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