The Plight of the Poor: The United States Must Increase Development Aid

James Gustave Speth

From Foreign Affairs, May/June 1999

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Summary:  Poverty is growing rapidly in developing countries, heralding greater instability everywhere. The West must increase development aid and political investment.

James Gustave Speth is Administrator of the United Nations Development Program.

The financial crisis that began in Asia in 1997 has exacerbated a growing problem: poverty amid abundance. The World Bank estimates that if current recessionary trends continue, the number of poor people in East Asia will increase sharply in the next two years -- from 40 million to more than 100 million. The number of Indonesians living on less than $1 a day will jump from 13 million in 1997 to 34 million in 1999. This rapid growth of poverty poses grave dangers to the West and to the world.

Lest cynics in the West argue this has nothing to do with them, consider the following. Economic declines inevitably translate into political instability and social unrest. Sporadic rioting and looting have already broken out in East Asia, along with attacks on ethnic minorities. What began as a financial crisis has spread and is tearing at Asia's social and political fabric. This may herald severe consequences for stability in countries where growing prosperity had once delivered social cohesion. The world has become more polarized, both between and within countries. The risk of a huge global underclass undermining international stability is quite real.

SAVAGE INEQUALITIES

The recent downturn has affected not only the Asian tigers and other developing countries but also states that are too poor to be considered emerging markets. Africa's growth for 1998, once expected to exceed 4 percent, has in fact been closer to 2.2 percent. In Latin America, growth forecasts have been scaled down from 5.3 percent before the crisis to 2.6 percent for 1999.

Furthermore, even before the international financial crisis cut the global growth rate in half and plunged more than a third of the world's economies into recession, the data on poverty were painting an alarming picture. In the past 15 years, per capita income has declined in more than 100 countries and individual consumption has dropped by about one percent annually in more than 60. Meanwhile, some 150 million people -- equal to the combined populations of France, the United Kingdom, the Netherlands, and the Nordic countries -- were pushed into poverty when the Soviet Union collapsed.

Among the 4.4 billion people in developing countries around the world, three-fifths live in communities lacking basic sanitation; one-third go without safe drinking water; one-quarter lack adequate housing; one-fifth are undernourished; and 1.3 billion live on less than $1 a day. Nearly one-third of the people in the poorest countries, mostly in sub-Saharan Africa, can expect to die by age 40. Even developing countries with strong growth rates are struggling. Despite Uganda's having posted six percent annual growth for a decade, for example, two-thirds of its population still lives in absolute poverty, with per capita income only now returning to the 1970 level. Rapid growth has only started to counteract the ravages of two decades of armed conflict, economic mismanagement, high inflation, crippling corruption, external debt, and declining export prices.

WHERE CREDIT IS DUE

Too often, short-term military, political, and economic interests, rather than the goals ...

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