Category: Dyck-Chapter 13

Development and Underdevelopment–the Commanding Heights

We addressed the topic of development and underdevelopment in POLI 1100 this week. Amongst the many issues covered, we started to explore some of the alleged causes of economic growth and development. Why is there still such disparity in income and economic growth around the world, not only between countries, but within? Why have countries in the global “South” lagged behind, for the most part, their counterparts in the global “North”? There are various answers to this question and we addressed a couple of them in class. I showed clips from a fantastic documentary series put together by PBS, called (and based on the book of the same name) The Commanding Heights. All the information you’ll need is at the PBS website. Fortunately, each of the three 2-hour episodes has also been uploaded (in its entirety) to the Internet. From the narration at the beginning of the first episode, we learn that

This is the story of how the new global economy was born. A century-long battle as to which would control the commanding heights of the world’s economies–governments or markets.

I encourage you to watch all three episodes.

 

Has Poverty in India Really Dropped?

In POLI 1100 yesterday, we analyzed the topic of development and underdevelopment and noted that, according to some estimates, the world has become less unequal (more equal) over the last 10 years or so, primarily (we noted) as the result of the economic rise of China and India. Given that these two countries contain more than 1/3 of the world’s total population, what happens to them (and their citizens) has dramatic global impact. So, if incomes (and wealth) in India and China are rising, then it’s not surprising that the world is becoming a wealthier (and more equal) place. Take a look at the chart below. You’ll notice differences in the two trend lines, which can be accounted for by the rise in income in China and India.

While there have been rumours for many years that official Chinese economic statistics may not be the most reliable, a recent story in the New York Times asks the somewhat surprising question “Has Poverty Really Dropped in India?” It turns out that the answer is most likely yes, though it appears, on the surface, that some of sleight was at work. However, in the end the drop in poverty seems legitimate:

Remember when the public was outraged at the idea that the poverty line should be 32 rupees, or 63 cents, a day in urban areas?

We’ve now learned it should really be 29 rupees. And believe it or not, this is no sleight of hand to show a drop in poverty.

The Planning Commission’s latest poverty estimates, [click on this link for the statistics, which are grouped by caste, religion, and other demographic indicators] released Monday evening, show a 7 percentage-point drop in India’s poor, the largest fall since the figure was first calculated in 1962.

Some critics say the Planning Commission has reduced an already controversially low poverty line even further, using the new thresholds to create the appearance of a large drop in absolute numbers.

By the way, how much is 29 rupees–the poverty threshold in urban areas? About 57 Canadian cents, at today’s exchange rates! So according, to the Indian government, an Indian living in an urban area can earn only 58% of the one dollar/day threshold and still not be considered as officially living in poverty!! Yikes!

Global Debt Crisis and Relief

The issue of the global debt crisis–and particularly the onerous debt levels of developing world (“Southern”) countries–was a topic that we covered in POLI 1100 today. It will allow me to combine two class topics–issues pertaining development and underdevelopment, and interest groups (NGOs)–into one blog post. The interest group, Global Issues, is dedicated to analyzing “social, political, economic, and environmental issues that affect us all” and has a section on debt relief for the developing world. Here are some facts and figures related to the scale of the debt crisis in the developing world:

Consider the following:

  • In 1970, the world’s poorest countries (roughly 60 countries classified as low-income by the World Bank), owed $25 billion in debt.
  • By 2002, this was $523 billion
  • For Africa,
    • In 1970, it was just under $11 billion
    • By 2002, that was over half, to $295 billion
  • Debts owed to the multilateral institutions such as the IMF and World Bank is currently around $153 billion
  • For the poorest countries debts to multilateral institutions is around $70 billion.

$550 billion has been paid in both principal and interest over the last three decades, on $540bn of loans, and yet there is still a $523 billion dollar debt burden.

Here are some remarks by Professor Susan George on how to tackle the debt crisis. Money quote:

…there is no level of human suffering, which in and of itself, is going to change policy. The only way policy changes is because people demand it, and in this case, it has to be the people of the North, because the people of the South have very little political clout.