Enlightened globalisation

C. Rangarajan

• Can poverty become history? Sach's agenda of action — a unique informed vision of the keys to economic success in the world today and the steps necessary to achieve prosperity for all. THE END OF POVERTY — Economic Possibilities for Our Time: Jeffrey D. Sachs; Penguin Books The Hindu Tuesday, Jul 26, 2005

The picture Sachs paints is grim. Bulk of the poor countries which are in Africa are not only poor but are devastated by the burden of diseases which cripple their productivity and livelihoods. Nearly 10,000 Africans die every single day because of AIDS, TB and malaria. The tragedy is even greater as these deaths are preventable. Poor nations are caught in the classic poverty trap. Low income leads to low savings and investment, which in turn lead to low growth of income. They cannot fight their way out of this vicious cycle on their own without help from outside and that too on a massive scale. If aid falls below a threshold level, it does not have much impact. Sachs argues that the aid so far made available to Africa has been so negligible that one should not be surprised that it had made no impact on poverty.

His core recipe for ending poverty is massive capital infusion into the poor countries to enable them to come out of the low equilibrium trap. The first three decades after the Second World War witnessed an enormous growth of the literature on development economics, ushering in concepts such as "disguised unemployment", "balanced growth", "big push", "leading sector" and "take off". The basic question was how to initiate the process of self-sustaining growth in the poor countries. All economists recognise that for poor countries to grow, external assistance is important. Often a parallel is drawn to Marshal Aid. This is interesting but not quite appropriate.

Good governance in one way or another is an important issue. Some of the poor countries have indulged in the luxury of armed conflicts. They have thrown up leaderships totally unconcerned with growth. These factors, nevertheless, do not take away the need for extending assistance and that too on a significant scale. Jeffrey Sachs has done a commendable job in arousing our collective conscience to a tragic reality. The poor nations need aid — immediately and in a substantial measure. For this to happen, there has to be an attitudinal change. The rich nations can afford to give it. "Enlightened globalisation", as Sachs calls it, can lead to eradication of poverty.