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Security and development

Security and development

Around a billion people live on a dollar a day. It is unlikely that, without change, the real standards of living will rise very much over the next generation for some 3-4 bn people. Statistics for the poor nations show aggregate improvements, but these are chiefly due to positive events in India and China, and the trend for the other nations with incomes per capita under $1200 per annum has been, at best, level. The very poor group have seen matters get worse for them, and their generation of wealth has fallen from 2.6% of world product in 1965 to around 0.8% today.

This is happening against a systematic background of worsening global security and a weakening biological environment. There are negative implications to a policy of "business as usual". Life could well become difficult for transnational companies with any ambition to operate in these regions. However, there are also potential direct impacts on the citizens of the wealthy world, with their dependence on complex systems, on the sacrosanct nature of intellectual property and on the tranquillity of their economic backdrop. Relatively minor impacts can create economic and political train wrecks. The true cost of the World Trade Centre attack is measured in trillions if we factor in the resulting military adventures, increased spending, weakened economy and so forth. The impact on the Spanish tourist trade of the events of early March 2004 are currently catastrophic and - if the experience of Lockerbie is a guide - constitute an impact which is likely to last for years. However, at a more structural level, it is plain that the aging populations of the wealthy world will come to rely entirely upon knowledge and complexity management for its continued standard of living. If knowledge is stolen - or if the development of understanding and knowledge are blocked by conservative or rejectionist forces - then this pillar will be broken. If the environment shifts from the merely complex to the turbulent or the muddled, then this change will sharply trim the scope for commercial differentiation of the wealthy world from the rest.

Poverty, whilst regretable, is not of itself a source of instability. It is the poor world with its nose pressed against the glass shopfronts of the rich that is far more likely to stir a sense of injustice. Modern communications are delivering this proximity, and the scope for this will hugely increase in the decades ahead. The acceleration of the technology-using world from the low-skill populations creates and will continue to generate a sense of helplessness in those viewing the retreating end of the ship. The mounting impact of commercial change on tradition systems of belief, social policing and politics creates alientation and a discomfort with the realities of everyday life. Multiplied by billions, articulated by new leaders over the new media, one can expect these forces to express themselves in waves of, at best, resentment.

Is this future inevitable? Are we to be locked into a situation that is so often echoed within the developing nations themselves, where the wealthy hide in their compounds, and take their holidays overseas? One hopes not, but a great deal has to change if we are to avoid something of this order.

At the heart of this there seem to be three forces at work.

First, the limiting factor in development is almost invariably institutional. Corruption, managerial incompetence and a lack of vision diffuse what assets there are. The poor nations cannot save enough to fund their development needs. But without security and institutional stability, foreign investors are not going to provide the funds that are needed. You, the reader, are unlikely to have put your pension fund into Zimbabwe. So Zimbabwe will not get the energy, transport, schooling and health that it needs to grow.

Second, the rich world offers little help and many barriers. Here is James Wolfensohn of the World Bank, talking about development funding:

[Around $52 bn is available for development funding.] "And, then when you do the analysis of the $52bn, you dig down and you'd be lucky to find $26-28bn in cash. All the rest is committed to non-development projects."

Against that, you have agricultural subsidies in the US and EU of $300bn plus. And, you have expenditures on military expenditures and defence: in 1999, around $800bn. And, our estimates today is that the figure is around a thousand billion. That's the statistics. We're spending 20 times the amount of development expenditures on military expenditures. And, the developing world, by the way, is spending $200bn a year on military expenditures."

Third, there is a very limited range of vision on show as to what might be if we were to get the system "right". There are many voices raised about inequity and iniquities, many views that point to complication and stasis, but next to nothing that provides a bold way forward.

The neo-conservative movement in the US has offered an interventionist view, one that sees the poor institutions as a blocked drain. Once the global plumber has made a call and forcefully freed up the obstruction, then freedom, democracy and the invisible hand will bring everyone to prosperity. It is possible to be less than convinced by this view, not least for the lack of evidence of success, and to feel no particular desire to call the plumber into your particular home. By contrast, the European Union offers a view which is populated by generalities, but which is Terribly Nice. When confronted by hard choices, it looks pained.

The World Bank-IMF provide the most promising perspective, but one which recalls the joke about the economist and the fisherman, marooned on an island. The fisherman sets about fishing for supper. The economist ponders efficient distribution mechanisms for the resulting fish.

Whilst the neo-conservatives are right about the need for an element of coercion, they are wrong about the machinery; whilst the WB-IMF has its hands of the right machinery, but lacks the means to coerce. Curiously, the rich world has all manner of carrots and sticks, not least the tariffs and subsidies mentioned above. A concerted effort to use these to make new friends would be worthwhile. We have the tools, in fact, but we have not had the debate that allows us to do the job.

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