Development: Not by bolstering GDP alone

By Dr B K Mukhopadhyay

Better late than never - developed countries have been motivated to accept the growth of less developed countries as an important goal and to help in its realization for humanitarian, political and economic reasons – the political motivation has probably been domint. The interest of the United States in Latin America, of France in parts of Africa, is some of the glaring examples. The global business scerio has been undergoing changes at a speedier rate than ever before – unprecedented transformation indeed. The reality is the fact that this transformation itself has also been causing turbulences. 

At this juncture, the main point is that the developed block, to serve their own interests should see that the laggards are coming up. They get the market. They park the fund. They get the places to bolster intertiol business ventures.   

But the big question looms large.

Is it still not the fact that a vast majority of the world’s population is living close to the perilous borders of bare subsistence?

World population is at 6.8 billion; world population is increasing by 77,000,000 or 1.2 per cent each year. 82 per cent live in developing countries, where the population increases by 1.4 per cent per year. More than 1 billion people do not have adequate food; at least 1.4 billion live on less than $1.25 a day; almost half the world population live on less than $2.50 a day; the price of food has risen dramatically: rice costs 28 per cent more in 2008 than in 2006; 642 million people are suffering from chronic hunger in Asia and the Pacific; 265 million in Sub-Saharan Africa; 53 million in Latin America and the Caribbean; 42 million in the Near East and North Africa and 15 million in developed countries.

Asia is home to two-thirds of the world’s poor: every fifth person lives on less than $1 a day. In India, Bangladesh and Cambodia, more than 30 per cent of people live on less than $1 a day and most poor people live in areas where the land is margil and ecosystems are fragile.

This, no doubt, has been the case for a long time but only recently has it attracted the interest and attention it deserves.

Today, the poverty in which the great mass of people lives stands at the very top and world economic problems demand a lasting solution. Though the impoverished countries, no doubt, themselves place economic development first on the priority list, yet it has come to be widely believed that half of the world’s population is suffering from deprivation and seething with discontent, while the remainder of the world lives in relative affluence. Higher commodity prices have been hampering further growth of these economies in particular.

It is, of course, a special point to note that developed countries, individually and collectively, through various intertiol organizations, have joined the battle and declared the intention to help raise the standard of living of the poorer countries.

Actually speaking, a global-friendly-environment encompassing bold leadership, good governce and disciplined multi-lateral trade framework is yet to emerge, though of crucial immediate requirement. It is thus to be agreed upon that health of the global economy hinges too heavily on how these emerging economies perform in the days to come especially when a number of European economies are still limping and the US economy has a lot still to do to weather the possible storm of recession recurrence.

Actually, the recent fincial crisis stems from the growing disruptions to the order established after the Second World War and the WTO Director General Pascal Lamy has rightly been calling for a reform in the entire global economic governce system. After 60 years of erosion of coherence and governce, a number of major deficiencies occurred both within the intertiol system and between tiol systems and the global system. “Drawing a parallel between the recent fincial crisis and the crisis of the 1930s and 40s, we owe it to ourselves to review the entire system of global economic governce,” he rightly observed. The WTO chief underlay full employment of human resources, development, social progress, a stable monetary system, open trade and environmental sustaibility to be the shared objectives for the new order while simultaneously stressing on the need for “a greater degree of explicit renunciation of tiol sovereignty” to establishing the minimum level of collective restraint and governce. Instruments designed to ensure transparency, legitimacy, coherence and efficiency is also of vital importance to the new

Actually speaking, a global-friendly-environment encompassing bold leadership, good governce and disciplined multi-lateral trade framework is yet to emerge, though of crucial immediate requirement. It is thus to be agreed upon that health of the global economy hinges too heavily on how these emerging economies perform in the days to come especially when a number of European economies are still limping and the US economy has a lot still to do to weather the possible storm of recession recurrence.

If we glance back we could note that, the recent fincial crisis stems from the growing disruptions to the order established after the Second World War and the WTO Director General Pascal Lamy has rightly been calling for a reform in the entire global economic governce system. After 60 years of erosion of coherence and governce, a number of major deficiencies occurred both within the intertiol system and between tiol systems and the global system. “Drawing a parallel between the recent fincial crisis and the crisis of the 1930s and 40s, we owe it to ourselves to review the entire system of global economic governce,” he rightly observed.

The WTO chief underlay full employment of human resources, development, social progress, a stable monetary system, open trade and environmental sustaibility to be the shared objectives for the new order while simultaneously stressing on the need for “a greater degree of explicit renunciation of tiol sovereignty” to establishing the minimum level of collective restraint and governce. Instruments designed to ensure transparency, legitimacy, coherence and efficiency is also of vital importance to the new global governce.

So, huge tasks ahead! A lot depends on to what extent global cooperation could forge ahead. Massive intertiol support would be required for economies knocked out of kilter by the popular uprisings against long-serving authoritarian leaders, where even tourism in particular has been hard hit.

The IMF rightly said ‘it can provide around $35 billion to help stabilize countries’ economies but the bulk of fincing will need to come from the intertiol community’. The Japan crisis had pushed the hitherto ongoing efforts to go on back foot. In a very recent report the Intertiol Monetary Fund (IMF) said the exterl fincing needs of oil-importing countries in the Middle East and North Africa would top $160 billion over the next three years. Also, the G8 leaders promised $20 billion in aid to Tunisia and Egypt and held out the prospect of billions more to foster the Arab Spring and the new democracies emerging from popular uprisings. Though (with aid to Arab states domiting) the G8 also recently issued a special declaration saying it stood side-by-side with Africa, yet the actual need is to intensify its efforts to achieve peace and stability, economic development and growth, regiol trade and investment.

(Dr B K Mukhopadhyay, a noted Magement Economist and an Intertiol Commentator on Business and Economic Affairs, Director, NetajiSubhas Institute of Business Magement, Jharkhand, can be reached at m.bibhas@gmail.com)