Why are poor countries poor?

Why indeed?

Ricardo Navarro eloquently mentioned that we should be talking about impoverished countries, not poor countries.

Poor countries are just a little down-and-out, they’re lagging a little behind economically but they’ll be alright in the long run. Maybe they’ve got a slightly corrupt government (who hasn’t?) and they’re slowly “trading their way out of debt”.

That picture might not be entirely accurate.

He notes that it’s important for us to regard poverty as one side of a coin. On the one side, we have impoverished countries and, on the other, wealthy countries. We can’t talk about poverty in Africa without considering the wealth of France. They’re two sides of the same equation and the stench of colonialism inevitably creeps into the discussion.

The vast majority of impoverished countries are former colonies. There is commonly minimal domestic ownership of abundant natural resources, which are then traded out of the country by companies who are very successful at paying little, if not no, tax at all. Though the military conquest is all done and dusted, neither the exploitation nor the ecological harm have receded at all. And although it’s private, unrestricted and unapologetic companies that are getting their hands dirty in this racket, the fingers in this discussion are unanimously pointed towards the World Bank, the International Monetary Fund and the World trade Organisation.


These organisations specialise in wielding debt like forceps, prying open economies to be depredated by rich companies from rich nations. “Trade your way out of debt”, they caw, offering veiled deals with fanged grins. Let’s look at Zambia. Zambia has lots of copper that was mined and sold abroad. Their government tried to start up other industries like textiles and railways in order to build upon their copper resources to create a more stable economy. Good plan. The 70s crisis hit when the price of copper collapsed, and Zambia began to borrow much more in order to maintain the economy they’d started to really solidify.

Western banks were in the habit of lending shit loads with low interest rates. Then the US put up interest rates at the end of the 70s and Zambia was in danger of defaulting on their loans. The money that was coming into the economy was barely paying off the interest, let alone starting to clear the debt itself. Similar to Ireland recently, IMF and the World Bank offered new loans to Zambia so the Western banks didn’t lose out. But the loans from the World Bank came with more than just interest payment stipulations, they came with a list of orders. Cut government spending, reduce trade taxes, export more of your resources grow cash crops for the West (like tobacco) and allow Western corporations to make a profit from your essential resources (like water). A classic, almost cliché, neo-liberal economic wish-list.

The price of ‘trading out of debt’ is seldom quantifiable, but the repercussions are felt throughout an economy. Time after time, we see that the money being siphoned out of ‘poor countries’ is several times greater than the money going in.

Zambia became even more dependent on exporting and their economy collapsed in the 80s/90s. Their debt stayed very high and has never been repaid. Arguably, repayment isn’t a priority, so long as they continue to obey the wishes of the richest countries.

About five years ago the IMF ideology was widely seen to have failed completely. Their professed aims had not been achieved, nor were they any closer to being. Oddly, the creation of G20 (the 20 richest countries in the world) rejuvenated support for these global institutions and, oddly, these G20 countries are the same countries who continue to enjoy the spoils of colonial resource-grabbing committed centuries ago.


Another conclusion that was echoed by all is that aid, in the sense that it is being reviewed in the UK right now, is no remedy for the ailment of poverty. For every pound that goes to a country in aid money, at least twice that will be taken out of the economy by companies using the indigenous resources and labour while taking repeated ‘tax holidays’.

UK aid is also commonly used by UK PR companies in order to advance and publicise the privatisation agenda – even to the point where popular musicians are hired to compose and sell ballads advocating open markets. This kind of aid is successfully being delivered in Ghana and Bangladesh, to name only a couple, but we need to ask exactly whose interests are being served here.

The structure of exploitation set up by colonialism is very much alive and well. The term ‘post-colonialism’, if it’s ever used any more, is ambitious at best. Neo-colonialism is probably a better term.


What are we actually funding with our aid? In whose pockets do these funds rest, after they’ve been routed around the globe?

And why do we think that the countries that instigated this level of poverty are best placed to elect what to do about it?

blog comments powered by Disqus