Global Politics: Poverty and Development PDF

CHAPTER 15 Poverty and Development ‘Poverty is the worst form of violence.’ M O H A N DA S KA R A M C H A N D G A N D H I ( 1 8 6 9 – 1 9 4 8 ) PREVIEW The issues of development and poverty reduction have become increasingly promi- nent since the end of...

CHAPTER 15 Poverty and Development ‘Poverty is the worst form of violence.’ M O H A N DA S KA R A M C H A N D G A N D H I ( 1 8 6 9 – 1 9 4 8 ) PREVIEW The issues of development and poverty reduction have become increasingly promi- nent since the end of WWII. In the early phase, this occurred as decolonization failed to bring about economic and social progress in what was then portrayed as the Third World, at the same time that industrially advanced western countries were experiencing historically unprecedented levels of economic growth. As global economic disparities widened, some argued that colonialism had given way to ‘neo- colonialism’, political domination having been replaced by more subtle but no less effective economic domination. Others heralded the emergence of a ‘North–South divide’. In this context, bodies as different as the World Bank and the IMF, on the one hand, and a host of development NGOs and activist groups on the other, came to view the task of reducing the gap between rich countries and poor countries as a moral imperative. However, poverty and development are complex and deeply controversial issues. Is poverty merely an economic phenomenon, a lack of money, or is it something broader and more profound? Does ‘development’ imply that poor societies should be remodelled on the basis of the rich societies of the so-called developed West? A further range of issues address the nature, extent and causes of global inequality. Is the world becoming a more, or less, equal place, and, in particu- lar, what impact has globalization had on global patterns of poverty and inequality? Finally, there have been passionate debates about the surest way of bringing about development. These debates have focused in particular on the merits or otherwise of the market-orientated approaches to development that have dominated espe- cially since the early 1980s. Have bodies such as the World Bank and the IMF failed the world’s poor? Do rich countries have a moral obligation to help poor countries? If so, how should that obligation be discharged: by providing international aid, cancelling debt, changing trading practices or whatever? KEY ISSUES  What is poverty?  How should ‘development’ be understood?  What are the key trends in global poverty and inequality?  Has globalization increased, or decreased, global poverty?  How successful have official development policies been?  Do international aid and debt relief work? 352  POVERTY AND DEVELOPMENT 353 UNDERSTANDING POVERTY AND DEVELOPMENT Poverty has been the normal state of affairs for most of world history. Even in well organized societies with advanced systems of rule (ancient China and Rome, the Incas and so on), economies were technologically simple with modest productivity levels and populations were overwhelmingly poor. Even most of those who were thought of as rich in their day would be poor by modern stan- dards. Poverty, thus, is not the exception; it has been the rule. The exception, from this perspective, is the wealth currently enjoyed in the modern West (see p. 26), and even this has occurred only fairly recently. It was only in the late eigh- teenth century that European and North American societies started to increase productivity in ways that defied the predictions of Thomas Malthus (see p. 408), who had warned that any improvement in productivity would simply be nulli- fied by demographic growth. How did western societies avoid this Malthusian trap? The answer to this question is ‘development’. Development was certainly associated with a series of innovations in technology and organization that led to the industrial revolution. Nevertheless, there is significant debate about precisely how the affluence of the developed West has been brought about, and, most particularly, about how affluence and development can best be replicated in parts of the non-western world. Before the complex and contested issue of development is considered, however, it is necessary to look more closely at what poverty is and how it can be measured. Defining and measuring poverty What is poverty? What distinguishes ‘the poor’ from ‘the rich’? If poverty reduc- tion is a goal of national, regional or global policy, it is necessary to understand what poverty is, and how it can be measured. However, poverty is a complex and contested concept. On the face of it, poverty means being deprived of the neces-  Development: Growth, the sities of life; that is, lacking sufficient food, fuel, shelter and clothing to maintain act of improving, enlarging or ‘physical efficiency’. In its original sense, this was seen as an absolute standard, refining; development is below which human existence became difficult to sustain. This means, for commonly linked to economic instance, that adult males must eat about 2,000–2,500 calories a day simply in growth, but the term is deeply order to maintain body weight. According to this view, poverty hardly exists in contested. developing industrialized states like the USA, Canada, the UK and Australia;  Absolute poverty: A even the poor in such countries live better than much of the world’s population. standard of poverty that is Absolute poverty is founded on the idea of ‘basic needs’, corresponding to phys- based on an income level or iological needs in Maslow’s (1943) ‘hierarchy of needs’ (see Figure 15.1). access to resources, especially However, the idea of absolute poverty may miss an important dimension of food, clothing and shelter, which are insufficient to ‘keep poverty. People may feel that they are poor not because they suffer from mate- body and soul together’. rial hardship and their basic needs are not met, but because they lack what others have got. They feel deprived in terms of the standards, conditions and pleasures  Relative poverty: A enjoyed by the majority in their society. In this sense, poverty is a social, and not standard of poverty in which merely physiological, phenomenon: it is based on people’s relative position in the people are deprived of the living conditions and amenities social order. Relative poverty defines the poor as the ‘less well off ’ rather than which are customary in the the ‘needy’. For instance, the Organization for Economic Cooperation and society to which they belong. Development (OECD) and the European Union (EU) both use a ‘poverty line’  354 GLOBAL POLITICS Self-actualization being meaning Esteem respect, recognition Social friendship, family, love Safety Security, protection Physiological Food, water, shelter, clothing Figure 15.1 Maslow’s hierarchy of needs that is based on a relative poverty threshold, which is set at an income level that is 50 per cent or less than that of the median household. In other words, people are considered to be ‘poor’ if their available income is substantially lower than that of a typical person in their country of residence. The concept of relative poverty nevertheless raises important political questions because it establishes a link between poverty and inequality, and in so doing suggests that reducing or eradicating poverty can only be achieved through the redistribution of wealth and the promotion of equality, as discussed later in the chapter. Whereas relative poverty is a subjective calculation, based on feelings of deprivation and disadvantage created by the gap between the poor and the rest of society, absolute poverty can surely be objectively defined. But at what level do people become absolutely poor? The World Bank (see p. 373), which has assumed growing responsibility for global poverty reduction, takes as a standard of extreme poverty an income level of a dollar a day, calculated at purchasing power parity (PPP). Based on its 2004 recalculation, which now uses $1.25 a day rather than $1 a day, the World Bank estimates that 1.4 billion people live at or below the international poverty line. Nevertheless, this calculation remains somewhat arbitrary, with some commentators preferring to use $2 a day or $2.5 a day. By the latter standard, the ranks of the world’s poor would more than double to 3.14 billion or 49 per cent of the world’s population.  Purchasing power parity: A However, there has been growing dissatisfaction with a narrowly income- calculation of purchasing power based definition of poverty. This stems from a recognition that poor people that takes account of the relative cost of living and the suffer from multiple deprivation involving a failure to meet their non-material inflation rates of different needs as well as their material needs. Amartya Sen (see p. 375) contributed to countries, sometimes based on such thinking in pointing out that famines often arise not from a lack of food, the ‘international dollar’. but from a complex of social, economic and political factors such as rising food prices, poor food distribution systems and government inefficiency. Poverty is  Positive freedom: Freedom defined in terms of self- therefore as much about restricted opportunities and the absence of freedom, in realization and the particular positive freedom, as it is about lack of income or resources. Such development of human thinking has placed greater emphasis on the notion of ‘human development’, capacities; freedom to be or do which has become central to the UN’s approach to global poverty, as reflected in something. its annual Human Development Reports. These reports review various issues  POVERTY AND DEVELOPMENT 355  The poor are often viewed as the victims of some form of social injustice. Poverty, in this sense, is something that happens to people, tending to demoralize and disempower even those thought of as the ‘deserving’ poor. Deconstructing... ‘POVERTY’  The widely accepted belief that wealth  As poverty is portrayed in terms of deprivation and is linked to hard work and ability suffering, it suggests that poverty equals ‘bad’ while implies that poverty is associated, at wealth equals ‘good’. As such, the concept of poverty least in part, with laziness and endorses a dominant materialist and consumerist personal failing. This suggests that the ethic. This ignores the idea that voluntary poverty poor are ‘undeserving’ and that may have moral and spiritual benefits, as advocated attempts to reduce poverty are both by some religious traditions, and it disregards the misguided and morally wrong. notion of ‘sufficiency’, as endorsed by some within the environmental and development movements. related to poverty and development and rank states on the basis of the Human Development Index (HDI). Development: competing visions Debates about poverty focus not only on the nature of poverty, but also on how it can best be explained and therefore how it should be tackled; that is, how ‘development’ can be brought about. However, the notion of development is surrounded by political and ideological controversy. What distinguishes a ‘devel- oped’ society from a ‘developing’ or ‘undeveloped’ one? Perspectives on develop- ment generally fall into two broad categories which we will call ‘orthodox’ and ‘alternative’. Orthodox view of development The orthodox view of development is rooted in economic liberalism. In this view,  Gross domestic product: The total value of all the goods poverty is defined squarely in economic terms, as a failure, through a lack of and services produced in an income or resources, to satisfy basic material needs. The reduction or even elim- economy, a measure of national ination of poverty is therefore clearly linked to the ability to stimulate economic income. growth, traditionally calculated on the basis of gross domestic product (GDP)  356 GLOBAL POLITICS Focus on... Human development Human development is a standard of human wellbeing  Leading a long and healthy life (life expectancy and that takes account of people’s ability to develop their health profile) full potential and lead fulfilled and creative lives in  Acquiring knowledge (education and literacy) accordance with their needs and interests. It is often  Access to resources needed for a decent standard of simply defined in terms of enlarging people’s choices. living (fuel, sanitation, shelter and so on) Influenced by Sen’s (1999) notion of ‘development as  Preserving resources for future generations (demo- freedom’, the idea has been most fully elaborated graphic trends and sustainability) through the Human Development Index, which has  Ensuring human security (see p. 423) (food, jobs, been used since 1993 to rank countries in the UN’s crime, personal distress) Human Development Reports. The key Human  Achieving equality for all women and men (educa- Development Indicators (HDIs) are: tion, careers/jobs, political participation) per head of population. Development, in effect, is synonymous with economic growth. But how is economic growth best stimulated? The central mechanism, from this perspective, is the free-market system. The virtues of the free market are that it gives full rein for individuals to pursue self-interest, providing incen- tives for people to work, engage in trade, set up business and so on, and that it ensures long-term economic equilibrium, helping to bring the forces of demand and supply (market forces) into line with one another. The market is thus the only reliable means of generating wealth, providing, indeed, the possibility of unlimited economic growth. ‘Backward’ or ‘under-developed’ societies are there- fore destined to be transformed into ‘modern’ or ‘developed’ ones. This view of development is reflected in modernization theory, which is evident, for example, in Rostow’s (1960) theory of the stages of economic growth. Rostow outlined five stages of economic growth, as follows:  Traditional societies – such societies are characterized by rudimentary tech- nology, pre-scientific values and norms and a subsistence economy.  Preconditions for take-off – at this stage societies exhibit a degree of capital mobilization (banks and currency) and start to develop an entrepreneurial class.  Take-off – this happens when the norms of economic growth are well estab- lished and sector-led growth becomes common.  Drive to maturity – this is characterized by growing economic diversifica-  Modernization theory: The tion, greatly reduced poverty and rising living standards. theory that there is a single,  High mass consumption – at this stage the economy is increasingly orien- linear path to development, tated around the production of modern consumer goods, with affluence reflected in the transformation of western countries from becoming widespread. traditional, pre-industrial, agrarian societies to modern, The orthodox view has dominated thinking on matters related to poverty, industrial and mass inequality and development since 1945. Its influence expanded in the 1970s and consumption ones. 1980s through the rise of neoliberalism (see p. 90) and the conversion of the  POVERTY AND DEVELOPMENT 357 A P P ROAC H E S TO... DEVELOPMENT Realist view Neo-Marxist thinking about development has been There is no realist theory of development as such. shaped by two main theoretical sub-traditions. Nevertheless, in explaining the phenomenon of Dependency theory highlights the extent to which, in economic development, realists have generally drawn the post-1945 period, traditional imperialism gave way heavily on the ideas of mercantilism. Mercantilism to neo-colonialism, sometimes viewed as ‘economic stresses the interplay between economics and politics, imperialism’ or, more specifically, ‘dollar imperialism’. particularly through the extent to which healthy and Despite enjoying formal independence and sovereignty stable domestic economies rely on a strong dose of (see p. 3), developing world states continued to be state intervention, especially in order to manage exter- subject to economic dependency through, for instance, nal trade relations (implying protectionism). Such a unequal trade relations, the impact of TNCs and biases view is highly sceptical of liberal claims about the within bodies such as the IMF and the World Bank that natural tendency of market economies towards equilib- favour the interests of industrially advanced states. The rium and growth, believing, always, that markets need other key neo-Marxist sub-tradition is world-system to be managed. theory (see p. 367), which portrays the world economy as an interlocking whole, composed of core, peripheral Liberal view and semi-peripheral areas. In this, economically The liberal approach to development is firmly rooted advanced and politically stable core areas dominate in the ideas of economic liberalism. Classical liberal and exploit peripheral areas that are characterized by economics draws heavily on individualist and rational- low wages, rudimentary technology and a dependence ist assumptions about human nature, placing a strong on agriculture or primary production. emphasis on the idea that human beings are primarily Amongst other critical approaches to development, motivated by the desire for material consumption. green politics has challenged the conventional empha- Liberalism therefore provides the basis for the ortho- sis on economic growth by championing the notion of dox notion of ‘development as growth’. From the liberal ‘development as sustainability’, usually linked to the perspective, the central mechanism for generating concept of sustainable development (see p.390). In this wealth is the market, which operates according to the view, economic growth must be balanced against its wishes and decisions of free individuals. The attraction ecological costs, a healthy environment being vital for of the market is that it is a self-regulating mechanism, meaningful development. For cosmopolitan theorists, which tends naturally to promote economic prosperity development should be understood in terms of the and well-being. However, individual acquisitiveness larger project of advancing global justice. Feminism and market forces are not always in themselves power- has been associated with various views about develop- ful enough to deliver economic development. For liber- ment. Some feminists argue that overturning gender als, ‘development failures’ stem from factors that are inequality must be seen as a key component of devel- internal to the society itself. These include cultural or opment, thereby highlighting the need to change social religious norms that inhibit individual self-seeking, structures, institutions and cultural practices in the rigid and authoritarian state institutions, chronic developing world. However, other feminists stress the corruption, and ethnic and tribal rivalries that subvert extent to which ‘development as growth’ is constructed civil order. The best way to overcome these obstacles is on the basis of masculinist assumptions, or the degree through market reform (privatization, financial dereg- to which women already play an important, if usually ulation, labour flexibility, tax cuts and so on) and the ignored, role in bringing about development. Post- integration of the national economy into the global colonialists, for their part, have sometimes challenged capitalist economy (free trade and an open economy). the very idea of development, advancing instead the notion of ‘post-development’. While conventional Critical views models of development involve the imposition of Critical approaches to development have been domi- western institutions and values on non-western soci- nated by neo-Marxists theories. These shift attention eties, ‘post-development’ allows each society to away from internal obstacles to development, to exter- embrace its own model of economic and social nal ones, particularly those that stem from the struc- progress, based on aspirations and a cultural heritage tural dynamics of the global capitalist system. that are authentic to the society itself. 358 GLOBAL POLITICS institutions of global economic governance and a growing number of states, led by the USA, to pro-market economic philosophy, and again in the 1990s through the widespread introduction of market reforms by former communist states. Nevertheless, the pro-growth and pro-market view of development has attracted growing criticism in recent years. As will later be seen in relation to development strategies, opponents have argued that economic reforms that expose countries to the vagaries of the market and the international trading system may be counter-productive, leading to economic and social dislocation rather than steady growth and the reduction of poverty. In the 1990s, such criticisms have focused in particular on the impact of ‘structural adjustment programmes’ (SAPs) (see p. 371), imposed by the International Monetary Fund (IMF) (see p. 469) and the World Bank. Opponents have, furthermore, questioned whether market-based solutions attend equally to the interests of all states and all regions of the world. Neo-Marxist critics, for instance, argue that the global capitalist system is characterized by deep structural imbalances. Alternative view of development The alternative view of poverty and development has become more prominent since the 1980s as disillusionment has grown with technocratic, top-down, pro- growth strategies. They have stemmed from various sources, including resistance movements in the ‘global South’ (see the North–South divide, p. 360), such as the Zapatista movement in Chiapas in Mexico (see p. 361) and peasant protests in the southern Indian state of Karnataka, UN agencies, development NGOs and their various forums, including the World Social Forum, and the broader anti- capitalist (see p. 70) or anti-globalization movement. However, there is no single or coherent ‘alternative’ package of ideas about development. While radical elements are strongly anti-western, anti-corporate and place a heavy emphasis on self-management and environmentalism, reformist elements may do little more than modify the application of orthodox liberal principles, seeking merely to rebalance the priorities of major states and the institutions of global economic governance. Nevertheless, certain general themes can be identified, the most important of which are as follows:  A humanistic view of poverty that emphasizes opportunity, freedom and empowerment (thus meeting material and non-material needs).  Self-reliance rather than reliance on wealthy states, international bodies or the market.  Ecological balance, sustainability and conservation of the ‘global commons’ (water, land, air, forest).  Social and cultural inclusion through respect for cultural diversity and the interests of marginalized groups such as women and indigenous groups.  Local control achieved through community action and democratic partici- pation.  The view that poverty has a structural character, stemming from disparities in the global trading system and elsewhere. The ‘alternative’ view rejects the ‘one size fits all’ implications of orthodox thinking and, in particular, the idea of a linear transition from a ‘traditional’  POVERTY AND DEVELOPMENT 359  The term development can be thought of as demeaning because it is based on a contrast between ‘underdeveloped’ or ‘developing’ countries or regions and ‘developed’ ones. The former therefore appear to be imma- ture, basic or in some way deficient, while the latter seem to be fully formed, sophisticated and advanced. Deconstructing... ‘DEVELOPMENT’  The primary difference between  As development also refers to the ‘underdeveloped/developing’ coun- biological process of growth, in an tries and ‘developed’ ones is their level individual or a species, it implies a of wealth or affluence. This can be single, linear process of change. seen to prioritize material goods and Development therefore suggests that values over non-material ones. Little ‘underdeveloped/developing’ countries attention, for example, is given to the are destined to go through the same possibility that poor countries may be stages and phases that developed coun- more morally, spiritually or culturally tries already have. Development thus developed than rich countries. tends to be linked to a distinctively western form of modernization. society to a ‘developed’ society, in which Latin American, Asian and African states are destined, sooner or later, to go through the same process of modern- ization as states in the ‘global North’. In other words, developing world states are not playing catch up. Indeed, to a significant extent, their plight can be blamed on external factors and the often self-interested impact of western states and transnational corporations (TNCs) (see p. 99), through, for example, aid regimes that are structured around the needs of donor countries and the demand for across-the-board integration into the international economy. On the other hand, few of those who support ‘alternative’ stances advocate separat- ing developing world economies from the global economy or seeking to develop a qualitatively different alternative to capitalism. Instead, they seek to combine growth-orientated economic policies with a sensitivity to local and regional needs and interests, placing stress on cultural diversity, ecological balance and self-reliance. What is sometimes called the ‘Southern consensus’ on development therefore usually allows for a greater role for state intervention than would be acceptable to supporters of economic liberalism. Adopting a neo-mercantilist 360 GLOBAL POLITICS Focus on... The North–South divide The idea of a ‘North–South divide’ was popularized ities between the high-wage, high-investment industri- through the work of the so-called Brandt Reports: alized North and the low-wage, low-investment, North-South: A Programme for Survival (1980) and predominantly rural South. The Brandt Reports also Common Crisis: North-South Cooperation for World highlighted the interdependence of the North and the Recovery (1983). Although the idea that the world is South, emphasizing that the prosperity of the North is divided into a ‘global North’ and a ‘global South’ is dependent on the development of the South. Some, based on the tendency for industrial development to be nevertheless, question the continuing relevance of the concentrated in the northern hemisphere, and for idea of a North–South divide. Amongst other things, poverty and disadvantage to be concentrated in the they draw attention to increasingly uneven develop- southern hemisphere (apart from Australasia), the ment across the South itself (disparities between China terms are essentially conceptual and theoretical rather and sub-Saharan Africa, for example), the growing polit- than geographical. ical influence of the South (the rise of the G-20 (see p. 117) and so on) and the quite different relationships The concept of the North–South divide draws attention that have emerged between the North and different to the way in which aid, developing world debt and the parts of the South, not all of which are now based on practices of TNCs help to perpetuate structural inequal- power and dependency. approach to development, the East Asian ‘tiger’ economies thus relied less on the free market than on the capacity of the state to pursue strategies for interna- tional competitiveness, especially through a heavy emphasis on education and training. The most impressive Southern model of development has nevertheless been found in China’s mixture of market economics and Stalinist political control (see A Chinese economic model? p. 89). (Feminist thinking on develop- ment and the role of women in bringing about development are discussed in Chapter 17.) A MORE UNEQUAL WORLD? Making sense of global inequality Questions about poverty are often linked to the issue of inequality. Indeed, from the perspective of relative poverty, the two concepts are intrinsically linked, in the sense that widening inequality effectively means increased poverty. However, the issue of global inequality is an arena of particular contention. On the one hand, there have been assertions, usually linked to criticisms of globalization and biases within the world trading system, that the gap between the richest and poorest countries has been increasing in recent decades, even reaching grotesque proportions. The UN’s 1999 Human Development Report, for example, noted that the assets of the world’s richest three individuals exceeded the combined GDPs of all the countries designated as the world’s ‘least developed’, comprising a total population of some 600 million people. As the rich get richer the poor get  POVERTY AND DEVELOPMENT 361 Focus on... The Zapatistas in Mexico: alternative development in action? The Zapatista Army of National Liberation (EZLN), take operate, in line with what is sometimes called their name from Emiliano Zapata (1879–1919), a ‘Zapatismo’. Zapatismo draws on anarchist, libertarian, leading figure in the Mexican Revolution of 1910 and a socialist and Marxist ideas. It has been notable for a prominent campaigner for agrarian reform. The main number of reasons. First, it has implacably rejected spokesperson of the modern Zapatistas is globalization, capitalism and neoliberalism, favouring Subcomandante Marcos, also known as ‘Delegate Zero’. instead the formation of self-managing councils and The Zapatista uprising started in 1994 when, within cooperatives. Zapatismo therefore represents the revo- hours of the signing of the NAFTA Agreement (see lutionary wing of the anti-capitalist movement. Second, Chapter 20), a seemingly ramshackle group of students, the Zapatistas differ from other left-wing revolutionary intellectuals, radicals and indigenous peasants emerged groups in that they are uninterested in seizing power in from the jungle of the Chiapas region to declare war order to rule on behalf of the people, and unwilling to against the Mexican state. As Mexican federal forces support a particular world view or set of economic were pushed back from the region the Zapatistas arrangements. This ‘non-vertical’ or ‘post-ideological’ established what is effectively an autonomous area, form of politics means that Zapatistas work in alliance leading, since 1994, to something of a stand-off with indigenous peoples and peasant groups rather between the EZLN and the Mexican state. than rule ‘from above’. Third, the Zapatistas have placed particular emphasis on the use of new communication As a result, in many of the mountainous and jungle technology to give their ideas a high profile within the areas of Chiapas, extending into some of the urban anti-capitalist movement in particular and in the wider areas, an entirely different set of principles and norms world. poorer, in relative and perhaps also in absolute terms. On the other hand, a growing body of commentators have come to the conclusion that in recent years the world has generally become a more equal place (Kay 2004; Wolf 2005; Friedman 2006). The debate about global inequality is nevertheless beset with difficulties. Not only are there significant difficulties surrounding the task of measuring inequal- ity, but the trends themselves are much more complex than the simple idea of a gap between rich and poor suggests. Ultimately, it may not be possible to iden- tify an overall trend in global inequality, meaning that the focus should shift instead onto discussing the contours of global inequality. This occurs for a variety of reasons:  A lack of clarity about what is being measured: income, life expectancy, educational opportunities, access to clean water and so on.  The data to measure inequality may be unreliable or contain biases.  Different time spans highlight different trends.  There is confusion about who are ‘the rich’ and who are ‘the poor’.  Within-country trends may be as significant, or more significant, than between-country trends. 362 GLOBAL POLITICS The first problem with any discussion of equality is in determining what is being measured. Equality of what? The World Bank, followed by most other bodies, uses a measure of inequality based on income, especially GDP per capita. This occurs partly because such data are easier to compile and calculate than alternatives, such as access to healthcare or clean water, and partly because income, adjusted for purchasing power parity, provides a broad but reliable indi- cation of people’s living standards. However, the principal alternative to this, the UN’s notion of human development, is not only multidimensional but also shifts attention away from economic equality to equality of opportunity, the idea of equal life chances. Second, the data that inform judgements about global inequality are not always complete or reliable. The World Bank’s annual World Development Reports provide the most comprehensive and commonly used data on income distribution in particular. However, some have questioned the neutrality of the World Bank, and until the early 2000s much data did not take appropriate account of factors such as exchange rates, the cost of living and inflation levels in different countries. Changing approaches to data collection and interpretation have, at different times, forced commentators significantly to revise their views on the nature and extent of global inequality. Moreover, there are important areas in which data on income disparity remains unreliable or is in short supply, notably on within-country inequality in many poor states. Third, trends in global poverty are crucially affected by the timescales over which they are measured. According to the long view on inequality, which takes account of trends over the nineteenth and twentieth centuries, there has been a profound and steady tendency towards a widening gap between rich and poor countries. It has been estimated, for instance, that in 1800, per capita income in the USA was probably three times greater than in Africa, while by 2000, it was twenty times greater. Compared to the poorest African countries, it may be fifty or sixty times greater. These trends are clearly a consequence of industrialization in the developed North, reflected in steadily rising living standards, particularly from the late nineteenth century onwards. Such a trend towards widening inequality would also be evident from 1945 to the present day, because the bene- fits of the so-called ‘long boom’ of the 1950s and 1960s were almost entirely concentrated in the industrially advanced world. However, if global inequality is measured since 1980, a much more complex picture emerges with contending images of widening inequality and diminishing inequality often being advanced. Furthermore, at different points during the post-1980 period different trends can be identified. For instance, during the 1990s there was evidence of widening inequality, due to factors such as the accumulating debt crisis in the developing world and the economic disruption that followed the ‘shock treatment’ transi- tion to the market economy in Russia and other former communist states. By contrast, the period between the events of 11 September 2001 and the global financial crisis of 2007–09 was characterized by strong growth in the world economy, which sometimes benefited poor and lower income countries more than wealthy ones. Fourth, there is no settled or objective definition of who are ‘the rich’ and who are ‘the poor’. Should we, for instance, be comparing the richest and poorest 10 per cent, 20 per cent or even 30 per cent in terms of the average income of the country they live in? Such questions are not merely of academic interest alone, but may affect the trend uncovered. The 2001 Human Development Report thus  POVERTY AND DEVELOPMENT 363 concluded that the ratio of average income in the countries containing the richest 20 per cent of the world’s population to average income in the nations containing the poorest 20 per cent of the world’s population had fallen between 1970 and 1997 (from 15:1 to 13:1), while in the case of the richest 10 per cent of countries and the poorest 10 per cent of countries, the ratio had grown (from 19:1 to 27:1). The reason for this is that, in recent decades, the fastest growing developing countries have not been among the very poorest. Finally, the analysis of global inequality is hampered by the fact that it is usually based on comparisons between countries rather than people or house- holds. GDP per capita is a calculation of the notional average income in a country, not a measure of the actual incomes of people (none of whom may be ‘average’). Between-country comparisons would therefore always be limited and misleading unless the within-country distribution of income is also taken into account. Indeed, if there is a strong tendency for within-country income differ- entials to widen, the gap between rich and poor people may be growing even though the gap between rich and poor countries may be diminishing. This also alerts us to the fact that the problem of poverty is not confined to poor coun- tries: poor people can also be found in rich countries. The most commonly used measure of inequality within a country is the Gini coefficient, which varies between 0 (complete equality) and 1 (complete inequality). Denmark, for instance, has a Gini coefficient of 0.24, while Namibia’s is 0.74. Contours of global inequality In the light of these considerations, the contours of global inequality in recent decades can be broken down into three key trends:  Equalizing trends, largely based on economic progress made by China and, to a lesser extent, India.  Disequalizing trends, largely reflecting continued and sometimes deepening poverty in sub-Saharan Africa.  A general trend for within-country inequality to grow. The narrowing gap between the richest and poorest countries each contain- ing 25–30 per cent of the world’s population is mainly explained by high growth rates in recent decades in China and India. Chinese growth rates since the 1990s have been about 8–10 per cent, while Indian growth rates have been about 7–8 per cent, compared with roughly 2–3 per cent amongst industrially advanced countries. The impact of this is all the greater as China and India jointly account for almost 40 per cent of the world’s population. The reduction of poverty in China has been particularly marked. By Chinese calculations of poverty (which are based on the amount of food needed to sustain a human being), absolute poverty fell from 250 million at the start of its reform process in 1978 to 28 million in 2001. The World Bank’s figures are marginally lower, but it still accepts that China has brought about the most spectacular reduction in poverty in human history. The UN acknowledged in 2008 that China had already achieved the key Millennium Development Goal (see p. 374) of halving the number of people in extreme poverty by 2015. China’s poverty reduction strategies have included a major expansion in manufacturing production, particularly in  364 GLOBAL POLITICS export-orientated industries, massive infrastructural projects, population control especially though the ‘one child’ policy, and improvements to the stan- dard of poverty relief. In this, it has worked with international partners, notably the World Bank. On the other hand, China’s remarkable success in poverty reduction has not been without its costs. These have included greatly increased pollution, enormous migration shifts through rapid urbanization, concerns about safety at work and a fracturing of family structures. While there is evidence that other parts of the world have made economic progress, sub-Saharan Africa has emerged as the principal exception, becoming a kind of ‘fourth world’. In the 2009 Human Development Report, the 24 lowest countries on the UN’s HDI were all in sub-Saharan Africa, including all the countries in the category of ‘low human development’ (see Table 15.1). Life expectancy in sub-Saharan African is 49.6 years (compared to a world average of 68.1 years). 74 per cent of the population is estimated to be undernourished; only 46 per cent of people have reliable access to clean water, and only 30 per cent have access to improved sanitation. Why has sub-Saharan Africa been left behind? Sub-Saharan Africa has been caught in a poverty cycle that has made it difficult or impossible to break out of poverty. This has been exacerbated by the link between poverty and disease. HIV/AIDS has been a particular blight on sub-Saharan Africa, accounting in 2007 for some 68 per cent of HIV/AIDS cases worldwide and 76 per cent of all AIDS deaths. The epidemic is particularly serious in the countries of southern Africa, such as Swaziland (33.4 per cent of the population living with HIV/AIDS), Botswana (24.1 per cent) and Lesotho (23.2 per cent). Africa also accounts for 90 per cent of deaths from malaria, with about 80 per cent of malaria victims worldwide being African children. The association between poverty and civil conflict, crime, corruption and state failure has also seriously disadvantaged sub-Saharan Africa, especially in the light of the legacy of colo- nialism and entrenched ethnic and tribal tensions. Further factors include the link between poverty and poor educational provision, low investment rates, uncontrolled population growth (27 out of 30 countries with the highest birth rates in the world are in sub-Saharan Africa) as well as the so-called paradox of plenty (see p. 409). (See p. 380, for an account of attempts to promote develop- ment and reduce poverty in Africa.) Finally, there is growing evidence that while between-country inequality is diminishing, within-country inequality has generally been growing. Cornia (2003) found that two-thirds of the 73 countries he analyzed appeared to have widening within-country inequality rates between 1980 and 2000. This has applied, albeit to different degrees, in a wide variety of states. Amongst OECD countries, it has been most evident in ones, such as the USA and the UK, which have most enthusiastically embraced neoliberal economics. Income inequality has widened as a result of financial deregulation, checks on social security spending and cuts in personal and corporate tax levels. The trend has been  Poverty cycle: A set of particularly evident in the former communist states of eastern Europe and in circumstances that tend to Latin America. In eastern Europe, economic transition involved a wholesale make poverty self-perpetuating dismantling of the economic and social supports that were customary in through its wider impact on health, civic order, political and communist systems, leading not only to increased relative poverty but also, in economic performance and so cases such as Russia, to growing levels of absolute poverty and falling life on. expectancy. In Latin America, income inequality rose markedly in the 1980s and  POVERTY AND DEVELOPMENT 365 Table 15.1 Top ten and bottom ten countries on terms of HDI rankings Top Bottom 1. Norway 160. Mali 2. Australia 161. Burkina Faso 3. New Zealand 162. Liberia 4. USA 163. Chad 5. Ireland 164. Guinea-Bissau 6. Lichtenstein 165. Mozambique 7. Netherlands 166. Burundi 8. Canada 167. Niger 9. Sweden 168. Congo (Democratic Republic of) 10. Germany 169. Zimbabwe Source: UN Human Development Report 2010. 1990s, often associated with external pressures to introduce economic liberaliza- tion and deregulation. Chinese experience demonstrates how the tendencies towards falling between-country inequality and widening within-country inequality can be part of the same process. Although Chinese economic reforms since 1978 have substantially boosted average incomes and dramatically reduced absolute poverty, they have also been associated with a fast rise in income inequality, particularly reflected in a widening of the urban–rural divide. The phenomenon of rural poverty is discussed in greater detail in the next section in relation to the impact of globalization. Globalization, poverty and inequality The impact of globalization on levels of poverty and inequality has been a source of debate and controversy since the early 1990s. Supporters of globalization have argued that it promises to deliver enhanced opportunities for all (Norberg 2003; Lal 2004;), while critics have linked globalization to polarization and intensified subordination (Held and Kaya 2006). Unfortunately, attempts to resolve this issue through empirical analysis alone have limited value. The most common approach is to identify correlations between the advance of economic globaliza- tion (see p. 94) and trends in income disparities. Not only, as already pointed out, are trends in inequality complex and, to some extent, contradictory, but correlations (both up and down) do not necessarily indicate cause or signifi- cance, as other factors may be affecting trends in poverty and inequality. Those who associate globalization with widening inequality draw attention to a number of processes. First, they portray globalization as a game of winners and losers, in the sense that those who benefit do so at the expense of others. This has revived interest in the core/periphery model, advanced by world- systems theory (see p. 367). The North is the core area within the global economy, in that it is the home of sophisticated and high technology production (including most ‘global goods’) and the world’s leading TNCs. The South is the peripheral area within the global economy, still largely restricted to agricultural  366 GLOBAL POLITICS production and supply of raw materials. The East (China, South Asia and so on) operates as a semi-peripheral area in that it has become the manufacturing powerhouse of the global economy without yet rivalling the North in terms of research and development and advanced technology. As such, globalization channels benefits to the rich North at the expense of the poorer South, helping to maintain, if not increase, between-country inequality. TNCs contribute to this process by exploiting raw materials and cheap labour in the South and by expa- triating profit to the North. Second, between-country inequalities are exacer- bated by the tendencies implicit in the global trading system and particularly the principle of free trade (see p. 474). As discussed in Chapter 19, free trade has been criticised for favouring the interests of rich states by giving them access to the markets of poorer states without exposing themselves to similar vulnerabil- ity. This explains both the pressure exerted by industrially advanced states, mainly via the World Trade Organization (WTO) (see p. 511), to encourage other states to embrace economic openness and the persistence of anomalies such as continued agricultural protectionism by the USA and the EU. Third, the advance of globalization has been associated with growing rural poverty and a widening of rural–urban disparities. Rural areas account for three- quarters of the people living on less than $1 day. This occurs largely because pressures from the global economy have massively disrupted agricultural prac- tices in the developing world, encouraging peasant farmers to convert to cash crops, produced for export, and abandon subsistence farming geared to local needs and local communities. Fourth, globalization has fostered within-country inequality in at least two ways. The first way is through strengthening social hier- archies. Corporate power has thus become stronger as businesses have been able to exert increased political leverage through their ability to relocate investment and production almost at will, while trade unions have been weakened by the fear that agitation for higher wages or improved conditions will merely threaten job security. The second way is that the emergence of a more open and compet- itive economy has forced all states, to some extent, to deregulate their economies and restructure their tax systems whilst also rolling back welfare and redistribu- tive programmes. The wealthy have therefore got wealthier while the poor have got poorer. To make matters worse, the theory of ‘trickle down’ has almost everywhere been exposed as a myth. On the other hand, supporters of globalization have portrayed it as the surest way of reducing poverty and narrowing inequality. This can be seen to apply in two main ways. First, globalization is a positive-sum game: mutual benefits flow  Trickle down: The theory from engaging in the global economy. This is what Friedman (2006) meant in that the introduction of free- proclaiming that the world is becoming ‘flatter’, meaning that globalization has market policies will, in time, levelled the competitive playing field between advanced industrial and emerging benefit the poor and not only the rich through an increase in economies. The period of accelerated globalization, starting in the early 1980s, economic growth and a general thus witnessed the rise of newly industrializing countries (NICs) and significant rise in living standards. economic progress in parts of the world that had formerly been characterized by poverty and underdevelopment. NICs, moreover, have based their development  Import substitution: An on a strategic engagement with the global economy rather than any attempt to economic strategy through which domestic industries are opt out of it. Their two main strategies have been import substitution indus- protected from foreign trialization and export-orientated development, in which a range of industries competition, at least during are targeted that it is believed can successfully compete in the world market- their infancy. place.  POVERTY AND DEVELOPMENT 367 Focus on... World-systems theory World-systems theory offers a neo-Marxist analysis of The core–periphery model emphasizes how strong the nature and workings of the global economy. Its states can enforce unequal exchange on weak ones, the most prominent exponent has been Immanuel transfer of economic surpluses from peripheral to core Wallerstein (see p. 100). The central idea of world- areas helping to maintain dependency and underdevel- systems theory is that the expansion of capitalism, opment. Low-wage and low-profit producers in periph- from the sixteenth century onwards, has created a eral areas are used to service and support high-wage global economic system comprising three interlocking and high-producers in the core. Semi-peripheral areas parts: act as a buffer or shock absorber within the world- system, helping to ensure that core countries are not  Core areas that are characterized by relatively faced by a unified opposition. Such relations are further high wages, advanced technology and a diversi- underpinned by political differences between the core fied production mix, including mass market and the periphery, the former tending to have demo- industries and sophisticated agriculture. cratic governments, effective state machines and devel-  Peripheral areas that are characterized by low oped welfare services, while the latter usually have wages, more rudimentary technology and a authoritarian governments, weak or ineffective state simple production mix geared towards staple machines and very rudimentary welfare provision. An goods such as grain, wood, sugar and so on. end to global poverty and regional imbalances within  Semi-peripheral areas that are economically the global economy requires the overthrow of the capi- mixed, including some core features and some talist world-system, or its collapse as a result of inher- peripheral ones. ent instability and recurrent crises. China is the most spectacular example of how an NIC can make globaliza- tion work for its benefit, but states such as India, Brazil, Mexico, Malaysia and the East Asian ‘tigers’ (Hong Kong, Singapore, South Korea and Taiwan) have adopted similar strategies, albeit with national variations. While there is evidence that integration – or at least ‘strategic’ integration – in the world economy is associated with rising GDP per capita, a failure or refusal to integrate is usually associated with low growth or economic stagnation. This can be borne out by the experience of sub-Saharan Africa. Supporters of globalization also challenge the idea that TNCs are the enemies of the South and a threat to global justice. TNCs in fact bring a range of benefits, including employment opportu- nities, better wages, training and investment in skills, and modern technology. Furthermore, rather than TNCs dictating to developing world governments, alliances are often forged through which governments also use TNCs for their own ends. Finally, even though trickle-down economics appears to have been a failure, pro-globalization theorists tend to argue that if within-country inequal- ity grows as the rich get richer, the important thing is not that the poor keep up but that they become less poor. This raises questions about the general impor- tance of inequality. 368 GLOBAL POLITICS Does global inequality matter? Attitudes to equality have traditionally shaped, if not defined, people’s core ideo- logical orientation. While left-wingers have generally supported equality and social justice, right-wingers have typically accepted that inequality is inevitable, and may even be beneficial. These positions also inform debates about global- ization and are reflected in the broadly egalitarian stance adopted by most critics of globalization, and the generally inegalitarian stance adopted by its supporters. The case in favour of social equality is based on three considerations: power, conflict and personal wellbeing. Equality is linked to power in that social inequality affects power relations. The rich control economic and social resources that enable them to control and oppress the poor. In this view, the rich are rich, and may be able to get richer, through their treatment of the poor. An unequal world is therefore unjust and exploitative, meaning that global justice requires not just a reduction in absolute poverty but also a narrowing of the gap between the rich and the poor. The link between inequality and conflict is evident in the fact that social disparities breed resentment, hostility and strife. This is of particular concern in relation to within-country inequality in poorer states. The combination of endemic poverty and widening income disparities, perhaps one of the key conse- quences of globalization in the developing world, creates a breeding ground for ethnic and tribal conflict and the general breakdown of civic order. In this sense, global inequality may have contributed not only to state failure and humanitar- ian crises but also to the growth of ‘new’ wars and the rise in terrorism (see p. 284). The link between inequality and personal wellbeing arises because human security (see p. 423) and happiness are affected by the fact that people perceive their social position in terms of what others have. If people feel excluded from the benefits and rewards that are customary in their society, they feel marginal- ized and disempowered (Wilkinson and Picket 2010). This perhaps has clearer implications for within-country inequality, where the less well off live in relative proximity to better off and rich people. However, the growth of global informa- tion and communications means that this may also increasingly apply to between-country inequality. For example, a growing awareness of the prosperity enjoyed in other parts of the ‘global village’ has helped to stimulate massive migratory flows from poor countries to rich ones. However, others have questioned the importance of inequality, even arguing that efforts to narrow the gap between the rich and the poor are misplaced or doomed to failure. The first such argument places an emphasis on poverty over inequality. From this perspective, absolute poverty is the real issue. Social evils such as hunger, a lack of access to clean water and sanitation, and low life expectancy are much more serious threats to happiness and personal wellbeing than the gap between the rich and the poor. If this is the case, national, regional and global policy should be structured around the goal of reducing extreme poverty, regardless of its implications for so-called relative poverty. Thus, it may not matter that the rich are getting richer, and perhaps much richer, so long as the poor are becoming less poor. A second argument is that inequality has certain economic advantages. Economic liberals have long argued that social levelling leads to economic stag- nation, as it caps aspirations and removes incentives for enterprise and hard  POVERTY AND DEVELOPMENT 369 work. From this perspective, one of the reasons for low growth rates, and even- tual collapse, of state socialist regimes was their relatively egalitarian social struc- tures. Widening inequality may, indeed, simply be a feature of the ‘take-off ’ phase of industrial development. A third argument is that the distribution of income or wealth, either within or between countries, is morally and politically less important than how that distribution is achieved. In this view, equality is less important than freedom. On an individual level, people should have the oppor- tunity to rise and fall in society, their final position being a reflection of their aspirations, talents and willingness to work. From a global perspective, states should enjoy sovereignty and freedom from foreign interference, allowing them to use their own resources in developing strategies for national advancement within the global economy. So long as states enjoy political independence, how they rank economically against other states may affect their own citizens, but it is not an issue of global justice. DEVELOPMENT AND THE POLITICS OF AID Structural adjustment programmes and beyond The end of empire in the 1950s and 1960s had profound political effects in the developing world, but remarkably few economic consequences. The established division of labour within the world economy between the industrialized North, the home of manufacturing production and the impoverished South, the chief source of primary production, especially raw materials and foodstuffs, remained unchanged. A lack of economic diversification in the South intensified economic vulnerability, as many developing world countries were (and in some cases still are) dependent for their export income on a single commodity, or a very narrow range of commodities. In 2005, as many as 43 developing states still depended on a single commodity for more than 20 per cent of their total revenues from exports. A slump in a single economic sector, often brought about by volatility in world export markets, could therefore have devastating consequences. However, from the late 1970s onwards the World Bank and the International Monetary Fund adopted a radically new approach to promoting development, using what became known as structural adjustment programmes, or SAPs. Why did this policy change take place, and what was the nature and purpose of SAPs? The shift in the approach to development in favour of structural adjustment occurred for two main reasons. The first was a growing debt crisis in the devel- oping world. This occurred as poorer countries borrowed heavily from western banks and other private bodies which were themselves flush with ‘petro dollars’ as a result of dramatic increases in the price of oil introduced in 1973 by the newly formed Organization of Petroleum Exporting Countries (OPEC). However, a combination of an increase in interest rates and the slowdown in the  Debt crisis: A situation in world economy in the 1970s (in part because of the world oil crisis) led to which a country is unable to service its debts because economic stagnation across much of the developing world, making it difficult, economic surpluses are and sometimes impossible, for their debts to be serviced. In this context, many insufficient to meet interest developing countries looked instead to borrow from the IMF (in order to deal repayments. with balance of payments crises) or from the World Bank (in order to fund  370 GLOBAL POLITICS development projects). Global financial institutions were therefore confronted by growing pressure to increase or restructure loans in a context in which previ- ous loans had done little to promote economic growth. The second factor was the ideological shift that had occurred as a result of the collapse in the early 1970s of the Bretton Woods system (see Chapter 19) and the emergence of the so-called ‘Washington consensus’ (see p. 92). Based on the belief that the debt crisis and other problems were due to structural inefficiencies in the economies of many developing countries, compounded by bad or misguided government policies, the IMF and the World Bank sought to build conditionalities into the provision of any future loans. The purpose of these conditions was to bring about a market-orientated ‘structural adjustment’ of economic policy in line with the principles of neoliberalism. The imposition of SAPs proved to be highly controversial. The thinking behind them was clearly rooted in economic liberalism. For officials at the IMF and the World Bank, the key to development was market reform, which would foster the dynamism, innovation and entrepreneurship that they believed are essential for economic growth, employment and poverty reduction. In encour- aging the governments of poorer countries to introduce such reforms, IMF and World Bank officials believed that they were acting in the long-term interests of domestic populations. What is more, structural adjustment programmes were not imposed on unwilling or resistant governments, but were, rather, negotiated and agreed between independent states and international bodies based on the former’s recognition that alternative sources of loans are not available, and, presumably, through an acceptance of the benefits of market reform. The prin- cipal alleged benefit of SAPs was that free trade and market reform would facil- itate the integration of national economies into the global economy, thereby offering, it was believed, the best hope for increasing growth rates and ending the poverty cycle. Such thinking, indeed, may be backed by the striking difference between the economic performance of Africa and East Asia. In the 1950s and 1960s, GDP per capita in many African states was little different, and sometimes higher, than in most East Asian states, with countries such as China and India widely being viewed as economic ‘basket cases’. However, East Asian countries subsequently made rapid economic progress, first through the success of the export-orientated strategies adopted by the East Asian ‘tigers’ and subsequently through market reforms that were adopted in China from 1978 onwards and by accelerating market reform in India, particularly after 1991. An example of this widening divide can be seen in the fact that whereas in 1957 Ghana had a larger gross national product (GNP) than South Korea, by 1996 South Korea’s GNP was almost seven times larger than Ghana’s. Nevertheless, the idea that the improved performance of East Asian economies can be put down to free trade should be treated with caution, particularly in the light of their use of state aid and forms of protectionism (as discussed in Chapter 4). However, to recognize that the countries that have been most successful in  Conditionality: The recent years in boosting economic growth and reducing poverty have been ones requirement, usually made by that have placed emphasis on trade and economic integration, is very far from the IMF and the World Bank, that certain conditions about demonstrating the benefits of SAPs. SAPs, in fact, have been remarkably ineffec- the future direction of tive in achieving such goals, as the IMF and the World Bank eventually acknowl- economic policy are met before edged (Przeworski and Vernon 2000; Easterley 2001). Top-down programmes of loans are agreed or made. market reform designed by usually US-trained technocrats from the IMF and  POVERTY AND DEVELOPMENT 371 Focus on... Structural adjustment programmes Structural adjustment programmes (SAPs), and some- government budgets through increased government times structural adjustment loans (SALs), are devices revenues (for example, through higher fees for that the IMF and the World Bank have used in the government services). attempt to overcome what are viewed as structural  Reducing or removing subsidies to domestic indus- inefficiencies that inhibit economic growth in the tries, which had often been part of import substitu- developing world. Used as the basis for the granting of tion strategies. loans during the 1980s and 1990s in particular, they  Reducing or removing tariffs, quotas and other reflected a strong faith in economic liberalism and a restrictions on the import and export of goods. desire to roll back regulation and government interven-  Deregulating the economy generally and particu- tion in the name of the free markets. SAPs tended to larly removing restrictions on foreign investment to have similar aims and components for all countries to achieve what is called capital market liberalization. which they applied. The key reforms included:  Privatizing, or selling off, government-owned indus- tries and services.  Reducing government spending, often through cut-  Devaluing of the exchange rate in order to encour- backs to welfare provision, or attempts to balance age exports and reduce imports. the World Bank were often harsh and paid little attention to local needs and circumstances. In cases such as Chile (which adopted reforms designed by Chicago School economists, following the ideas of Milton Friedman (see p. 91)), Argentina and Mexico, market-orientated structural adjustment led to years of economic disruption and political instability. Following the Asian financial crisis of 1997, it was notable that Malaysia, which had refused to accept the IMF’s offer of a loan and its accompanying conditions, recovered significantly more quickly than Thailand and South Korea, which accepted loans and faithfully carried out IMF prescriptions. The lesson of China and, to a lesser extent, India is that market-orientated and pro-export reforms work most effectively when they are part of national strategies for development, allowing countries to engage with the global economy essentially on their own terms. What were the drawbacks of SAPs? First, as analysts such as Joseph Stiglitz (see p. 468) have pointed out, they often resulted in greater poverty rather than less. For instance, pressure to reduce government spending frequently led to cuts in welfare, education and health budgets, which had a disproportionate impact on the less well off and especially on women and girls. Similarly, exposing rela- tively weak economies to foreign competition often pushed up unemployment while also driving down wages and worsening working conditions, all in the name of greater ‘labour flexibility’. Increased foreign investment also tended to focus on the production of consumer goods for world markets rather than the building of schools, roads and hospitals where economic returns are far less impressive. Second, far from creating a rising tide of global economic growth that would ‘lift all boats’, SAPs, arguably, attended more to the interests of major donor states, especially the USA, which were seeking expanded investment and 372 GLOBAL POLITICS trading opportunities, than they did to the needs of the developing world. This, indeed, may reflect deep biases that operate within the IMF and the World Bank, based, for instance, on their reliance on largely western, or western-trained, senior officials and analysts, and the fact that, suffering from the pressures of hunger, disease, poverty and spiralling debt, developing countries often have very limited freedom of manoeuvre in dealing with international organizations. Finally, and perhaps most crucially, many would argue that SAPs were based on a flawed model of development. They had a very weak empirical underpin- ning, in that it is based on a model of development that no economically devel- oped state had actually followed. In imposing SAPs, industrially advanced countries were, in effect, saying: ‘do as we say, not as we did’. The record of coun- tries such as the USA, Germany, Japan and, more recently, China, is that early industrialization is closely linked to a willingness to protect industries from foreign imports until they are strong enough to compete. Such countries only converted to policies of free trade and economic liberalism once they had reached a level of economic maturity that ensured that domestic industries were no longer vulnerable. By contrast, SAPs are based on the myth of free-market development, in that they treat an open economy as a pre-condition for devel- opment, rather than as a consequence. As criticism of SAPs intensified during the 1990s, pressure for reform built up. Even the IMF and the World Bank came to accept that SAPs had caused at least short-term economic and social disrup- tion, and were an unreliable means of boosting growth. Since 2002, the ‘one size fits all’ approach to structural adjustment has largely been abandoned. Conventional SAPs have been replaced by Poverty Reduction Strategy Papers (PRSPs), which are modified SAPs that are more flexible, seek to promote country ownership, place a heavier emphasis on poverty reduction and allow for longer-term loans (up to 7 years). Nevertheless, the underlying emphasis on market economics and boosting exports remains unchallenged. International aid and the development ethic Since the 1980s there has been growing political and ethical debate about devel- opment and how it can best be achieved. This, in part, reflected mounting disil- lusionment with ‘orthodox’, market-based approaches to development, greater attention being paid to more critical and reflective ‘alternative’ theories of devel- opment that, amongst other things, give greater scope for Southern views rather than technocratic intervention by the North. Amartya Sen’s (1999) notion of ‘development as freedom’ and growing interest in the ‘human development’ approach to poverty are examples of this process. In addition to this, a global anti-poverty movement started to emerge, often acting as the most prominent element within the larger anti-globalization or anti-capitalist movement. The anti-poverty message has been conveyed by a wide range of development NGOs, groups such as Jubilee 2000 (which campaigned for the end of developing world debt by the year 2000) and the Make Poverty History campaign, and by the Live Aid concerts in 1985 (which aimed to raise funds for famine relief in Ethiopia) and the Live 8 concerts and protests that sought to exert influence on the 2005 G8 summit in Gleneagles, Scotland. One consequence of this has been a willing- ness to make bolder assertions about what Jeffrey Sachs (2005) called the ‘end of poverty’, and to set ambitious targets for its achievement. The most significant  POVERTY AND DEVELOPMENT 373 G L O B A L AC TO R S... THE WORLD BANK Type: Intergovernmental organization Established: 1944 Headquarters: Washington, DC Membership: 186 countries The World Bank is a bank that Significance: In the early period, the emphasis on the structural, social provides loans and financial and World Bank concentrated on and human aspects of development. technical assistance to support promoting post-war reconstruction. This was done through the reconstruction and development, However, over time, promoting Comprehensive Development with a growing emphasis on the development became the principal Framework (CDF) which, in 1999, in task of reducing poverty. The World focus of its work. This, nevertheless, conjunction with the OECD, the IMF Bank was created as a result of the occurred through a number of and the UN, set six key targets for Bretton Woods agreement of 1944, phases. In the first, sometimes viewed poverty reduction to be met by 2015. with its first loan ($250 million to as ‘modernization without worry’, it The new strategy has been dubbed France for post-war reconstruction) mainly supported large infrastructure the ‘post-Washington consensus’. being made in 1947. The Bank projects in transport, energy, The World Bank is the world’s comprises two institutions: telecommunications and so on. leading organization concerned with During the 1970s, under the presi- the issues of development and  The International Bank for dency of Robert McNamara poverty reduction. Its supporters Reconstruction and (1968–81), the Bank placed greater highlight its success in transferring Development (IBRD). emphasis on poverty reduction; for resources, through development  The International Development example, by promoting projects in projects, from wealthy countries to Association (IDA). rural development and concentrating poorer ones. They also point out on meeting basic needs. From the that the Bank has learnt from earlier The President of the World Bank is early 1980s, confronted by the mistakes, recognizing, for instance, responsible for the overall manage- growing debt crisis of many develop- the need for more flexible and ment of the Bank. The Board of ing countries and under the influ- creative approaches to poverty Directors oversees the approval of ence of the ideological shift towards reduction which place greater loans and guarantees, new policies, neoliberal economics represented by emphasis on country ownership. In the budget and key strategic deci- the ‘Washington consensus’, the addition, the Bank is the major sions. Voting within the World Bank Bank, in conjunction with the IMF, collector and disseminator of infor- is weighted according to the finan- embraced a strategy of ‘structural mation about development, its cial contribution of member states. adjustment’. Structural adjustment publications including the World Although the IBRD obtains funding programmes (SAPs) linked loans and Bank Annual Report, the World through the sale of bonds in the other forms of support to conditions Development Report and the review world’s financial markets, the IDA requiring a range of market reforms Global Development Finance. Critics obtains the majority of its funds and later even to political conditions. of the World Bank have argued, vari- from 40 donor countries, most These were designed to re-establish ously, that its financing of develop- prominently the USA. The as quickly as possible the credit- ment is insufficient, that its record of President is always a US citizen worthiness of developing countries reducing poverty is poor, that its nominated by the US Treasury in order to focus once again on the neoliberal bias remains in place Secretary. The capital of the Bank in fight against poverty. During the despite the abandonment of formu- 1945 was $10 billion; by 2003, it 1990s, in the face of growing criti- laic SAPs, and that, together with the had grown to $189.5 billion. Since cism and a recognition of the failures WTO (see p. 511) and the IMF, it 1993, the Bank has made loans of many of the SAPs, the Bank tends to uphold the imbalances and annually to the tune of about $20 started to place less emphasis on disparities of the global economic billion. macro-economic reform and greater order rather than challenge them. 374 GLOBAL POLITICS Focus on... Millennium Development Goals: ending global poverty? The Millennium Development Goals (MDGs or MDG 8)  Goal 4: Reduce child mortality. are a long- and medium-term (to be achieved by 2015)  Goal 5: Improve maternal health. development agenda approved by the UN General  Goal 6: Combat HIV/AIDS, malaria and other Assembly in December 2000. Their purpose was to diseases. inject renewed urgency into global development efforts  Goal 7: Ensure environmental sustainability. by establishing challenging targets in each of the key  Goal 8: Develop a Global Partnership for human development areas. The MDGs were adopted by Development. 189 countries and were signed by 147 heads of state and governments during the UN Millennium Summit in The Goals are focused not only on transferring wealth, 2000. The eight MDGs are: but also on changing the rules of the global economy to remove structural inequalities. This is particularly  Goal 1: Eradicate extreme poverty and hunger. emphasized by Goal 8 (the only goal that does not  Goal 2: Achieve universal primary education. have fixed targets), which encompasses the goals of  Goal 3: Promote gender equality and empower establishing an open trading and financial system that women. is rule-based, predictable and non-discriminatory. attempt to do this, and to reinvigorate the development agenda took place through the establishment of the Millennium Development Goals (MDGs). Underlying these developments has been the emergence of a new develop- ment ethic that reflects the declining influence of realist assumptions and a strengthening of cosmopolitan sensibilities. In the realist approach to develop- ment, aid and other forms of support for foreign countries are, and should be, motivated for a concern for national self-interest. This is based on the assump- tion that people’s moral obligations are essentially confined by citizenship and culture, and are thus restricted to people who share the same national identity and are part of the same community. This ethical nationalism suggests that concern about the plight of other peoples and other countries should be informed by a kind of enlightened self-interest, in which, for example, rich countries provide international aid (see p. 376) primarily to support the creation of new and more vibrant markets for their own good. By contrast, cosmopoli- tanism (see p. 21) globalizes moral sensibilities in that they extend to all peoples and grou