Type: Process Essays
Sample donated: Hope Carpenter
Last updated: November 22, 2019
Rapid population growth is only a factor causing poverty and this is only in certain circumstances, unfortunately these circumstances are not rare. Other factors such as debt repayments, war and sanctions and unfair trade rules imposed by western powers also affect the amount of poverty that is to be found within a country. Rapid population growth can play a very large part in reducing a countries population to poverty. This is especially found in countries with very little resources or with low levels technology. If a country has no resources it has nothing the outside world wants.
Also if a country has no resources it has nothing to support its population with. This may not be the case in countries that have developed very high levels of technology, such as Japan. Japan is an example of a country with very small resources but with very high technology levels. High levels of technology mean that there is a higher likelihood of more efficient agricultural techniques being developed. On the other hands there may be a country that has valuable resources but it does not have the technology required to exploit these. For example, Nigeria is one of the world’s poorest countries, they however are sitting on large oil reserves.These reserves remain largely untapped due to the lack of technology.
Debt repayments play a very large part in the reduction of a country to poverty. These repayments divert millions from education and healthcare. The UN has estimated that if funds were redirected from loan repayments to healthcare and education, seven million children would be saved every year. There are two main types of creditors, the first being multilateral creditors such as the World Bank and the International Monetary Fund (IMF). The other creditors are called bilateral creditors and mainly consist of the Group of Seven richest countries in the world.
They all however set stringent guidelines as to who is eligible for a loan. Applicants have got to be willing to bow to the following conditions, privatising industries and services which causes job losses, reducing public expenditure which result in the introduction of fees for education and healthcare and the removal of subsidies for basic food causing prices to increase. These conditions hurt the poor, the people the loans are supposed to help, and make the rich even richer. Forty-one countries (33 in Africa) have been selected by the World Bank and the IMF for being extremely poor with very high debts.These countries can apply for debt relief under the Heavily Indebted Poor Countries initiative (HICP).
The HICP countries owe $205 billion to their creditors. In 1999, HIPCs paid $185 million a week to creditors. Half of this was owed to bilateral creditors, 37% was owed to multilateral creditors and only 14% is owed to private creditors. Sub Saharan Africa makes payment of $35 million each day to the rich West, at the same time they face declining economic growth rates, rising infant mortality, falling life expectancy and a HIV/AIDS crisis.Whoever is to blame for the huge build up of debt, the only people that suffer as a result are the poorest people in the world. Then there is the question of where all this money goes.
If so much money ahs been borrowed why haven’t we seen improvement in the conditions of people in poor countries? The answer to this is that the way in which the money is spent is left largely unmonitored. Creditors don’t care how it is spent as long as they get it back with interest. Some countries such as the UK make a large proportion of their annual income through interest on debts.The money that is lent may be spent badly, it may be wasted, it may line the pockets of dictators and some may go straight back to the Western creditors by corrupt lending.
Very little of the money actually helps ordinary people, but it is ordinary people who suffer now because of the debt. Here again we see the rich getting richer and the poor getting poorer. The HICP initiative is a good start to debt cancellation but it does not go deep enough, it does not include enough countries and there are too many economic conditions that have to be met before approval.It does not go deep enough in the respect that the HICP so far does not cancel all debt.
The 22 of the 41 countries that have completed the first stage are getting their annual debt service (the amount they pay) reduced by an average of one quarter. This is freeing up new resources to fight poverty, but it will still leaves these countries spending more on debt than they currently spend on health. HIPC includes potentially 41 countries, though in practice only around 30-35 are expected to qualify. Some of the world’s poorest countries, which also have huge debt, are not even being considered for debt cancellation.For example Nigeria houses one in five of the population of Africa and it owes $30 billion and is scheduled to pay $1.
5 billion this year. Nigeria is not considered to be a HICP. There are too many conditions that are devised by the World Bank and the IMF in Washington, often ignoring the real circumstances in the countries concerned. These slow down the HIPC process, which can take from four to six years to complete.
The HIPC has however done some good; money that was previously tied up in debt repayment has now become available for other things. In Uganda, twice as many children of primary age are going to school (almost 90%).In Honduras, the government now provides three years extra of free schooling, up to 14 years. In Mozambique, an additional half a million people have been vaccinated against diphtheria, whooping cough and tetanus. Debt cancellation in itself will not eradicate poverty and solve all the problems that exist in the poorest countries. Governments, policy makers and international institutions must tackle many other issues, such as declining aid and unfair trade rules.
Even if all the debts were cancelled, further resources would be needed to help lift the people who live on less than a dollar a day out of extreme poverty.Debt cancellation is a critical first step in the fight against poverty. Complete debt cancellation will make aid more effective and will boost spending for health care, education and basic infrastructure. Unfair trade regulations mean that poorer countries cannot compete with the products of richer countries, event though their products are produced cheaper. An example of this can be found with the European Union. The EU is a free trade zone, but only to those who are members.
The managing committees know that poorer countries can sell their produce at much cheaper prices than they can.This is because in LEDCs the wages are lower and raw materials are cheaper. This means that they can offer their goods at a cheaper price. The EU has overcome this by imposing taxes on imported goods to such an extent that they become more expensive than the EU produce. These kind of trade regulations mean that people will opt for the cheaper option and the poorer countries will be driven out of business. This means that the economy of the country may begin to decline and so bringing more hardship onto the poor, as it is hardly ever the rich who suffer. If trade regulations are changed, it means that there will be fair trade around the globe.
The poorer countries will have more of chance to compete on the global scale. They will be able to make profit, which will then be used on their country to improve education and healthcare and provide work and food and to improve their infrastructure, or it may be reinvested into the successful companies. This will aid in turn help to drive people out of poverty, in theory.
Another factor that has caused poverty around the world is war. War destroys lives, homes and countries. War is indiscriminate and it is mainly the innocent poor who are hurt. The poor get poorer whilst the rich get richer.Iraq is a perfect example, 10 years of sanctions, 10 years of bombing and Saddam Hussain is still in power. Have the sanctions affected him? Whenever he is seen he seems to be well fed and living a luxurious life. It is the poor in Iraq who suffer. What has 10 years of bombing and sanctions achieved? Millions of men, women and children have died so that Iraq cannot be a threat any longer.
Is Iraq still a threat? We saw after the World War Two Germany receiving massive debt relief. The allies realised it made sense to rebuild a stable Germany. This is because a stable Germany meant peace and prosperity in Europe.The levels of debt that were agreed as affordable for Germany are only figures that today’s post-war countries in Africa can only dream of. Why is the same reasoning not applied to countries such as Iraq, Mozambique, Angola, Rwanda and other post war poor countries? Would it not be reasonable to assume that a prosperous third world would mean a prosperous global economy? These questions can only be answered by the rich nations and public banks (WO and IMF). They can afford to write off this debt.
We now see that rapid population growth only plays a role in the explanation for poverty.To fully explain the causes of poverty everything has got to be taken into account. There is no way that anyone can say that this factor causes this as there are many effects that each factor has. Under different conditions there will be different effects. Then the effects of unfair trade regulations and war have got to be taken into account.
Debt repayment is probably the boulder that needs to be removed before any progress can be made in any attempt to lift people out of extreme poverty. If this is removed then more money can be redirected back to alleviate the poverty of the people of the world.