Need to focus on people on fringes

The World Economic Forum aims at keeping the formal world economy propped up. A world economy whose health is gauged by the GDP growth rate (and its components, fiscal and trade balances), fails to capture the economic health of the people on its fringes. No economy is healthy if the people by and large are economically insecure.

The annual gathering in Davos yet again this year dispersed without a firm resolve to impact the bulk of humankind that remains poor and deprived in more ways than one. It might be argued that deprivation is not one of the terms of reference of the participants at Davos who are concerned primarily with the affluence of the rich. While that may well be the case, the poor are having their presence felt through militancy that is destabilising locally, regionally, and even globally. Nonetheless, rising militancy ought to be shrugging the participants of this scenic ski resort in Davos out of their smugness. If the affluent wish to pursue their goals of wealth accumulation in peace, they must now look sideways at the ones clamouring for their share of the world economy.

Development goals should, therefore, not just surface on the world agenda but there should be pressure created on national governments to ensure their attainment just like there is pressure created for the attainment of domestic political goals as these are perceived to be central to the attainment of big power aims and objectives. The big powers ought to realise that their political goals are not easy to attain unless the domestic economic goals in various regions are realigned towards all inclusive development.

Having said the above, some voices were raised at Davos this year regarding the collective inability of the world to achieve development goals. These included the UN Secretary General Ban Ki-moon, Bill Gates, and rock star Bono. They attempted to shift attention to some core economic issues of infant mortality, poverty alleviation, and climate change. Britain’s PM Gordon Brown floated the idea of making the World Bank responsible for environment also in addition to development. World Bank president Robert Zoellick expressed concern for increase in world food prices. And, Bill Gates announced a $306 million grant for the development of farming in poor countries.

The question, however, is whether they will leave a mark on the socio-economic plight of the teeming millions deprived in under-developed countries. The answer would be that intent of leaders is a necessary but not a sufficient condition for attaining development goals not until the same are translated and woven into their foreign policy outlook.

The economic development of LDCs (less developed countries) will enhance purchasing power thereby enlarging the size of markets for domestic businesses and global corporations alike in this era of liberalised flow of goods and financial capital. Private business interests in the developed world would stand to gain. Economic development of LDCs should, therefore, feature significantly on all international agendas.

Progress should go beyond the intent mentioned in Davos this year. A meaningful direction needs to be given. Before the World Bank graduates to fix the environment, it should instil confidence on the front of development. The IFIs (international financial institutions) for the most part have reflected the concern of their majority shareholders. Even though into development, loans were not directed to the least developed. Rather, loans were given in line with the strategic interests/priorities of their financiers.

The upshot is that over a half century of so-called bouts with under-development, poverty and under-development have persisted or increased in places. When the IFIs started exporting privatisation in line with Reagan’s final assault on communism in the 1980s, many quipped that the development agencies must also be privatised as they have not been able to achieve the end of development. Can they now be expected to fight environmental issues especially when their major financier has been soft-pedalling on the front of environment and has been trying to push it to the back- or slow-burner?

While the outreach of Bill Gates farming donation needs to be known, can Bill Gates donation for farming make a difference in the lives of poor farmers in those countries where the big landlord is the dominant player to the exclusion of small ones and views the development of the latter as a zero-sum game? One wonders about the extent to which Bono, Bill Gates, and Gordon Brown understand and appreciate the structures of power in LDCs that resist transformational change and perpetuate status-quo for the continuity of their own power and wealth concentration.

The World Bank and other IFIs do understand these development-inhibiting power structures. But, the IFIs follow the path of least resistance and actually use the power centres as anchors to gain a foothold in the less developed countries. In their private reports, they do highlight the importance of transformational change and even land reforms but in their public documents they will give recommendations cautiously that would not upset the applecart for either themselves or for the cores with whom they liaise with in the LDCs.

So, on the one hand, the virtuous pronouncements at Davos were actually shots in the dark, the sincerity behind them notwithstanding. On the other hand, global power centres remain dependent on the LDC power centres for their geo-political/strategic interests.

While some of the development intent at Davos was encouraging, it will soon be viewed as futile unless fleshed out into a logical strategic whole for action and quick implementation with visible results on the ground.