77. Poverty In The 3rd World Countries

346 Emporium Current Essays ITT II During the last decade, we witnessed crucial change in the economic policies of most of the Third World countries through rapid devaluation of their currencies, falling prices of their exports, rising debts and also imposition of the principles of 'free market' economic policies. Under such situations, the international financial institutions became more powerful than ever and imposed specific socio-economic policies in the name, of 'globalisation'. Here we intend to review these policies:, whom it benefits in terms of employment and income. The World Bank and IMF sponsored 'structural adjustment programme' (SAP) constitutes a powerful policy which bears a direct relationship of changes in earnings and reinforcement of cheap labour export economy and also budgetary austerity, trade liberalisation which is being applied simultaneously to about 70 indebted countries in the Third World and Eastern Europe. The World Bank and IMF sponsored SAP constitutes a powerful instrument of economic restructuring which affects the likelihood of millions of people. It favours the internalisation of economic policies and places these policies under the direct control of the World Bank and IMF, which are acting on behalf of powerful financial and political interests of rich countries. The Washingtonbased World Bank and IMF are entrusted with the execution of global economic policies which affect the likelihood of more than 80 per cent of the world's population. Meanwhile, since 1960, the population of Africa has doubled, while food production has slipped back to 20 per cent less than in 1970. This fall in food production stems partly from the agricultural policies, mainly suggested by the experts from the rich Countries and institutions, which gave priority to export crops that have served them so badly; partly from the lack of investment in food crops, partly from the disruption of agriculture production by war and disorder, which has driven people from the countryside to towns. Emporium Current Essays 347 The,debt crisis aggravated the economic situation during the 1980s. At the heart of the debt crisis lies an unequal structure of trade, production and credit, which defines the role and credit, which defines the role and position of Third World countries in the global economy. The restructuring of the world economy under the guidance of the Washingtonbased financial institutions increasingly denies the individual countries the possibility of developing a national economy. In fact, the globalisation and SAP transforms countries into open economic territories and national economics into supplier of cheap labour and natural resources.

In many indebted Third World countries, the real earnings in the manufacturing sector declined by more than 60 per cent since the beginning of the 1980s. The situation of the informal sector and the unemployed is more critical. In Nigeria under General Babangida, for instance, the minimum wages declined by 85 per cent and are currently about 10 to 20 dollars a month. In Peru, after the SAP the fuel prices increased by 31 times overnight whereas the prices of bread increased by 12 times. The minimum wage in 1990 had declined by more tan 90 per cent (in relation to its 1975 level). Whereas an agricultural worker in Peru's villages was only S8 a month in 1995, while the domestic prices of many consumer goods in Lima were almost the same as in New York. By the turn of the century, the world population will be 6 billion of which 5 billion will be living in poor countries. While the rich countries with some 15 per cent of the world population control about 80 per cent of the total world income, some 56 per cent of the world population constituting the group of Mow income countries' (including India and China) and a population of nearly 3 billion, receives only 5.4 per cent of the world income, less than the GDP of France. With a population of 464 million people, gross product of the entire Sub-Saharan African countries is about half that of the American state of Texas (see table 1). The disparities in income between the 'rich' and 'poor' have reached unprecedented proportions: an average middle class family in London suburb has an income of more than one hundred times higher than a rural household in South Asia: a Bangladeshi peasant has to work for two years to earn what a New York lawyer earns in an hour. The amount spent by Americans (30 billion dollars a year) on soft drinks like Coca Cola and Pepsi is nearly twice the gross national product of Bangladesh. These vast disparities in income within and between countries are the consequence of the structure of commodity trade and the unequal international division of labour which imparts to348 Emporium Current Essays Emporium Current Essays 349 the Third World a subordinate status in the global economic system. These disparities have widened in the course of 1980s as a result of the following SAFs by the indebted Third World countries. Thanks to the deterioration of the terms of trade and downward movement of real commodity prices. This structure of unequal trade and development has taken a new from since the inception of the debt crisis supported by the rich countries. Under the close watch of the World Bank and the IMF, the exports of same commodities are promoted in over 75 countries into a cut throat competition. Everybody wants to export the same to west European, American and Japanese markets. The increased concentration of income and wealth in a few OECD countries has led to the dynamic

growth of the luxury goods economy: travel and leisure, the automobile, the electronics and telecommunications revolution, etc. The 'drive-in' and 'duty-free' culture built around the axes of the automobile and air transport are the focal points of the modern 'high income' consumption and leisure economy towards which massive amounts of financial resources are channelled. The structure of global production based on cheap Third World labour is thus conducive to a duality of consumption on a whorl level: the global cheap labour economy is not geared towards the development of internal purchasing power. The low wage structure tends to counter-act the expansion of purchasing power: low wages are an input into production, however, this low wage structure cannot constitute the basis for the dynamic development of consumer goods' market in Third World countries. The entire economy of the rich countries, which is based on ownership of industrial know-how, product designs, research and development, etc. subordinates the material production. Moreover, industrial production remains subordinate to corporate monopoly capital. At present, the entire economy appropriates close to 75 per cent of the world income. Therein lies the origin of the Third World debt Ironically, part of the income appropriated from the Third World is used to provide new credits to enable the poor countries to continue servicing their external debts. The income taken from the direct producers (based in Third World) through unequal trade and debt sen icing is lent back to them on condition, of course, that they continued apply IMF's SAP and accept depressing wages further and so on. Private capital flows from the rich countries to the Third World has been highly concentrated, with mostly East Asian countries including China absorbing some 80 per cent of private flow to Third World countries since 1990. Foreign Direct Investment (FDI) flows to Third World have exhibited uninterrupted growth for a decade. Net FDI in Third World countries jumped from S25 billion in 1990 to S90 billion in 1995, of which S54 billion (60 per cent) went to East Asia. By contrast South Asia's share was S2 billion. CATT agreement signed in 1995 at Marrakesh (now it is called World Trade Organisation) further undermines people's right in the Third World, particularly in the area of biodiversity and intellectual property rights. Several clauses of the SAP are now permanently enshrined in the articles of the World Trade Organisation (WTO). The WTO's mandate consists in regulating world trade to the benefit of the international banks and transitional corporations as well as 'supervising' the enforcement of national trade policies (see figure 2). Trade regulated by WTO and SAP are managing to reduce food resources' increase dependency on transactional companies, and cut social spending on health and education. Millions have been forced to migrated to cities or to other countries, where they struggle to survive, having to accept the most marginalised jobs. In the Third World countries, a privileged social minority has accumulated vast amounts of wealth at the expense of a large majority of the population. This new international financial order feeds on human poverty and the destruction of the natural environment. It

generates social tension, encourages ethnic strife and often precipitates countries into destructive confrontation among nationalities. The internationalisation of the financial system is closely linked to that process of 'globalisation'. With the massive incorporation of technological resources, the financial system is becoming a giant instrument to globally manipulate savings, princes and currencies and the .wealth in favour of the privileged few. The wide majority of financial transactions have become merely speculative with no links whatsoever to physical, productive or territorial values.