Global Economic Crisis : Main Root Problem of Poverty?

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Backyard of Rio

The latest  UN  report on world social crisis, stated that  “ Over the period 2008-2009, the world experienced its worst financial and economic crisis since the Great Depression of the 1930s. In 2009 global output contracted by 2 per cent . Global unemployment rose sharply from 178 million persons in 2007 to 205 million in 2009. Th e rapid rise in unemployment has triggered an increase in vulnerability, especially in developing countries without comprehensive social protection. Estimates suggest that between 47 million and 84 million more people fell into, or remained trapped in, extreme poverty because of the global crisis. The economic crisis was preceded by the food and fuel price hikes in 2007 and 2008. According to the FAO, the number of people living in hunger in the world rose to over a billion in 2009, the highest on record. Th ese multiple crises have set back the progress many countries have made towards achieving the internationally agreed development goals, including the Millennium Development Goals.[i]

Try to understand the logic behind the blaming Global Economics Crisis  as the root  of the problem  of unemployment by  concluding a liner correlation amongst the variables attributed to the poverty  as follows:   Poverty is caused by employment, employment is caused by no investment; no Investment because of no economic growth, no economic growth is caused by collapsed of global  financial  system.

This logic may work in developed country not for developing country, although  SHA ZUKANG- under Secretary-General for Economic and Social Affairs of UN  in the preface of the report say : “ Although the financial crisis did not originate in the developing countries, their economies, especially those more integrated into international financial markets, were not immune to the financial turmoil. They were hurt through a variety of channels, including collapsing trade and commodity prices, capital flow reversals, higher costs of borrowing, declining remittance incomes”

The  argument is weak since the pattern  and concept  of economic crisis in 1930 is far different  with the pattern  of current economic crisis, including the concept of poverty and quality of live . How ever I’m agree that deficit of global financial market system is the problem of  current global and environmental crisis.  If they realize  the global system is the root of the problem, so the only solution is changing or transformed it.  We can measure the success of this global talk that involving 12 000 leaders of UN system, states member, CSO, and  private businesses from the degree of changing in global economics system . Blaming global economic crisis is the only excuse of  UN of their fail to implement their humanity mandate

Since the last two days CNN  the only  English channel  in Rio that is not dubbed in Porto  debating  the request of 120 billion euro bailout to save Spain  financial crisis. As it happened in Greece , there is still pro and contra with regards to the need of ball out. Obama  suggest decrease  spending and budget cutting, while Director of IMF said that  bailout  is the solution since the problem is lack of  money.   She said “ this the only way to save Spain and all Europe country  that  euro system work”   UN MDGs-8 report 2011  reported that  “Donor countries provided a record-high $129 billion in official development assistance (ODA) in 2010”[ii]   Further more the report say that this amount of support although still far from the 0,7 percent of UN targeted , have give significant impact on achieving some target of MDGs.   If IMF  want to be the hero of humanity ,  she will see the social global crisis is much danger than  Spain that is believed by Spain people can solve their own problem without bailout as Greece done; and donate the money for the capital of sustainable development.  That will really make different ; although this is only  a dream of utopist.

Thinking about poverty alleviation  can not be measured by  income or expenditure, but more important  is its reliance. The resilience only happened  when the world agree to change their global economic system  that will ensure just distribution, enough consumption and  sustainable planetary boundaries . However, again this is just  a dream  if  major member of states  especially developing countries   never want to change their position in maintaining  their paradigm and its domination, .   TWN reported  that  29 May to 2 June informal negotiations in New York on the outcome document for the Rio+20 Conference, substantial differences remain between developed and developing countries over understandings and intentions of the ‘green economy’ concept .  There  are also rumors  here in Rio  that  EU states leader  will not come  due to urgent priority to solve  European financial crisis, while US president  will also not come due to next year election.  Long way  step toward sustainable development. ( Sigit Wijayanta, June 12)


[i]The global Social Crisis, the  Report of World Social Situation  in 2011,  http://www.uncsd2012.org/index.php?page=view&type=400&nr=195&menu=45

[ii] The MDG Gap Task Force Report 2011: The Global Partnership for Development: Time to Deliver, UNDESA, http://www.uncsd2012.org/index.php?page=view&type=400&nr=186&menu=45

Photo :  Behind the beauty of Rio – by Setya Dharmadja