Why are some countries rich while others remain poor? How does globalization contribute to the wealth or poverty of nations?
To tackle these questions we have to recognize that both are very open and it is probably very hard to have a definite answer. My purpose with this essay is to analyze what I consider to be the most important aspects of these questions taking into account my research, background and experiences.
I will try first to address both questions and at the end present conclusions that interrelate the answers to both of them.
Why are some countries rich while others remain poor?
The fact is that we live in a world of inequality, and the gap between rich countries and poor countries is growing as measured by some statistics. According to a recent World Bank study, the average income in the 20 richest countries is 37 times the average income in the 20 poorest countries - and that gap has doubled in the past 20 years.
Why is it that some countries have grown spectacularly rich while others remain miserably poor? The reasons include, but are not limited to, history, geography, culture, politics, and probably random facts. David Landes notes that historically, hot countries have been poorer than cold countries. Tropical climates breed diseases such as malaria, leprosy, African river blindness, and parasites that invade and weaken bodies. Heat itself saps energy. Cold, is conducive to greater human productivity and therefore prosperity. However, the climate effect on the wealth of nations may be diminishing as the "knowledge economy" becomes more important, and as medical technology eradicates diseases. Singapore, with a hot, tropical climate, today has a higher per capita income than Britain.
War and corruption cause poverty, as governments redirect resources from health care and education towards the war machine, or to lining their own pockets. So does using the talents and productivity of only half the population: countries in which women are badly oppressed are nearly always poor.
Today, a combination of AIDS, which kills millions of people in their most productive years, the burden of debt (some countries spend up to half of their national budgets in servicing old loans), falling commodity prices (coffee prices alone have fallen by more than 60 percent since 1997), global trade rules that are skewed against developing countries, as well as drought and other natural disasters, are preventing millions of people from escaping poverty. One billion people are hungry most of the time. Around the world 113 million children, two-thirds of them girls, do not go to school.
In the wake of last year's September 11 attacks on the United States there is a growing recognition by world leaders that the gap between rich and poor is unsustainable. Poverty and inequality provide fertile ground for the rise of fundamentalism. Failed states threaten global stability.
But what can be done? In the last half-century developed countries have given the equivalent of a trillion US dollars in economic assistance to poor countries, yet many of the recipients remain desperately poor. Corrupt and incompetent governments have frittered away money meant to provide health and education to their people, or spent it on weaponry. Well-intentioned development projects have sometimes done more harm than good.
However, there have also been many cases where aid has worked. Since the 1960s countries as diverse as Korea, Botswana, Thailand and Chile have used aid and expertise from overseas to help them industrialize.
I have no doubt that trade, rather than aid, is the most efficient means of achieving economic growth. But to benefit everyone, trade needs to be fair as well as free. The US, Europe and Japan spend $350 billion a year on subsidies for their farmers, which is seven times more than they give in overseas aid. Oxfam Community Aid Abroad estimates that if Africa had just one per cent more of the global...
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