What Did Globalisation Mean for Poor Countries like

Saksar Sawasth Aur secular Haryana

What Did Globalisation Mean for Poor Countries like
India?
We discussed earlier, the developed countries in North America and Europe were engulfed in an economic crisis in the 1970s. But very quickly they found a way out of this. They did this by transferring the major impact of the crisis on to developing countries like India. One method they did this was by opening up the markets of these countries by dangling the promise that a "borderless world" under globalisation will benefit everybody. T h e rich countries and the large banks t h a t they controlled had already used the bait of easy loans to trap many developing countries into a debt crisis. The debt crisis meant that many poor countries could not even pay back the interests on the
loans they had borrowed. Now the developed countries used this situation to their advantage. They said that they would bail out these countries facing a debt crisis by giving even more loans! But now these loans would be tied to certain conditions. Future loans were now linked to accepting a broad package of policies called Structural Adjustment Programme (SAP). These policies, that were now forced upon poor debt ridden countries, included conditions that governments need to spend much less on social sectors like food security, health and education. The conditions also required these countries to open their markets to goods and services from the rich countries. In agriculture these countries were asked to produce for exports and not worry about producing food grains for their own people.
[My country is under huge indebtedness!Why should I worry so much about returning
merely Rs. 500 to the Seth! The rich countries took advantage of our debt crisis and placed conditions on future loans, they sought to offer. They wanted us to open our markets to goods an services of developed countries, and produce food grains for exports
without fulfilling our domestic needs.]
These policies were implemented in Latin America and Africa in the 1980s. In the agricultural sector, this led to the reinforcement of colonial patterns of agricultural production, stimulating the growth
of export-oriented crops at the cost of food crops. The problem at the heart of this pattern of production is that it was implemented at a time when the prices of primary commodities (that is, products from agriculture and mining) were the lowest in history. By 1989, prices for agricultural products were only 60 per cent of their 1970 levels. This led to the further devastation of the economies of these countries and seriously affected food availability. In the industrial sector, the new policies forced governments in developing countries to withdraw support to their own industries.
The government run public sector, set up to create basic infrastructure and provide public utilities like electricity, roads, communications, water, etc. were systematically dismantled. They were privatised, or handed over to multinational corporations. Further, over this period, capital (money) across the globe was concentrated in fewer and fewer hands. The driving force behind this phase of imperialist globalisation became this accumulated money. Countries were forced to remove restrictions on the flows of this capital in and out of their countries.
[Development will be best if you give free enterprise the green light. Build ports and office space to attract corporates. Set up more EOUs, plantations and factories…Don't waste your capital on basic food and clothing.]
This money is called speculative capital because it is invested for short term profits - just like a gambler would do - without any intention to create facilities that would promote manufacturing capabilities. Thus economies of poor countries are captive in the hands of those who have huge amounts of money - large multinational banks based in rich countries or foreign institutional investors (FIIs) - who have the ability to shut down these economies in matter of days if they decide to move their money to some other country. Together these policies and processes increased indebtedness of Third World countries that they were supposed to reduce, increased the rate of
exploitation of wageworkers across the globe, and shifted wealth from productive to speculative sectors. The policies also led to the increase of casual, poorly paid and insecure forms of employment. Fund cuts in education and health also meant that already weak and under-funded systems of health, education and food security collapsed. It is thus not accidental that
these policies increased levels of poverty in already poor countries even as a small section of the
population became richer; this section of the middle and upper classes obtained access to consumer goods that were earlier available only in the rich countries. Indeed this figure has increased substantially over the last three decades. Between 1990 and 1993 sub-Saharan Africa alone transferred 13.4 billion dollars annually to its creditors, substantially more than it spent on education and health combined. From 1987 to 1993, the net transfer of resources from Africa to the IMF was 38 billion dollars. As a result, inequalities within and between countries have risen sharply: the income gap between the world's richest and poorest has more than doubled, although the world has never been as rich as it is today.
[In spite of all the talk about developing countries receiving aid from the rich countries, in actual practice, every year close to 80 billion USD are paid by the former to latter just in order to return the loan that were forced upon them earlier.]
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In 1960 the 20 per cent of the world's people in the richest countries had 30 times the income of the poorest 20 per cent; today they command 74 times more. The same richest 20 per cent of the
population command 86 per cent of the world GDP while the poorest 20 per cent command merely 1 per cent. More than 80 countries have per capita incomes lower than they were a decade or
more ago; 55 countries, mostly in sub-Saharan Africa, Eastern Europe and the former Soviet Union, have had declining per capita incomes.

r.S.Dahiya