The Question: Globalization and poverty
Once the Era of apartheid had come to an end in 1994 the internationally development community entered South Africa promoting the microcredit model with high hopes to empower the poorest black communities to break loose from the poverty spiral, however the Microcredit model was seen to be having the complete opposite effect, ultimately causing incredible damage to the area. The microcredit model was supposed to be the means of bringing sustainable development to the extreme poor areas. The model has been named the “anti-development” intervention (1), because in practice it has only shown that it supports consumption spending. The poor are worse off than ever before; to keep up with the obligations of repaying their microloans, they are forced to sell the few assets they own or borrow money from friends or relatives or even worse take up new microloans in order to pay for the old ones. This is not the only downfall of this type of so called sustainable development; another problem that emerges from this is that the actual businesses emerging form microloans are anything but businesses elevating poverty. The type of business that has been arising from the microloans have only created hyper-competition amongst all the new businesses as well as the old ones, leaving about 40% of the South African population repaying debt. The poorest and most vulnerable are left behind to take care of themselves drowning in debt, while the private banks and microcredit institutions gain huge financial profits. This is nothing but a microdebt-trap (1). Hence in the year of 2013, where the top priority of all countries is to diminish, if not eradicate, extreme poverty, how can something like the microdebt-trap still occur? Why is it so hard to fight poverty? Where does the problem lie and how did poverty become such an immense problem? In order to try and understand the extents of the situation, we need to have the basics in place. Lets begin by understanding poverty.
Definition of poverty:
Extreme poverty is defined by the World Bank as people living off under $1,25 a day. These are the people who hardly have the basics for survival; they do not have access to proper food, clean drinking water, health and education. (3) Do demographics have any influence on where the majority of the poorest population is situated vs. where the majority of the richer population resides?
Drawing a line at the equator reveals a fact of a geographic distribution of far more poverty being present south of Equator compared to that of north of Equator. (See appendix 1) It appears that the geography is linked to the economies of the world. I.e. the rich and developed countries are in the northern hemisphere (disregarding Australia) and the poorer countries distributed in the southern hemisphere, below the equator. (See Appendix 2) This is not the first time such comparisons have been made. Immanuel Wallerstein developed the World-system theory (2) in...