CURRENT GLOBAL ECONOMIC SITUATION

viewstonews on November 12, 2009

International wealth in the last five decades has persistently transferred from the poor to the rich nations. And at the beginning of the 21st Century there is endemic deep poverty affecting over a billion of people. This is primarily because of current global economic situation. In this article effects of Current Global Economic Situation on countries and common people have been deliberated upon.

International wealth in the last five decades has persistently transferred from the poor to the rich nations. And at the beginning of the 21st Century there is endemic deep poverty affecting over a billion of people[1]. There is also a steady widening gap between a rich minority of the world’s population (located mainly, but not solely in North America, Western Europe and Japan) and the majority poor people of the world. One of the crudest measures is that about 300 dollar billionaires are collectively as wealthy as the poorest 2.4 billion people. It has also been reported that in 1960, the richest 20% of the world’s people had 70% of the world’s income; by 1991 their share had risen to 85% while the share of the poorest had declined from 2.3 to 1.7% put in another way the ratio of the global inequality had doubled[2].

· Recent statistic shows that the Third World with about 85% of the world population had only about 21% of world trade and about 20% of world income in 1997. In the last decade, about 85% of the international capital investment took place in America, Western Europe and Japan, compared with about 45% of such investment between 1980 and 1990. In 1980 the developing poor countries received 55% of world’s direct and capital investment but since 1990 when globalization became more intense such investment had fallen to only 15%. Of the about 5000 multinationals and strategic companies and corporations controlling about 75% of the world trade today about 95% of them are owned largely by Japan, European Union and North America. This leaves the rest of the world with a balance of just 5%.

· Measured by traditional yardstick, the world is getting richer by the year. Since 1950 the gross global product has grown from $ 3.8 trillion to $ 25 trillion (in 1997) strongly out pacing the population growth rate. Statistically the average man has thus grown richer but in reality the reverse is the case. While there have been undeniable improvements in human wellbeing, over a couple of decades, large number of people remains mired in excruciating poverty. Some 1.5 billion people in the developing world countries alone are considered “capability poor”[3] (as defined by the 1996 Human Development Report), lacking adequate nourishment, health care and education to escape poverty and lead descent, productive lives.

· Most of the world’s poor – some 86% of the global total live in developing countries. Poverty is especially concentrated among the countries of South Asia; with about 560 million people living in poverty and sub Saharan Africa with 400 million people. Relative to the total population of these regions, however, sub-Saharan African stands out: two third of its people are poor compared with roughly 40% in South Asia and about 45% in Latin America[4]. Annex-B shows “World Regional Poor Population”.

· For people at the lower end of the global economic divide, particularly in the developing countries, the day-to-day reality is innumerable hardship and chronic insecurity. They have to contend with meager incomes despite long hours of backbreaking work, insufficient amount of food and poor diet, lack of access to safe drinking water and susceptibility to preventable diseases. Their houses provide few comforts and scant shelter[5].

· And yet, this comparison understates the true global disparity, because the statistics given here are based on national averages – that is they assume that all inhabitants of the richest countries are rich and all inhabitants of the poorest countries are poor. In fact the richest 20% of humanity, irrespective of the country they live in, enjoy an income 150 times as the bottom 20%[6]. A different statistic underscores this reality; the world’s 358 wealthiest individuals (distinguished by possessing at least $ 1 billion in assets) had a combined wealth of $ 762 billion in 1994. This is equivalent to the income of 2.4 billion poor people or 45% of global population.

· Equally important, gaps exist within countries of both the South and the North. There is now a “Third World” of impoverished communities even within the richest countries, just as there is “First World” of wealthy enclaves within poorer nations. Inequality, marginalization and the resulting polarization of society appear to be on the rise virtually everywhere. Many societies including the developed are confronting the paradox of a growing GNP and stagnating or eroding incomes and low living standards. Latin America countries have long displayed the most unequal income distribution in the world. This disparity grew even larger during the 1980s. In Argentina, Brazil, Costa Rica Uruguay and Venezuela for example, the richest 5% of the population gained during the 1980s, at the expense of the bottom 75%. Income inequality has also risen sharply in many countries in Eastern Europe and the former Soviet Union[7]. Among Asian countries income distribution in India, Malaysia, Singapore, Hong Kong and Taiwan has become more stable but in Bangladesh and Thailand it has deteriorated.

· The Western Industrialized nations have vastly greater resources to ensure a higher standard of living for all citizens but even so, some 100 million of their inhabitants – more than 10% - live below the poverty line and more than 5 million are homeless. About 15% of American – 39 million people was officially considered poor in 1993[8]. Inequality has also increased in many rich nation, in UK for example, the ratio between the top 20 and bottom 20% of the population went from 4:1 in 1977 to 7:1 in 1991 and in the USA which has the widest income gap among the industrialized nations it went from 4:1 in 1970 to 13:1 in 1993.

Annually, the United Nations publishes Human Development Index and ranks nations according to their citizen’s quality of life rather than strictly by a nation’s traditional economic figures. The criteria for calculating this ranking include life expectancy, educational attainment and adjusted real income. Thirty countries have been categorized as the most liveable countries in 2004 while another 30 countries have been characterized as the least liveable countries in 2004