By 2030, 1,2-billion people in developing countries will belong to a global middle class, up from 400-million today. The increase in wealth will make income inequality and environmental pressures more acute, predicts the World Bank in a report titled Managing the Next Wave of Globalisation.
Several NGOs think the bank’s warnings are inconsistent with its position on free trade.
In the next 25 years, growth in the global economy will be powered increasingly by developing countries, notably in Asia, the World Bank report says. The global output will rise from $35-trillion in 2005 to $72-trillion in 2030. Overall, developing countries’ share in global output will increase from about one-fifth of the world economy to nearly one-third, the report predicts.
Despite an expected increase of the world’s population to eight billion by 2030, the number of people with an income below $1 a day will fall to 550-million from 1,1-billion today. As more people in developing countries will move from agriculture into better-paid manufacturing and services jobs, the ranks of the middle classes will triple.
By 2030, 1,2-billion people in developing countries will earn between $4Â 000 and $17Â 000 a year. This would give countries as diverse as China, Mexico and Turkey average living standards comparable to Spain today.
The wealth increase comes at a cost, both socially as environmentally. Africa is most likely to fall further behind because of its political fragility and vulnerability to fluctuations in commodity prices.
In two-thirds of developing countries the income gap between the rich and the poor is bound to increase, the World Bank predicts. That is because a more integrated global economy offers opportunities to the well-educated, whereas unskilled workers have to compete harder and probably earn less to keep their jobs.
The pressures in labour markets will be partially offset by India and China’s hunger for energy, technology and investment goods. Hence, strategic investments in research, education and lifelong learning become more important than ever as a safeguard in a more competitive global economy.
The report proposes increase in development assistance and lowering of trade barriers to products from developing countries, especially agriculture and labour-intensive manufactures.
For Etienne de Belder of Oxfam, the World Bank’s policy guidelines show an appalling lack of consistency. “Countries that followed the export-driven model of development which the bank proposes were left with a social and economical hangover. Just look at the pauperisation in sub-Saharan Africa or the deforestation in Indonesia.”
The World Bank is not learning from the past and is in a poor position to give lessons for the future, De Belder said.
“You can’t have economical deregulation and at the same time ask for more rules to solve ecological and social problems. Local entrepreneurs in Africa are not ready to stand up to global competition. As long as the inequalities persist, there cannot be beneficial free trade between equal parties.”
He continued: “India and China’s successes in boosting exports and reducing poverty are mainly due to their huge internal markets. Smaller developing countries have to look for different strategies.” — IPS