Global Ramification of Poverty - Assignment Example

Global Ramifications of Poverty Poverty and political instability are endemic to much of the world. Unfortunately for many, poverty is a feature of daily life. Political instability - meaning dictatorship, political violence and coup d’etat, - is also prevalent in many regions of the world. Seeking to address the linkages between poverty and political instability, this essay will explore the relationship between these two diverse, although seemingly interdependent phenomena. Does poverty breed political instability? Are poor countries more prone to political violence and insecurity? These questions and many more will be addressed and explored with reference to our analysis of the linkages between poverty and political instability. A cross-continental analysis of the political and economic situations of two countries, Iraq and Somalia, will explore the relationship between poverty and political instability. The term poverty will be defined and our theoretical analysis of political stability will be guided by Leon Hurwitz’s definition of this tricky concept. The analysis will then be followed by an in-depth examination of two diverse countries, each representing different regions of the world. Poverty, it seems is also a universal feature of the global community. What are the global ramifications of extreme poverty? Poverty and Political Instability What is poverty and how can it be defined? The term poverty refers a deprivation of some sort that affects one’s quality of life. Poverty is often described in monetary terms and varies from country to country. Poverty thus is environmentally specific as the idea of poverty will differ in North America and Africa. Many developed countries use a low-income cut-off to gage poverty in their respective societies and a so-called poverty line can be useful for understanding poverty. While very difficult to measure globally, the United Nations frequently uses the analogy of a dollar a day to refer to someone who is poor (for more information on the challenges associated with poverty measurement, see Amartya Sen’s Poverty: An Ordinal Approach to Measurement). How does one define political stability? Theoretically speaking, the term is notoriously difficult to define and definitions will necessarily vary (see Ake 271-283; Fosu 329-348; Pasos 70-86; Goldsmith 471-480). Nonetheless, it is integral that the concept of political stability be defined for the theoretical purpose of this essay. Leon Hurwitz explored four conceptions of political stability and defined it as: 1) the absence of violence, 2) the duration of government, 3) the existence of a legitimate political regime, and 4) the absence of structure change (149-163). Since this definition is comprehensive it will guide an important component of this essay as well as complement the overall analysis of our case studies. Somalia Situated on the easternmost tip of the Horn of Africa, Somalia is one of the world’s poorest countries with a per capita GDP of $600 (2007 estimate). In fact, in a global GDP per capita ranking by the US Central Intelligence Agency, Somalia scored last out of a total of 216 countries. Also that year, Somalia’s estimated official Gross Domestic Product was estimated to be a mere $2.483 billion (CIA World Factbook, 2008). As with GDP, unemployment and inflation in Somalia are difficult concepts to quantify and measure. While it is known that there is extreme poverty and unemployment in Somalia, actual numbers are hard to come by. In fact, in its annual Human Development Report for Somalia, the United Nations was unable to measure unemployment in Somalis and listed it as “not available” (HDI, 2007/2008). Despite this estimates exist and in 2005 the World Bank reported that Somalias labor force was an estimated 4.6 million (or 56% of the countrys total population) with a whopping urban unemployment rate of 66% (CIA World Factbook, 2008). A figure for inflation, as a measure of the annual increase in consumer prices, is equally hard to measure and is absent in the literature. Somalia’s total lack of functioning government and institutional capacity inhibits economic growth and the result is one of the world’s smallest GDPs per capita. Accordingly, in its annual Index of Economic Freedom 2008, the Wall Street Journal and the Heritage Foundation made the conscious (and conspicuous) decision to omit Somalia due the complete absence of the rule of law, stating that “economic freedom in Somalia is impossible to analyze” (Holmes et al, 2008). Internationally renowned and well-respected British periodical The Economist followed suit and omitted Somalia in its annual economic rankings, The World in 2008 (The Economist, 2008). Political Situation Following Hurwitz’s definition of political stability, Somalia today is an incredibly unstable country, beset by extreme violence and lacking central authority in the form of a national government. Hurwitz explored four conceptions of political stability and as a refresher, defined the term as: 1) the absence of violence, 2) the duration of government, 3) the existence of a legitimate political regime, and 4) the absence of structure change (149-163). Is Somalia a violent place? Yes, in fact Somalia, along with Iraq, is one of the most dangerous and violent countries in the world. The life expectancy of the average Somali today is 47 years for men and 49 years for women (BBC Somalia Country Profile, 2008). According to Time Magazine: Since the collapse of the last functioning government in 1992, Somalia has been a prisoner of bloody anarchy, a void filled by vicious and impressively armed chaos, as rival warlords, clans and sub-clans and Islamists prosecuted a series of civil wars — over power, over historic tribal animosities and over competing visions of Islam (Perry, 2008). How durable is the Somali government? According to Mohammed Hussein Farah Aidid, former warlord and Somalias new Deputy Prime Minister, "Its a symbolic government. Permanence we do not have. We do not have institutions; we do not have a credible force. Unless [we receive outside assistance] quickly, we have no chance of building a nation." (Perry, 2008). Is the current Somali regime legitimate in the eyes of the Somali public? The British Broadcasting Corporation reports that “Somalia has been without an effective central government since President Siad Barre was overthrown in 1991.” (BBC Somalia Country Profile, 2008). In fact, chaos, anarchy and factionalized fighting between warlords have been the normative state of affairs in Somalis for more than 15 years. The current government – known as the Transitional Federal Government - headed by former warlords President Abdullahi Yusuf Ahmed and Prime Minister Nur Hassan Hussein was installed in Mogadishu by Ethiopian forces in December 2007. Ethiopia has historically been the traditional enemy of Somalia and this is certain to hurt the credibility of the current regime among Somalis. It must be noted that chaos remains supreme and the transitional authority is unable to maintain law order. Its current grasp on power is tenuous at best (BBC Somalia Country Profile, 2008). Has Somalia experienced recent structural change? The Somali state imploded following the overthrow of Siad Barre in 1991. Civil ensued and resulted in total Somali institutional collapse. All institutions of governance (the security services, the judiciary, the economy) ceased to function in any coherent capacity. Recently, attempts have been made to install a Transitional Governing Authority but the traditional pillars of government (legislature, executive, and judiciary) do not presently exist in Somalia (BBC Country Profile, Somalia, 2008). Iraq Iraq, following Saddam Hussein’s ouster in 2003, Iraq provides perhaps one of the best modern examples the impact of political instability on economic growth, particularly since Iraq is a country rich in natural resources. The political situation following the US-led invasion has had an incredibly disruptive effect on oil production in Iraq with subsequent affects to the economy as a whole. From a macro-economic standpoint, one cannot overemphasize the importance of oil to the Iraqi economy. In fact, 2/3rds of Iraq’s present economic output is derived from the sale of oil in international markets. Additionally, the security situation in Iraq remains the greatest impediment to the smooth functioning of the Iraqi economy as a whole (Wood et al 65). The present economic situation in Iraq, in spite of some gains following the US invasion, remains insecure. In 2007, Iraq had population of 28.2 million people, a labour force of 7.4 million, and a Gross Domestic Product of $55.44 million. GDP per capita was estimated at $3,700. Inflation, an increase in the general level of prices for goods and services, is high and running at 31.6%. Iraq’s unemployment situation today is estimated to also be a high 30%. Although negative in 2003 and 2004, Iraq’s GDP growth rate is now estimated at 5% in 2008. How has continued political instability affected the economic situation in Iraq? (CIA World Factbook 2008). Iraq’s economy suffered greatly following the US-led invasion of 2003. In fact, Gross Domestic Product in 2003 – the year of the invasion – contracted and was negative at -3%. The following year in 2004, Iraqi insurgency began and GDP further contracted to -21.8%. Iraq in 2005 witness exceptional growth of 52.3% but in 2006 annual growth fell again to -3%. As mentioned above, annul GDP growth for 2008 is estimated at 5% with GDP per capita at $3,700 (CIA World Factbook 2008). What role does oil play in the Iraqi economy? Oil is integral to the Iraqi economic situation as this country is the second largest petroleum producer in the world (Alkadiri and Mohamedi 20). Prior to the invasion Iraqi oil production was estimated at 2.5 million barrels per day. It dropped to almost zero in April of 2003 and exports completely ceased operations in June. Electricity generation also fell by 25% that year with the International Monetary Fund (IMF) estimating that GDP per capita fell by 22% in dollar terms in 2003 (Foote et al 65). In its annual Index of Economic Freedom 2008, the Wall Street Journal and the Heritage Foundation describe the effect of political instability today on the Iraq’s oil industry: Iraqs oil industry provides more than 90 percent of hard-currency earnings but has been hurt by pipeline sabotage, electricity outages, and years of neglect and postponed maintenance. Economic recovery, though helped by high oil prices and economic aid from the United States and other foreign donors, is hampered by continued insurgency and instability (Holmes et al 217). Unemployment, estimated at upwards of 30% in 2007, is a direct result of the war and the social and economic instability caused by civil strife and extreme violence. In fact, the unemployment rate represents a 75% increase from that recorded in the 1997 Iraqi Census (Foote et al, 67). Described in Foreign Affairs magazine as the “growth of warlordism” (Simon, 68), endemic violence, upheaval associated with the invasion, and a weakened central authority have dramatically reduced the economic prospects of the average Iraqi. People are afraid to leave their homes due to the prevalence of murder and daily bombings. In addition to hurting the job prospects of Iraqi citizens, crime was also described by the World Bank as one of the “main obstacles to private sector investment in Iraq” (Foote et al 66). Political Situation Following Hurwitz’s definition of political stability, Iraq today is an incredibly unstable country, beset by extreme violence and sectarian strife. Hurwitz explored four conceptions of political stability and they are applied to Iraq below: Is Iraq a violent place? Yes, in fact Iraq is arguably one of the most dangerous and violent places on earth. According to the British Broadcasting Corporation, by February 2008 a total of 85,263 non-military personnel (civilians and Iraqi policemen) have been killed since the invasion of 2003 (2008). Suicide attacks are commonplace and violent acts occur on a daily basis. Both political reconciliation and the smooth functioning of the economy are inhibited by an extremely precarious security situation. How durable is the Iraqi government? Not very durable as Iraq’s present government is a loose-coalition of political parties, each representing different ethnic communities. Democracy has been imposed from abroad and is a new concept to the Iraqi people. The current political system represents the sectarian nature of Iraqi society and exacerbates important sectarian cleavages. Iraq is overcoming a 35 year legacy of Ba’ath Party rule and democracy has not yet been entrenched. Kurds in the north want independence, Sunnis feel marginalized under the new regime and the majority Shi’a population is seeking redress for past grievances. Iraq today is on the verge of internal combustion and the government is being propped up by a foreign – and always unpopular – American-led coalition force. Far from durable, and intrinsically tied to the security situation, the Iraq government is precarious at best (Zizek 42-49; Simon 68). Is the current Iraqi regime legitimate in the eyes of the Iraqi public? Yes and no. Although many Iraqis welcomed the end of Saddam Hussein’s tyrannical rule, the inability of the present government to improve the security situation, as well the overt presence of foreign (re: American) troops on the ground serve to undermine the current government and de-legitimize it in the eyes of the many Iraqis (Simon 57-76). Has Iraq experienced recent structural change? Yes, Iraq has undergone an intense political, social and economic transformation following the removal of Saddam Hussein’s Ba’athist regime in 2003. After Saddam’s overthrow, the Ba’ath Party was banned, the armed forces were disbanded and the economy suffered as a result of war. Of extreme importance, oil production – accounting for 2/3rds of Iraq’s economic output – ground to a halt following the US-led invasion (Foote et al, 65). Concluding Remarks There is a direct and very strong relationship between poverty and political instability. The cases of Iraq and Somalia demonstrate how poverty leads to instability on the political front. It’s important to note that while a country like Iraq may have high annual GDP growth, developing countries may experience quicker rates of annual growth and these rates of growth can be illusive. From a macroeconomic perspective, other factors including unemployment, GDP per capita and total GDP output can be better indicators of the actual size and strength of a particular national economy. This cross-continental analysis looked at case studies in Africa and the Middle East and demonstrated that poverty is a precursor to economic instability. Works Cited Ake, Claude. A Definition of Political Stability. Comparative Politics 7:2 (Jan., 1975): 271-283. Alkadiri, Raad and Fareed Mohamedi. “World Oil Markets and the Invasion of Iraq”. Middle East Report 27 (Summer, 2003): 20-27+30-31. “Country Profile: Somalia.” British Broadcasting Corporation (BBC). 2008. June 9 2008 http://news.bbc.co.uk/2/hi/africa/country_profiles/1072592.stm Foote, Christopher, William Block, Keith Crane and Simon Gray. “Economic Policy and Prospects in Iraq”. The Journal of Economic Perspectives 18:3 (Summer, 2004). Fosu, Augustin Kwasi. “Political Instability and Economic Growth: Implications of Coup Events in Sub-Saharan Africa.” Journal of Economics and Sociology 61:1 (Jan. 2002): 329-348. Goldsmith, Arthur A. “Does Political Stability Hinder Economic Development? Mancur Olsons Theory and the Third World” Comparative Politics 19:4 (Jul., 1987): 471-480. Holmes, Kim R., Edwin J. Feulner, Mary Anastasia OGrady and Anthony B. Kim. Index of Economic Freedom, 2008. Washington: The Heritage Foundation, 2008. Hurwitz, Leon. “Contemporary Approaches to Political Stability”, Comparative Politics 7 (Jan. 1975): 449-463. Perry, Fred. “In Somalia, a Fragile Hold on Power”. Time Magazine June 2nd 2008. “Iraq”. Central Intelligence Agency (CIA): World Fact Book. 2008. June 22 2008 “Iraq violence, in figures”. British Broadcasting Corporation (BBC). 2008. June 22 2008. < http://news.bbc.co.uk/2/hi/in_depth/629/629/7036331.stm> Sen, Amartya. “Poverty: An Ordinal Approach to Measurement”. Econometrica 44:2 (March 1976): 219-231. Simon, Steven. The Price of the Surge. Foreign Affairs. 87:3 (May/June 2008): 57-76. “Somalia.” Central Intelligence Agency (CIA): World Fact Book. 2008. June 22 2008 < https://www.cia.gov/library/publications/the-world-factbook/geos/so.html> “Somalia.” Human Development Index, 2007/2008. New York: The United Nations. “The World in 2008” The Economist. January 31 2008. “Zizek, Slavoj. “Iraqs False Promises”. Foreign Policy 140 (Jan. - Feb., 2004): 42-49. Read More