The Economic Crisis and Its Impact On Developing Countries: Briefing Paper #11
The Economic Crisis and Its Impact On Developing Countries: Briefing Paper #11
The Economic Crisis and Its Impact On Developing Countries: Briefing Paper #11
Introduction 1
I. Impact on developing countries – what we know so far 2
II. Impact on development aid (ODA) 4
III. Institutional responses: opportunities and threats 6
IV. Effects of crisis on development organisations and development climate 12
V. Resources 14
WWW.SOLIDAR.ORG
INTRODUCTION
In 2009 some 59 million people could lose their jobs, whilst 200 million will be
added to the ranks of the 1.3 billion of those working but living on less than $2 per
day. Some 53 million could be driven into absolute poverty, on top of the 135-150
million that were already pushed there in 2007-08 due to the rise in food and fuel
prices. Given the unprecedented scale of the crisis, SOLIDAR calls on European
governments to engage in an urgent revision of the global economic system,
ensuring that decades of profit-driven growth ideology is replaced by a people
and environment- centered economy.
But first let’s put this current crisis into a context: before the fall of Lehman Brothers and
the jitters on Wall Street, the developing world was already suffering from a massive lack
of affordable food and fuel. In addition, the challenges of climate change, HIV/AIDS and
the attainment of almost all of the Millennium Development Goals were already
combining to make an urgent revision of our economic modus operandi a necessity. The
latest financial crisis, its impact on the real economies of developing and developed
countries alike and the strain this will put on aid budgets have transformed this from an
urgent task to an urgent necessity.
In June 2009 the World Bank updated its outlook for the global economy. Justin Lin,
Chief Economist for the World Bank, commented on the findings: “extraordinary
measures by governments around the world have helped save the global financial
system from complete collapse, but the economic recession in the real sectors persists”.
This highlights that a real political commitment is required to effectively eliminate poverty
and inequality and bring about social and economic justice, for men and women, all
around the world.
In SOLIDAR’s eyes, a real political commitment from world leaders is a package that
fundamentally re-orients the economy towards a reduction in poverty and inequality, that
stimulates decent employment, re-distributes wealth and ensures social protection for all
and reinforces human and labour rights so that people throughout the globe can live a
life in peace and dignity.
Conny Reuter
Private capital flows to emerging economies − The real shock facing the 10 countries
are expected to drop by $US165 billion as reviewed is far worse: export values are
banks restrain lending (World Bank) falling. Indonesian exports of electronic
products (which account for 15% of total
Remittances, which easily outstrip ODA are exports) fell by 25% in value between
also drying up, with migrant workers losing January 2008 and 2009. In Cambodia,
jobs or not being able to afford to send as garment export values at the beginning
much money home. Early evidence of this year had dropped alarmingly from
suggests those most hard hit are European a monthly average of $250 million in
Neighbourhood Countries and Latin 2008 to just $100 million in January
American countries. 2009.
In 2009 some 50 million people are − In Kenya, remittances were down 27%
expected to lose their jobs, with another 200 in January 2009, compared to January
million joining the already 1.3 billion (43% of 2008, after a year of volatility.
the global workforce) in extreme poverty, ie
people who work but earn $2 per day (ILO) − Aid to Uganda fell in 2008.
Some 53 million people could be driven into − In Bangladesh, emigration fell by 38.8%
poverty in developing countries, on top of between February 2008 and February
the 135-150 million driven into poverty by 2009.
the rise in food and fuel prices over the
2007-2008 period (World Bank) − Growth predictions have had to be
revised significantly in all ten countries.
Cambodian growth, for example, is set
1
Source: ODI, The financial crisis and developing
countries
G20: The outcomes of the last summit − The communication states that IFI
“mandates and governance must be
It was in itself a massive victory for reformed to reflect changes in the world
campaigners (mostly ones in the UK, with economy”, but there is no detail on this.
involvement of SOLIDAR members) that The IMF quota reform already agreed
forced the question of development on the last year is re-announced and a further
agenda at the April Summit. The summit did one pledged “by 2011”. The World Bank
not “refound the financial system” as was should propose further ways to change
promised, but there was some progress on its governance “by 2010”.
EU Communication: Supporting developing countries in coping with the crisis (April 2009)
For a new economic and social model – LET’S PUT FINANCE IN ITS PLACE!
The World in Crisis: Securing Economies and Resources for Poor Countries – Manifesto
for the Czech Presidency of the European Union