:

*Neo-liberalism is in the first instance a theory of political economic practices that proposes that human well-being can best be advanced by liberating individual entrepreneurial freedoms and skills within an institutional framework characterized by strong private property rights, free markets and free trade ([18], p. 2).*

*Neo-liberalism is commonly thought of as a political philosophy giving priority to individual freedom and the right to private property ([19], p. 224).*

Implicit in these definitions is that Neo-liberalism advocates for and promotes the freedom and liberty of individuals to pursue entrepreneurial activities, free exchange of goods and services and own private property. Inherent in these definitions is that the state should act as umpire and provide the necessary enabling environment for the individuals to actualize their potentials. Given this ensuing analysis, it is axiomatic therefore to conclude that modern day capitalism and the accompanying democratic philosophy is underpinned by Neo-liberal ideology.

It is pertinent to note that neo-liberal thinking has evolved overtime with various prototypes at display in its shelf. These varying typologies descend from the literature polarization of the understanding of the role of the state in economic activities and the degree to which it should intervene. From the time of Adam Smith, who was the proponent of *classical liberalism* (believes that the state should steer clear from meddling into economic activities) and John Maynard Keynes, who is the father of *macroeconomics* and a firm believer that state should run the economy, other economists pitch their tents in between these polar ends. In the same vein, Neo-liberalism has various categorizations according to the limit of state's role in economic activities. Some extreme Neoliberals believe that the state should be abolished completely, they are referred to as 'anarcho capitalism,' while some others believe that there is need for a strong state whose role is to safeguard individual liberty and property rights [20–22]. The latter is referred to as *classical liberalism.*

In a nutshell, Neo-liberalism is a political ideology that believes in the free reign of market forces as a best means of allocating resources with the role of state being to provide the enabling environment to protect individual freedom to economic pursuit and property rights.

#### **4.2 What are Neoliberal trends and effects in global South?**

There is no doubt that we live in a globalized world, with various nation states linked together in such a way that the world is seen as a global village [23, 24]. The implication is that what happens in one region generate in some ways a ripple effects in other regions of the world. The neo-liberal thinking which was developed in the global west has since permeated and shaped the political and economic thinking in other regions especially in the global south. For instance, the major institutional

*Sustainability in Urban Planning and Design*

devil's workshop.

resources.

*3.1.6 Loss of natural ecosystem*

**3.2 Benefits of urbanization**

absence of a genuine means of livelihood, resorts are made to criminal activities for survival. This fits into the age-long proverbial saying; that an idle hand/mind is a

The springing up of urban sprawls is attended with the destruction of forests and natural reserves for squatter settlements. This leads to the loss of farm land

In as much as urbanization has negative effects on global South cities, however, there are immense benefits that accrue when cities get urbanized. Urban cities enjoy delivery of services in terms of supply of basic amenities such as water, electricity, and health attention. This flows from the fact that administrations of cities are usually planned. Different activities of city life are allotted to specific areas and are carefully monitored to ensure compliance. In comparative terms, life in the city is much more sophisticated and advanced than the rural areas. It boasts of better transport, communications, educational and health facilities. There is much more convenience and comfort in the city. Finally, products of different types both local and foreign normally find their way into the city. Larger markets are cited in the city and these attract buyers and sellers from diverse places. This result to growth in commercial activities much more than what obtains in the rural areas. Other benefits include: growth in economy, social and cultural integration, efficient use of

The word Neo-liberalism etymologically is an amalgam of two words, namely 'Neo' which means 'new' and 'liberalism.' which connotes 'freedom and without let'. The simple literal translation is that it is a new and revived form of liberal political economic thinking. Impliedly, this definition suggest that there was a time liberal ideology ruled the political-economic thinking of the world; and with time got replaced by other ideological thinking, and has come back into the political-economic thinking with the new christened name- Neo-liberalism [10–13]. Proponents

Another perspective of looking at Neo-liberalism is akin to the concept of 'Neoconservatism' which descended from and shares a lot of similarities with conservatism but represent a different thoughts altogether [14–16]. The implication of this school of thought is that neo-liberalism, albeit, share the same roots and similarities with liberalism it comes with a lot of embellishments to give it an independent school of thought. The key question is what is the essential thrust of Neo-liberalism

The concept of neo-liberalism is fraught with polemics and varying interpretations in the literature that it defies uniform and integrated definition. These divergent opinions inhere from the fact that most literature discourse of neo-liberalism is largely approached from the point of critiques rather than an attempt at definition, description and postulations. The heterogeneity of opinions notwithstanding,

which ordinarily would have been available to city dwellers for farming.

**4. Neo-liberal trends and effects on global South cities**

of this perspective see Neo-liberalism as a revived form of liberalism.

thinking? What are its trends and how does it affect global south cities?

**38**

**4.1 What is neo-liberalism?**

frameworks that drive neo-liberal thinking are capitalism (economic mode of production) and democracy (political ideology). Prior to the era of neo-liberalism of the nineteenth and twentieth century, various countries of the global South cities adopted various types of political-economic ideological formation. In sub-Saharan African countries for instance, depending on their historical experiences, there were divergent political experimentations. While some practiced various forms of western democratic type of government, others practiced eastern type of communism and yet others experimented on domesticated forms of African socialism. At some point, military type of centralized totalitarian government became the vogue among many countries in the global south nations. However, with the increased specter of neo-liberal thinking there is an overwhelming convergence in the adoption of western democracy as the best form of political ideology. The tenets and values of western democracy has become so internationalized that there is instant global rejection of any overthrow of any democratically elected government by way of coup d'état. Fascism and totalitarian government in any form, including apartheid regime were denounced and repudiated. As a result, what you see, albeit there are various shades, is the enthronement and respect of democracy as the dominant global political thinking; many thanks to neo-liberalism.

The question is how did this neo-liberal thinking permeate the political thinking of these global south cities? The answer to the question takes us back to the nature of the relationship between the global south nations and their previous colonial or trading masters. During and after colonialism the relationship between these developing countries and their colonial masters continued in the form of dependence of the former on the latter. This subservient relationship shifted from direct political and administrative dependence during colonialism to economic dependence during post-colonial dispensation. For instance, most advanced western countries used loans and grants conditionalities to compel these nations to politically align to liberal democracy and to deregulate their economy. The Breton woods institutions (IMF and World Bank) that are used to supervise many of these credit handouts would usually require the beneficiary nations to structurally adjust their economy to align to neoliberal thinking before the deal is struck.

Another manifest influence of Neo-liberal thinking in the global South economies is the unprecedented bilateral, multilateral and international growth in trade relations between and among countries of the various geographical divides. Neo liberalism has supported the removal of barriers and inhibitions to global trade to the extent that most global south cities are net importers of basic necessities of life. Several institutions such as World Trade Organization (WTO), United Nations Conference on Trade and Development (UNCTAD) and a plethora of regional and sub-regional trade agencies were conceived to facilitate international trade. The implications are that the specter of neo-liberalism has left in its wake a clear dismantling of the structural inhibitions to international trade. This move is further supported by credit, aid and donor granting agencies that insists that these barriers would be removed as a condition for continuous financial aid to these countries. The anticipated and sometimes unintended consequences of these unequal economic relations are the growing huge indebtedness of these developing countries to international financial institutions.

The concluding remark of this section is that neoliberalism provides the theoretical context that explains the spiraling growth of informality in the global South cities. Neo-liberalism supports a milieu that promotes free economic enterprise with minimal, if any interference from the state. The implication of the tenets of neoliberal theory is the roll back of the state and by extension, the reduction of formal sector which unfortunately, contemporary formal urban planning in developing countries superintends [25, 26]. The growth of urbanization and complimentary

**41**

*Future Planning of Global South Cities with Inclusive Informal Economic Growth in Perspective*

Defining informal economy or informal sector has attracted much research within academic circles. In literature, hence, there is a plethora of definitions and perspectives of informal economy. Many more definitions and re-definitions are still on-going. For this study, however, two definitions are trite: (i) The last general discussions of informal economy by the ILO tripartite constituents in 2002 International Labour Conference… define informal economy to include "all economic activities that are—in law or practice—not covered or insufficiently covered by formal arrangements"; and (ii) Employment in the informal sector was defined by the 15th International Conference of Labour Statisticians as "including all jobs in informal sector enterprises, or all persons who, during a given reference period, were employed in at least one informal sector enterprise, irrespective of their status

deregulation of the economy as supported by neoliberal thinking and forces provides theoretical explanation of the growth of informal sector in developing

**5. Predominance of the informal economy in global South**

in employment and whether it was their main or a supplementary job".

operations, and (d) goods and services produced require a lot of labour.

Researchers have attempted to delineate the main threads that run in the several definitions. For instance, Kasarda and Grenshaw [27] after synthesizing several works submitted that the conceptualization of informal economy were hinged on four main characteristics namely: (i) size of firm; (ii) source of financial and material resources; (iii) the degree of linkages between regulated and unregulated sectors and (iv) the extent to which firms comply with government regulations. With regards to the main characteristics of enterprises that operate in the informal sector, Becker [28] presented the following characteristics; (a) start-up and conditions are minimal; (b) activity level is normally small with a number of workers; (c) normally, formal education does provide the expertise required for business

The informal economy or sector had existed in various forms in the pre-historic times. In literature, however, two research works are credited with popularizing the concept. The honor of "discovering" the concept has frequently been given to Keith Hart, a British Anthropologist, as a result of the work he did in Ghana from the mid-to-late 1960s [29]. The second work was the research by the International Labour Organization (ILO) alongside the United Nations Development Programme (UNDP) Employment Mission to Kenya in 1972 [30]. These research efforts are believed to have greatly popularized the use of the term and as a result triggered off much research in that field. Going through literature, however, reveals that each bloc/country within the economies in the global south regions have their peculiar

**5.2 Predominance of informal economy in Global South: Statistical evidence**

Evidence is rife in research literature concerning the prevalence of informal economy in the Global South. On a global scale, World Bank [31] observed that an equivalence of two-thirds of the entire workforce is employed in the informal sector. On the African continent [32] observe that a good junk of economic activities are taken-up by the informal sector notably in mining, finance, commerce and manufacturing. Xaba et al. [33], in his sub-Saharan African countries' study has

*DOI: http://dx.doi.org/10.5772/intechopen.89145*

economies of the global South.

**5.1 Origin of informal economy**

version as regards the origin of informal economy.

deregulation of the economy as supported by neoliberal thinking and forces provides theoretical explanation of the growth of informal sector in developing economies of the global South.
