Poor nations could lead recovery

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G20 Leaders Family PhotoThe message of protesters at last week's G20 London Summit was that wealthy bankers have caused us all to suffer. It is also asserted that the poor, particularly those in developing countries, are bearing a disproportionate burden of the economic pain.

Poor countries have been adversely affected by measures taken by the developed world to protect their economies. Wealthy nations have kept import tariffs high to protect their own economies, while the IMF and World Bank impose conditions on aid that require poor countries to maintain open markets.

Nobody was expecting good news to come out of the one-day event. But we woke on Friday to learn that leaders had put aside their differences to support a US$1 trillion injection of funds 'for global economies', including rich and poor.

The figure includes $250 billion in overdraft funds, and $100 billion to be given directly in loans to the world’s poorest nations. The G20 leaders also reaffirmed support for meeting the Millennium Development Goals, which had been pushed aside by the crisis.

The London-based advocacy organisation Progressio — formerly the Catholic Institute of International Relations — describes the measures as a 'good first step' that will cushion the impact of the crisis for the world's poor. But Progressio's Tim Aldred says the measures fail to go far enough:

'It is more than we expected. But we would have hoped that more of the $1 trillion would be explicitly targeted at the world’s poorest people. At best it looks like this money will keep poor people where they are, rather than lifting them out of poverty.'

The Economist outlines the case for directing money towards the world's poor. It argues that offering new sources of funding to developing nations makes good economic sense. It is not charity.

The Economist says that while these countries have far less fiscal room for manoeuvre than rich economies, 'they are also areas of the world where growth could rebound quite quickly, because households are not weighed down by the crushing debts typical in America and Europe'.

It is at once astonishing and heartening to consider that stimulating the economies of poor nations could kick-start the global economy.

Many of us have struggled to come to terms with the fact that the only solution to this crisis might be to put more money into bailing out the wealthy banks that caused the problem. Now that the G20 London Summit has uncovered a spirit of international cooperation, it is time for the G20 to take a few extra steps, and give currency to the idea of giving developing nations a pivotal role in remaking the world economy.

Michael MullinsMichael Mullins is editor of Eureka Street.


Topic tags: michael mullins, global financial crisis, US$1 trillion injection, g20, developing nations, the economist



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Existing comments

As the son of a country pharmacist, I saw how GPs had come to be seen as our community's leaders, its respected senior counsellors and moral leaders. In this regard, they had supplanted the clergy who had performed similar roles in previous generations.

Among the healthily indebted participants of our globalised economy, it appears that bankers have now superseded doctors. Clearly, one must be of superior moral, physical and intellectual capacity to be successful in the banking industry.

As a rough guide to success, it is worth noting that in Canada, prison inmates with psychopathic tendencies are more likely to win over parole boards and to be released.

They are also more likely to re-offend while on parole.

A bank robber was asked why he robbed banks: "because that's where the money is."

One wonders why people choose careers in banking.

David Arthur | 07 April 2009  

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