Handouts will not eradicate povertyFebruary 28 2005 at 9:31 AM
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|The National - Bottom Line |
Handouts will not eradicate poverty
THERE has been much talk in recent months about efforts by developed countries to help those in the so-called third world.
For many years there has been an ongoing debate about whether or not rich countries should forgive debts owned by the world’s poorest countries, but nothing concrete has come out of these discussions.
Attitudes have shifted since the Boxing Day tsunami that resulted in the deaths of tens of thousands of people in several countries, including Indonesia, Thailand, Sri Lanka and India.
After some initial hesitation countries like the United States, Japan, Australia and some of the European nations raised more than US$5 billion to help provide immediate medical and social services and to commence the task of rehabilitation.
Following the showing of the unimaginable horrors of the tsunami on television screens and the print media around the world, there has been a somewhat heightened interest in aid and developed-related issues.
Bottom Line would today like to reinforce one of the threads of opinion that has run through this column in the past. Despite the obvious generosity of millions of people across the globe, developing countries must recognize that self-interest is uppermost when nations conduct their international affairs.
This is not to denigrate the many positives that have come out of the recent public reaction to the tsunami because there are millions of people of compassion and goodwill everywhere. National governments may not always be in tune with these sentiments.
Besides the outpouring of assistance for the victims of the tsunami and for the reconstruction effort, other aid-related issues have come to the fore in recent times.
One of the foremost was the announcement by Britain that it was going to forgo debt repayments for some African countries, a very welcome development. There were suggestions that debt repayments may also be cancelled for Sri Lanka.
US President George Bush and the UK’s Tony Blair have also announced plans to help long suffering African countries out of their development dilemma, although tribal conflicts on a massive scale is something only the individual countries themselves can deal with.
Nevertheless it is most unlikely - Bottom Line believes it will not happen - that the most meaningful aid that could make a very quick impact, on the lives of millions of people who live in poverty, will take place. This is nothing to do with being a cynic but because of a keen awareness of the playing field of international politics and economics.
The simplest and most effective way for western countries to help poor countries to climb out of poverty would be to take a systemic approach to the promotion of agricultural development.
In many sub-Saharan countries this would mean tackling environmental and ecological problems that ultimately are linked with the issue of desertification and secure water supplies.
The west has the finance and technology to provide a great deal of help to make this happen even in such areas as dry land agriculture. It has not done so over the past half century and why would anyone expect this is going to happen anytime in the near future.
The reason for this is quite simple. It has a lot to do with the massive subsidies the United States and Europe pay their farmers and the over-production of various agricultural commodities.
If African countries, like many other poor countries around the world, are given meaningful assistance to develop their agricultural sectors they will also become competitors on the global scene.
None of the western countries genuinely want to see this happen or at least not until they have restructured their domestic economic systems to take care of this issue and to ensure their economies have become even richer in the meantime.
What this means is that developing countries themselves have to implement the necessary initiatives and to find their own sources of technology and finance, possibly in part by attracting overseas investors, to get their agricultural sectors into better shape.
This determined effort to protect domestic national interests is also seen in the environmental debate and is the real reason why Australia and the United States have refused to sign the Kyoto Protocol.
Basically what these two countries are saying is that even though both, in different ways, are among the worst emitters of greenhouse gases such as carbon dioxide, they cannot afford to participate in efforts to reduce their emissions because of the impact this will have on their economies.
Put another way this is just a message to say, ‘we are right jack’. Australia and the United States are among the richest countries in the world and want to ensure they stay that way, regardless of the global environmental impact they are creating.
What do you think all the pressure from the United States and organizations such as the International Monetary Fund on China to revalue its currency, the yuan, is all about?
It is basically the same agenda of national self-interest.
By reducing China’s flexibility to generate economic growth by demanding a float of the yuan, the US would expect to be able to counter the immense gains China is making through exports to the US and elsewhere.
China understands this issue very well, which is why it continues to resist this pressure.
In the end the reality of the situation is that China is clearly, in per capita terms, a poor country with hundreds of millions of people living close to the poverty line.
If its current rapid economic growth rate is jeopardized - it managed an incredible 9.5% growth and still managed to cool down inflation last year - the country’s efforts to reduce poverty in its more remote, rural areas would become that much more difficult, if not impossible.
And for reasons provided by this column in the past, the per capita income gap between people in the United States and China will continue to widen in America’s favour well beyond the current decade.