World Bank Chief David Malpass warns that everyone must be concerned with the depth of the latest debt wave. (courtesy Wikipedia. Org)

The global South is on track to a major economic crisis. Consequently, the success stories of developing and emerging countries could very well be chimerical. This assessment is forced on the observer by some very ominous pronouncements on the global economy that were made recently by the World Bank and the IMF.

World Bank President David Malpass, for example, was on record as stating the following to AFP, among other things: ‘A wave of debt in emerging and developing nations has grown faster and larger than in any period of the last five decades… The size, speed and breadth of the latest debt wave should concern us all. Clearly, it’s time for course correction.’

Meanwhile, the IMF was reported as stating that the total global debt rose to $188 trillion at the end of2018, equivalent to nearly 230 percent of the world’s economy. IMF chief Kristalina Georgieva, focusing on African economies in the main was quoted saying that the region needed to strike ‘the right balance between financing development and bringing about a manageable debt level.’ The latter observation could be considered as applicable to the majority of developing countries on account of the widespread nature of the issues in question.

The above observations ought to compel policy and decision makers of the South in particular to conduct fresh, in-depth analyses of the world economy with a view to arriving at the correct policy prescriptions for survival and growth. Besides, they need to draw relevant lessons from the way the global economy has evolved over the past three or four decades. Clearly, there is something radically wrong with the ‘development paradigms’ or popular ‘panaceas’ for economic survival the South in particular has adopted over the years.

To be sure, the general growth experience of the South since the early nineties, when the Cold War crumbled, has been complex and not amenable to simplistic analysis. On the one hand, socialism cameto be seen as ineffective as a development paradigm on account of the perceived economic and social backwardness and strangulation it bred. Socialism, essentially, was seen as incapable of meeting rising popular expectations in the economic and social fields, whereas, the ‘market’ economies were believed to be doubly successful in this respect. The collapse of communism in Russia and Eastern Europe was, among other factors, brought about by this faith in the ‘open’ economy and associated liberalization measures.

Economic liberalization was not possible without political liberalization and these processes came toconstitute two sides of the same historical reality in the late eighties and early nineties. The ‘free market’ was seen to be most possible only within the democratic system, as conceived by Western capitalist countries, and these conceptual underpinnings played a substantive role in weakening and bringing to an end communism inside and outside Europe. That is, economic rights and political rights, as interpreted by the West, were seen as intertwined and essential for material success and survival.

IMF Chief Kristalina Georgieva’s suggestion on managing African economies is applicable to the rest of the world. (courtesy
IMF Chief Kristalina Georgieva’s suggestion on managing African economies is applicable to the rest of the world. (courtesy

It was this belief in the efficacy of the ‘market’ and liberal democracy that led countries the world over to adopt the twin systems over the past three decades. Needless to say, Sri Lanka led from the front in South Asia in accepting the market economy and its political correlatives, broadly termed neo-liberalism,in the mid-seventies. Today, almost the totality of the South swears by the ‘market’; that is, adherence to neo-liberalism is a near absolute.

However, the driver of these seemingly revolutionary changes was the capitalist West. It led some Western commentators to believe that the capitalist system was resoundingly and forever triumphant over communism; that is, the world had arrived at ‘the end of history’.

However, some decades after these sea-changes in economics and politics, world history seems to have come full circle. Clearly, all is not going well for the majority of those countries that headily adopted the neo-liberal development paradigm. As the World Bank and the IMF are now having us believe, one of the deadliest debt crunches is upon the world and the global South is facing the brunt of it.

Ironically, as two West-controlled global financial institutions, it was the WB along with the IMF that propelled the South in the direction of neo-liberalism by virtue of their policy guidance. If some countries of the South were all at sea with regard to clear policy direction in the first years after independence in the fifties and sixties, the chances are great that not a few of them would be mulling over giving the socialist experiment another chance, since neo-liberalism has only pauperized them to a greater degree.

However, the South would be misguiding itself by veering from one economic system to the other. It is plain to see that the majority of Southern economies has failed if these countries are today, more than neck deep in debt. Clearly, external advice from the global financial institutions of the West and others seen as relevant has come to nought.

On the other hand, the South would be only trading one form of dependence for another by seeking the assistance of institutions, such as the China-led Asian Infrastructure Investment Bank. Here too, assistance and aid is bound to come at a cost and the South could do without any such self-destructive solutions.

The South would do well to re-visit and revive South-South cooperation and collaboration which were seen as urgently needed in the heyday of the Non-aligned Movement, for example, in the initial decades after independence. But more importantly it needs to find out why it is repeatedly failing to jump-start its economies and set them on a course of self-sustained development.

It should be obvious to the South that robust and sustained entrepreneurship is failing to materialize among the majority of the countries within its fold, and entrepreneurship is a key to growth. This is a highly complex and knotty problem that eludes simple answers. But there are a few initiatives that ought to be explored earnestly by states to make development, to some degree, a reality. One of these is to contain privilege and ascriptive rights among their publics and make opportunities accessible to as wide a cross-section of their populations as possible. That is, there is no escaping the need to democratize their polities. This is the genuine revolution that is still waiting to happen.


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