One of the myths about globalisation that has been systematically
punctured over the past decade is that it would lead
to greater convergence of incomes between countries.
In fact the period after 2000 has been one of even more
uneven development in the world economy than in the
past.
It
has become evident that those analyses that still try
to peddle this line rely essentially on the fast economic
growth of China and to a lesser extent India, who together
make up more than one-third of the world' population.
And even so, greater rural-urban inequality within these
two countries makes a completely optimistic result hard
o establish.
However, on the question of the convergence between
the richest and poorest countries, it would be impossible
to have a debate. The data is unambiguous that the poorest
and least developed countries (hereafter LDCs) have
not performed well over this period, and the gap between
them and both the richest and the middle income countries
has grown substantially.
Of course, it is true that even among LDCs, there has
been a wide distribution of outcomes. For example, the
best performer, Bangladesh, grew at a very respectable
annual rate of 2.6 per cent per capita between 1980
and 2002, while the worst performers (Djibouti, Sierra
Leone, Haiti) all had per capita income losses of between
40 and 50 per cent. But there were only three clearly
good performers among LDCs: Bangladesh, Lesotho and
Uganda. The group of LDCs as a whole shows no movement
towards higher per capita incomes and nearly half of
them had negative growth rates.
What explains this growing divergence? What are LDCs
not only failing to catch up, but even experiencing
patterns of growth that widen the gap between them and
richer countries? A recent study by the economist Branko
Milanovic (''Why did the poorest countries fail to catch
up?'', Carnegie Papers No 62, Trade Equity and Development
Project, Carnegie Endowment for International Peace,
2005) tries to identify the factors.
This study at least helps to establish what was not
responsible. Mainstream economists, when faced with
such reality, have a typical response: ''The reforms
have been too slow, or too limited, or not deep enough.''
But Milanovic shows that even when ''reforms'' (which
are basically more neoliberal policies) have been slower
or less extensive than in other middle income developing
countries, this could have played at best a minimal
role. In fact, even this limited conclusion is unwarranted,
since Milanovic suggests that neoliberal reforms in
these countries started a decade after those in middle
income countries, whereas actually most LDCs (especially
those in Sub-Saharan Africa and Central or Latin America)
have been engaged in policies of privatisation and liberalisation
from the early 1980s, typically due to pressure from
multilateral aid institutions.
Similarly, the study shows that the LDCs did at least
as much trade liberalisation as other countries. The
average level of protection measured by tariff rates
is not different for LDCs than it is for other countries,
so this too is unlikely to have been a cause of poor
countries' bad performance. The lower ratio of trade
to GDP was therefore probably a result of lack of development,
rather than a cause of it.
The study also finds that the reliance on multilateral
lenders is unlikely to help the poorest countries. (It
could be added that this is also because such reliance
comes with greater insistence on the very policies that
have been associated with earlier lack of growth and
development.) There is another important insight: that
the much-touted positive roles of democracy and higher
education on economic growth are very difficult to discern
on the basis of the empirical evidence alone. ''Indeed,
it could be that both are primary goods, desirable in
themselves, instead of purely instrumental goods acting
as tools for higher income. In that sense, democratization
and better education in poor countries are worthy goals,
but neither seems to be an instrument for economic development
- particularly so if other enabling conditions, like
peace, are not present.'' (page 26)
Instead, the study highlights another potentially important
reason for the slow economic growth of the LDCs: the
implications of political and social instability. Milanovic
points out that one key factor associated with low growth
is war and civil strife. The poorest countries have
lost, on average, some 40 percent of their output through
much greater frequency of war compared with the rest
of the world. According to him, if we take the effect
of wars alone, we find that the entire relative decline
of the LDCs compared with the middle-income countries
can be thus explained. In other words, had prevalence
of war among LDCs been at the same level as elsewhere,
the LDCs would have at least kept pace with the rest
of the world.
This interesting conclusion of course begs a further
question: why are there so many more wars and civil
conflicts in these LDCs? It is worth noting that most
LDCs are not poor in terms of natural resources: many
of them are sites of major reserves and ongoing extraction
of important ores and minerals, as well as producers
of agricultural commodities that require very specific
natural conditions. In fact there have been those who
have argued that it is precisely this natural wealth
that has been a curse for these countries, attracting
national and international bees to the honey pot in
the scramble for accessing or controlling such resources.
It is no secret that local conflicts have been stoked
by outside, and imperial, interests.
Aside from such considerations, however, there is another
sense in which we should not be surprised at the higher
levels of violence in LDCs. When substantial populations
are at the margin of subsistence, even small changes
in territorial access or economic policies can have
major implications for life and basic conditions of
living. So struggles over even what appear to be relatively
minor issues are fought aggressively and bitterly, because
often what is at stake is sheer survival.
So, in a very basic sense, the extent of political conflict
and instability in particular countries also has material
foundations, even though the links are not always so
apparent. And this vicious spiral in turn can be traced
to certain kinds of neoliberal policies characteristic
of current imperialism, which are affecting not only
the world economy but especially these particular countries.
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