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Poverty: The Power Of Global Institutions And Interests Of Developed Nations

2141 words - 9 pages

A major reason why it is not possible to end poverty is due to the power of global institutions and interests of developed nations in keeping the developing world weak. From the 1970’s to the present day, the amount of debt owed by the developing world has continued to increase, with developing countries external debt rising to $4 trillion at the end of 2010 (The World Bank, 2012, p. 1). Despite the vast amount of aid given out by nations, debt has reached a point where “for every $1 received in aid grants in 1999, sub-Saharan Africa paid back $1.51 in debt service” (Mentan, 2002, p. 117). This is having a severe impact on poverty levels, with the majority of African nations spending more on debt repayments than they do on education and healthcare combined (Owusu and Clarke et al., 2000). In response, developing nations have turned to international institutions such as the IMF and World Bank for assistance; however the neo-liberal policies prescribed by structural adjustment (SAPs) have only served to increase poverty levels and lead to greater deprivation. One example of this is the Ivory Coast, which in 1993 received a loan in return for policy changes such as privatization, deregulation and promoting the expansion of commodity exports through trade liberalisation (Fridell, 2006, pp. 8--28). Faced with the need to pay back debt, the Ivorian government followed through with the SAPs, increasing the export of cocoa which in turn caused oversupply in the market and declining prices, leading to 70% of the population experiencing increased rural poverty and played a part in causing civil war (Manzo, 2014). Indeed by getting developing nations to open trade borders, whilst they face protectionist barriers which are “3 to 4 times higher” than those faced by developed nations, is only working the terms of trade and creating imbalances in favour of the developed world (IMF, 2001). Furthermore, it is clear that debt problems have only gotten worse with a number of nations unable to pay back the Bretton Woods institution’s original loan, let alone the debt they already possess. Despite their good-natured intentions, these institutions and their policies are keeping the developing world poor and the developed world rich.
The adverse effects caused by neo-liberal policies are largely due to the impact of colonialism that is still present today. When Africa was initially colonised, Western nations aimed to exploit the vast amount of natural resources whilst at the same time making colonies dependent on “imported industrial goods” (STRW, n.d.). This system continues today, with the continued use of many colonial trade routes as well as the majority of Africa reliant on primary resource exports and foreign imports (Rodney and Babu et al., 1981). When African nations began to get independence in the 60’s and 70’s, many adopted policies aimed at reducing Western dependence by taking out loans, however oil shocks and economic crises left government’s unable to...

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