Non–WikiLeaks: Development and poverty

Fayyaz Baqar Column

Assessing global wealth, it becomes evident that the wealth of nations has multiplied in these fifty years with global gross domestic product (GDP) increasing sevenfold, from about US $3 trillion to US $ 22 trillion.

In stark contrast, the present state of underdevelopment remains at an all time high. Of the 4.6 billion people in developing countries, more than 850 million are illiterate, nearly a billion lack access to improved water sources, and 2.4 billion lack access to basic sanitation. Nearly 325 million boys and girls are out of school and 11 million children under age five die each year from preventable causes -- equivalent to more than 30,000 a day. Around 1.2 billion people live on less than $1 a day (1993 purchasing power poverty in US dollars), and 2.8 billion on less than $2 a day.

A contributing factor to the under development is the state of global inequality. Presently world inequality is very high. In 1993 the poorest 10% of the world’s people had only 1.6% of the income of the richest 10%. The richest 1% of the world’s people received as much income as the poorest 57%. The richest 10% of the US population (around 25 million people) had a combined income greater than that of the poorest 43% of the world’s people (around 2 billion people). Around 25% of the world’s people received 75% of the world’s income (in purchasing power parity in US dollars).

The most appalling example of global wealth and inequality lies in the fact that the richest billion people command sixty times the income of the poor billion.

However, the poor can play the most important role in coming out of the poverty trap in Pakistan, where the level of indigenous philanthropy remains high. A survey by Aga Khan Foundation (AKF) found out that “in 1998 Pakistanis gave an estimated Rs41 billion in money and gifts in kind. Additionally, citizens volunteered 1.6 billion hours of time, valued at another Rs29 billion. Additionally, it is showed that at 58 percent, Pakistan’s rate of volunteering “exceeds even the famously high rate of volunteering in the United States, and almost twice that of the twenty two countries examined by the John Hopkins University comparative nonprofit sector project.”

Assets owned by the poorest of the poor put together, present a staggering amount. By our calculations, the total value of the real estate held but not legally owned by the poor of the Third World and former communist nations is at $9.3 trillion. Major assets would be unleashed by unlocking the dead capital.

This is a number worth pondering: $9.3 trillion is about twice as much as the total circulating US money supply. It is very nearly as much as the total value of all the companies listed on the main stock exchanges of the world’s twenty most developed countries New York, Tokyo, London, Frankfurt, Toronto, Paris, Milan, the NASDAQ, and a dozen others. It is more than twenty times the total direct foreign investment into all Third World and former communist countries in the ten years after 1989, forty six times as much as all the World Bank loans of the past three decades, and ninety three times as much as all development assistance from advanced countries to the Third World in the same period.

Modern development has entailed change in resource use pattern. It has moved resources away from production for use (subsistence economy) to production for local, national and global markets. This has resulted in expansion of large-scale production at the expense of small-scale production. Expansion of large-scale led to exodus of farm population to squatter settlements is urban areas and creation of informal sector. Informal sector competes with the formal sector at very adverse terms of trade. Paradox of modern development consists in integration and marginalisation of local producers in the global economy. To improve livelihoods of informal sector investment is needed for creation of physical, social and economic infrastructure extension services and credit. In rural areas poverty has been caused due to expansion of market economy and negative externalities of large scale production by public and private sector. Rural poverty has found expression in environmental degradation, landlessness, indebtedness, rural-urban migration, unemployment and increasing crime rate.

Sustainable development is not attainable under unregulated capitalist markets; however we can have sustainable resource use with investment in informal sector/low income groups through the NGO-Government partnerships. Sustainable development would come under the domain of politics and choice of people centred policy mix. The NGOs’ role would be to do innovation; advocacy and scaling up will take place through the government. Furthermore, NGOs’ role is to help the government make an informed choice in providing the course of change.

This course of change would entail two components, partisan and non-partisan. In order to do that, certain patterns would have to be formulated. The non-partisan would have to focus on existing resource allocation “working within the system, living within the means”, including all in the development process. The partisan would have to focus on changing distribution of resources, regulations and consolidating the gains.