Behind the increasing interconnectedness promised by globalization are global decisions, policies, and practices. These are typically influenced, driven, or formulated by the rich and powerful. These can be leaders of rich countries or other global actors such as multinational corporations, institutions, and influential people.
In the face of such enormous external influence, the governments of poor nations and their people are often powerless. As a result, in the global context, a few get wealthy while the majority struggle.
In this symposium we are going to talk about how Politics, and Political factors, prevent countries from being allowed to develop and raise their population out of poverty.
Political corruption is the use of legislated powers by government officials for illegitimate private gain.
- This can involve Government officials take a large share of the National Income and spending it on luxuries for themselves.
The Ex Iraqi dictator Saddam Hussein spent $2.2 billion building about 48 palaces between 1991 and 2004.
The economic impact of corruption on this scale is that it hinders development because the money should be spend on improving a countries infil-structure and instead is spend on a goods that serve no utility to the country. The money spent in a poor under-developed country carries with it a very high opportunity cost as it can be used to improve the state of the country.
Bangladesh -
- GINI co-efficient
- Misallocation of resources
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It is somewhat paradoxical that the discovery of valuable natural resources can lead to poverty in the bottom billion. A large group of resource-rich countries, such as Saudi Arabia or Persian Gulf states like Kuwait have enough income from oil to take them to middle-income status. That’s all very well for them, but what about for the resource rich countries in the bottom billion who are definitely not at middle-income levels. 29% of the people in the bottom billion live in countries where resource wealth dominates the economy. So why is this a problem?
- Firstly, resource wealth can lead a country back into trap 1 – if the resources are controlled by a dominant elite, the chances of civil war breaking out will be much higher. This in turn can cause democracy to malfunction.
- Why else is there this “resource curse?”
- There is the issue of Dutch Disease. The term originated from the effects of North Sea gas on the Dutch economy and basically states that... say in Debs country, i started exporting loads of pens because pens were an abundant natural resource. Because country ..A.. liked my pens, she bought loads of them which in turn boosted the strength of my countries currency. When currency is strong, it means that exports are less competitive because they are more expensive for the importers abroad. Therefore, although I have revenue from the pens i sold, person ..B.. would not be able to sell her peanuts because the exports of country Debs are now less competitve. So, exports from one resource may crowd out the export activities elsewhere, which could have the potential to grow rapidly.
- Another issue is that natural resources tend to be very volatile which leaves uncertainty for countries and their governments. The volatility can often lead to growth in a boom and bust fashion so that although public spending can be increased during a boom, it becomes difficult to reduce the spending in the subsequent crash.
-Health care
-Judiciary System
-Education
-Political System
-Communications
The Conflict Trap
73% of people in the bottom billion have recently been in, or are still in a civil war
It doesn’t take much logic to work out that a country who has recently suffered a civil war will find it harder to break out of poverty. But what Collier identifies is that not only will countries that have had a civil war find it harder to break out, but that there is a link between the starting income of a country and the likelihood of civil war actually breaking out – the poorer the country, the more prone to a war, the more prone to a war, the poorer the country. For the people stuck in the bottom billion, this is a never ending cycle.