Fundamental conditions for economic development

Poverty and wealth are often found side by side. They are two dimensions in our world that are interrelated because they affect each other and influence both the willingness and capacity of states to ensure a stable global system. Traditional approaches to IR are premised on the notion of state sovereignty. But, sovereignty as an absolute concept that reinforces separation between states has been tempered through the many processes of globalisation, including economic agreements and the establishment of international organisations, as well as with the emergence of human rights thinking as captured through the Universal Declaration of Human Rights. With respect to the emergence of human rights thinking, the premise goes that in the context of a common set of universal rights based on the individual, the sovereignty of the state can be challenged if a government does not respect or maintain these rights. Here, sovereignty means that a state does not only maintain rights, it also meets its responsibilities. In relation to poverty, globalisation raises the question of the obligation the wealthy owe to the poor and vulnerable. One of today’s most pressing international problems is what to do about poverty and the approximately one billion people living in such a condition. As we start our scan of key global issues, it is appropriate to open this second section of the book by addressing an issue of the magnitude.

Poverty matters as a subject for reflection in IR on many levels, one of which is a prominent set of ideas around global justice that considers what states owe each other in the process of international cooperation. After all, it can be said that those with the power and ability to assist have a moral and ethical obligation to try and solve problems like poverty. This stems from what Peter Singer (1972) calls the ‘rescue case’, noting there is an obligation for someone to assist an infant drowning in a shallow pond if the child can be saved with minimal effort or inconvenience. In the context of global poverty, the logic flows that developed states have an obligation to help poor states because they can, with minimal effort. However, the obligation of developed states to help alleviate poverty is not just relevant because they can assist; it is also because they are very often implicated in creating the conditions for its existence. For example, Thomas Pogge (2008, 2010) argues that poverty exists due to a coercive global order – which includes international governmental organisations such as the World Bank and the International Monetary Fund – that disadvantages the poor and reinforces a context of poverty. This means that developed states and multilateral institutions contribute to the persistence of global poverty due to both the way they have structured the international system and how they operate in it. These perspectives indicate that a global problem like poverty requires a global solution that developed countries have both a moral, and strategic, responsibility to address.

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Defining poverty

Defining poverty begins with a consideration of conditions that prevent regions, states and peoples from having access to wealth. Though there are many elements to this, there are four key structural conditions to consider.

1. History of exploitation

Many of today’s poorest nations were previously exploited through colonialism and/or slavery. These actions have had lasting impact through entrenching inequalities between socio-ethnic groups within states. A prescient example is South Africa, which, under British and Dutch rule, restricted the rights of indigenous African groups in the areas of education, land ownership and access to capital. At the same time there was a concentration of wealth in the hands of the white colonising minority. Such actions were eventually enshrined in the creation of the apartheid system of racial segregation. However, even since its dismantling in 1994, poverty amongst the indigenous population is disproportionately high in comparison to white groups due to the fact that capital and land continues to be concentrated in the hands of a select few. Of course, some former colonial nations have emerged from their exploitation to become some of the world’s leading economies – consider the US and Australia. Yet, even in these ‘Western’ societies there remains a legacy of colonialism that often affects indigenous peoples disproportionately. In more absolute terms, as decolonisation unfolded in the second half of the twentieth century, many new nations, particularly in Sub-Saharan Africa, were left with inadequate or weak political structures that soon gave way to other types of exploitation via dictatorship or corruption. In these cases, the bulk of the population experienced exploitation. In some states, these problems still persist.

2. War and political instability

When thinking of the fundamental conditions for economic development to take place in a state, security, safety and stability often come to mind. This is because peaceful conditions permit a government to focus on developing natural resources, human capacity and industrial capabilities. War and political instability often act as significant distractions as efforts are directed at combating violence or insecurity. For example, think of the conflict in Syria that began in 2011. This has led to a mass flow of millions of refugees seeking to escape the conflict, leaving behind a war-torn state that lacks the human and economic resources to govern itself effectively. It is a pattern that has been seen before – for instance, in the 1990s in Somalia, where instability still persists. The outlook for Syria in the years to come could well be even worse. It is also something that can be seen in the developed world, though to a different degree. Consider the United States: it spent upwards of $3 trillion on the invasions and occupations of Iraq and Afghanistan as part of its ‘Global War on Terror’ while, simultaneously, relative poverty and inequality increased within its own society, in part due to the government prioritising public spending on warfare. It is no surprise, then, that when surveys on citizens’ qualities of life are undertaken, stable nations which do not typically engage in warfare – such as Switzerland and Denmark – are often top of the list.

3. Structural economic conditions

The way in which the international economic order is structured can either reinforce or ease poverty. Institutions like the World Bank and the World Trade Organization are dominated by wealthy nations. This has placed them under scrutiny due to embedded practices that often place developing countries at a disadvantage. For example, before the World Bank issues a loan to a low-income nation, certain conditions must be met. These are known as conditionalities. They can include policy changes such as the privatising of public services – for instance, the provision of water, sanitation and electricity. Imposing such conditions, or structural adjustments as the World Bank calls them, have frequently been shown to cause more harm than good.

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