Economy

Current Global Economic Structure: Pro poor or Pro rich

Do you know how poor and rich are iving during Covid 19? Read more to know Current Global Economic Structure: Pro poor or Pro rich.

There is a speculation nowadays that the current global economic structure in the name of globalization which strengthened after the end of cold war is pro rich or pro poor. The reason behind this is that the first two decades of 21stcentury have passed but still there are numerous economic problems which the poor people of the world are facing due to the affects of globalized economic model. Some of these problems include food insecurity, low per capita income, unemployment, high inflation rate and low purchasing power etc. This individualistic perspective is just a one side of the equation because there are also multiple effects of this global economic structure on national and international level. But these effects vary considerably from rich states towards poor states. Besides this, the role of tools of this economic structure is also very important and these tools are IMF, WORLD BANK, Multi-national corporations and WTO etc. These institutions are dictated by those who are getting maximum benefit from this global economic structure.

It is clear from the current outlook of world economic condition that the current global economic structure is pro rich and it has divided the society into two groups. At national state level, these groups include rich people and poor people. But at international level, these are rich nations and poor nations or developed and developing states. It one looks deep into this phenomenon then it will become crystal clear that rich people in both developing and developed world are enjoying the benefits of this globalized world. But contrary to that poor people are not satisfied and they are just struggling for their survival. They are facing money related issues on daily basis. The situation in even worse in war torn countries like Yemen, Syria and Afghanistan etc. According to the forecast of World Data Lab report 2019, there are currently 600 million poor people in the world. This is far greater than the population of whole Europe which is just 445 million in 2020.

At national level, the reason behind the disadvantages of poor people from this global economic structure is that the big companies or industries in any country are in the control of rich people. These same people are present in the state legislatures. They get two tier benefit from this. First is that these rich people paid the labor class very small amount in return from their labor but they sale their product at four times prices with respect to their manufacturing cost. With the passage of time when their businesses expand, they don’t share the profits with their employees on equal basis. They exploit these working class and gradually the money starts to revolve around these rich people. This ultimately led to widening of gap between rich and poor people.  This is just one aspect of their exploitation. The second one is that these rich people are the also the part of the parliaments or state legislatures. They try their best to prevent pro poor legislation. They pass only pro rich tax legislation and exempt themselves from hefty tax. In result, the poor people have to pay the burden of heavy taxes through indirect taxation. This ultimately further widens the gap between rich people and poor people and that is the same reason that rich people always support current global economic model and they do not want to change the status quo. Otherwise, their interests could be endangered.

The situation at international level between states is minutely different up to somehow but the crux remains the same. At international level, the global economic institutions are only serving the interests of rich states. For example, the terms of World Trade Organization (WTO) which include free trade between states and end of trade barriers are only beneficial for advanced states which have advanced technologies. Due to this particular clause, the industries of numerous developing nations have devastated because the developing states industries cannot compete with the developed nations industrial sector. The reason behind this is that they have old technologies and they cannot compete the foreign industries in terms of costs of products. There are several nations who have completely dominated the world markets by supplying cheap products in the name of globalization such as China. In this scenario, the developing states only have to rely on their agriculture sector and this is why their conditions did not change throughout the globalization. There are also some exceptions which totally counter the above-mentioned argument such the rise of Asian tigers which include Singapore, South Korea and Taiwan. But the reason behind their rise is timely adjustments in their economic policies and huge investment in research, education and industrial sector. All developing countries can’t follow this trail. The decisions in these institutions is similar to the decisions made in state legislature which only serve the interest of rich not the poor one. This is the same reason Bali Declaration failed several times.

Now, if one looks into the policies of Bretton wood institutions then it will become crystal clear that these institutions were created by developed nations in the 20th century just to dictate the poor states and to make them in line with the interests of rich states. These institutions have become the part of rich states carrot and stick policy. US and European Union have large voices in these institutions because they contribute more to these institutions financially. That is the same reason the policies of these institutions cannot deviate from the dictation of US and European Union. If one examines the example of rogue states such as North Korea and Iran then it will become clear that these states cannot lend from IMF or World Bank because US and European Union considers them as hostile states. But if one also analyzes the condition of those countries who got IMF and World Bank loans then one will be surprised that the situation is same. Because the success ratio of IMF or World Bank is very low. Pakistan who got up to sixth time IMF loans is still economic ridden country. In addition to this, the IMF programmes in Latin American countries also met with failure during era from 1995 – 2007. This is done on deliberate terms just to keep these poor countries in constant cycle. So that the developed states can control them according to their needs. So, all of this shows that current global economic structure is pro rich not the pro poor and currently there is no hope for its change.

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Muntaha Saleem
She is an Editor-in-Chief . She is a Telecom engineer and a blogger. She loves to blog about latest technology news and products.

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