chapter
24 Pages

Introduction: Governing global poverty and inequality

ByRORDEN WILKINSON, JENNIFER CLAPP

A series of crises unfolded in the latter part of the first decade of the twenty-first century which combined to exacerbate already profound conditions of global economic inequality and poverty in the world’s poorest countries. In 2007, unsound lending practices caused a collapse in the US housing market which ushered in a broader economic crisis that reverberated throughout the global financial system. The consequences were many and varied, with a huge reduction in the availability of credit, the collapse of major banks, significant and extensive defaulting on mortgages, and the onset of global recession being among the most significant. This economic shockwave had a global impact, triggering not just instability in other industrialized countries, but also (and in some cases more acutely) in their developing world counterparts. As financial markets became increasingly unstable in the run up to

the collapse, oil prices also increased markedly. From the mid-1980s to the middle of 2003 oil prices had maintained a steady inflationadjusted price of somewhere below US$25 a barrel (US Energy Information Administration, 2009). However, worries over the extent of existing petroleum reserves, concerns that the point of maximum petroleum extraction was close to being reached (after which the rate of production would enter terminal decline), oil price speculation, and tensions in the Middle East (including those between Israel and Lebanon, the US-led invasion of Iraq and its aftermath, and perceptions about Iran’s nuclear ambitions) fueled huge price rises. By October 2006 the price of crude oil had reached US$92 a barrel. Over the course of 2007 and the first half of 2008 prices rose further, reaching a peak of US $147.30 a barrel in July 2008 (BBC News, 2008a; 2008b). The result was to dramatically increase transportation and energy prices and to usher in serious financial hardship across the globe. Rising oil prices and collapsed financial markets were matched by

sharp rises in food prices. Between 2006 and 2008 prices of wheat, corn,

soya, maize, and rice-staple foodstuffs for much of the world’s population-increased dramatically. The average world price for rice rose by 217 percent; for wheat the rise was 136 percent; for corn 125 percent; and for soybeans 107 percent (Steinberg, 2008). The causes of the food price rises are multiple and subject to much contestation (ranging from biofuel production, stagnating production, changing diets, and commodity speculation-see Heady and Fan, 2008). Nevertheless, and inevitably, these dramatic increases hit the most vulnerable hardest. Unsurprisingly civil unrest erupted in over 40 developing countries as the poor’s ability to access food rapidly diminished. The World Food Programme (WFP) was forced to make an emergency plea for an additional US$755 million in funding to meet the food needs of the world’s most vulnerable people (UN Press Release, 2008), as an additional 100 million people joined the ranks of the undernourished. Although international food prices eased when the financial meltdown intensified later in 2008, food prices in the world’s poorest countries remained high and volatile as credit sources dried up and hindered the ability of developing countries dependent on food imports to finance international food purchases (Clapp, 2009). In addition to economic turmoil, much higher than expected rainfall

in 2007 caused widespread flooding and wreaked havoc in a number of developing countries. In November 2007, flooding ravaged much of South Asia, Africa, and Central America. In Bangladesh, India, Nepal, and China as many as 20 million people were displaced and tens of thousands killed by the flooding, which at the same time destroyed crops and exacerbated the spread of disease (BBC News, 2007a). Similarly, flooding across central Africa resulted in displacement, food shortage and disease, with Ghana, Burkina Faso, Togo, and Mali faring among the worst (BBC News, 2007b). Floods also left 300,000 stranded in Mexico and affected as many as 1 million people (CBC News, 2007), while the previous month saw severe disruption throughout much of Central America (Reuters, 2007). These crises placed increasing pressure on already impoverished

populations across the developing world. They also further highlighted deficiencies in the current structures of global governance to protect the world’s poorest and most disadvantaged. Despite the emergence over the past decade of what appears to be a global consensus on the necessity of tackling human immiseration (Hulme, 2010), even before these crises hit, the number of people living in poverty was persistently high, and the gap between those that have, and those that do not, had increased markedly. Indeed, the recent national and global action to repair a fundamentally moribund system of economic governance in

response to the financial crisis stands in stark contrast to the limited efforts that have been taken to improve the well-being of much of the world’s population. While it is the case that efforts to address human deprivation were stepped up in the late 1990s and early 2000s following decades of decline in conditions for many of the world’s poorest people, these have not succeeded in providing a concerted, extensive, coordinated, and substantial response to poverty and inequality. Even the additional pressure brought to bear by the agreement in 2000 of the Millennium Development Goals (MDGs)—with the aim of drastically improving basic development indicators for poverty and hunger, education, health, and gender equity for the world’s poor by the year 2015-has failed to result in substantive and concerted action. The crises described above have no doubt exacerbated the plight of

the world’s poor, and have led to much lamenting, particularly within the UN system, about the capacity to meet the MDGs (see, for instance, UNDP, 2009). The recent crises, and their impact on the poor, have also underscored the salience of questioning the capacity and indeed the appropriateness of existing global governance approaches to the tackling of poverty and inequality. Our aim in this book is to offer answers to questions raised about the role of global governance in the attenuation and amelioration of world poverty and inequality. Our concern with the role of global governance in the attenuation and amelioration of poverty and inequality is an important one. Not only are we interrogating the role of systems of governance at a time of global economic crisis and continuing environmental degradation, we do so against a backdrop of an acceleration of the increase in inequalities within and between communities and across the globe. We ask three questions, to which each of the contributions that follow respond:

1 What role do existing institutions and systems of global governance play in the alleviation of poverty and in reducing inequality in income and wealth, and health and well-being?