ETVT that global economic governance has been ineffective in tackling poverty Flashcards
structure
- the IMF and WB promotion of Neo lib capitalism
- WTO and free trade
3.UN efforts to bring international focus to tackling poverty
LOA
mixed results
examples
- against IMF and WB
The IMF and World Bank tackle poverty by offering loans with conditions that push for free market reforms:
→ trade liberalisation, privatisation, and deficit reduction.
These reforms (like the SAPs in the 1980s-90s) are often criticised for causing social harm, but supporters argue they solve core economic problems and create long-term growth.
📈 Real-World Example:
India opened its economy in the 1990s, became a global tech hub (e.g. Bangalore), and cut extreme poverty from 45% (1993) to ~6% by 2024 (World Bank).
💡 Theory Link:
Fits Classical Economic Development Theory — global trade and investment drive growth, efficiency, and poverty reduction through comparative advantage. in context of opening up global south
In cases like Ghana in the 1980s, IMF-backed reforms had some success in reducing
inflation, stabilising the currency, and fostering economic growth.
- for IMF and WB
Critics argue that IMF & World Bank reforms — especially Structural Adjustment Programs (SAPs) — often worsened poverty. Poor nations were forced to accept austerity (privatisation, spending cuts) to receive loans, deepening inequality and underdevelopment.
🌍 Real-World Examples:
Nigeria: SAPs (1986) caused inflation, falling real wages, and worsened poverty — rising from 28% (1980s) to 66% (early 1990s).
Zambia: SAPs led to mass layoffs and poverty soared from 49% (1989) to over 80% (mid-1990s), leaving the economy reliant on copper exports.
🔗 Theory Link:
Matches Dependency Theory — reforms locked African nations into a cycle of exporting cheap raw materials & importing expensive manufactured goods, reinforcing global economic inequality.
📊 2025 Context:
As of 2023, ~38% of Sub-Saharan Africa lives in extreme poverty. The region still relies on raw material exports (75% of exports unprocessed), making it vulnerable to global price shocks.
- against WTO promo of FT
The WTO promotes free trade and limits protectionism by simplifying trade rules, reducing barriers, and settling disputes, helping developing nations access global markets.
✅ Key Agreement:
The Bali Trade Facilitation Agreement (2013) cut global trade costs by ~14%, making it easier for small businesses and developing countries to trade internationally.
🌍 Updated Impact:
Between 2000 and 2024, global GDP nearly tripled, from $33 trillion → $104 trillion (World Bank, IMF).
According to 2024 World Bank reports, global poverty continued to decline post-COVID recovery, especially in Asia and Latin America.
🇨🇳 Modern Example:
China’s long-term integration into global trade via the WTO led to a historic poverty reduction — by 2019, poverty fell below 1%, and by 2025 China is focusing on reducing rural-urban inequality rather than extreme poverty.
📈 New 2025 Context:
The African Continental Free Trade Area (AfCFTA) — fully operational as of 2024 — aims to cut trade barriers across 54 African nations, with the World Bank predicting it could lift 30 million people out of extreme poverty by 2035.
for WB promo of FT
Structural theory argues global trade reinforces inequality:
Wealthy, industrialised nations (the core) dominate, while poorer nations (the periphery) are trapped exporting raw materials and importing expensive manufactured goods.
This keeps the Global South underdeveloped, entrenching the North-South Divide.
🌍 Modern Example:
In Nigeria, oil and gas make up ~92% of exports and 65% of government revenue.
This dependency creates economic instability, and as of 2024, ~40% of Nigerians live below the poverty line.
💡 State-led Success Stories:
Countries like China and South Korea lifted millions out of poverty not by following pure free market policies, but through:
→ Strategic industrial policies
→ State-led export strategies
→ Investment in education & infrastructure.
China’s success (800M lifted from poverty by 2019) shows state intervention was key — contradicting the free-market focus of the IMF, WTO, and World Bank.
🧠 Critical Point:
Despite state-led success elsewhere, global governance still pushes Classical Economic Development Theory, which critics argue protects the economic dominance of rich nations.
- for UN efforts to bring international focus
IGOs like the UN, World Bank, and IMF have embedded poverty reduction in their core missions through global initiatives.
🌍 Key Initiatives:
Millennium Development Goals (MDGs) (2000): Halved global poverty by 2015 (ahead of schedule).
Sustainable Development Goals (SDGs) (2015–2030): Aim to eliminate extreme poverty and tackle structural barriers like inequality, climate change, healthcare, and education.
🌱 Climate & Poverty Link:
Climate change worsens poverty in the Global South.
At COP28 (2023) in Dubai, world leaders reaffirmed the promise of $100 billion per year in climate finance for developing countries — continuing the commitment from COP26 (2021).
Funding supports renewable energy, biodiversity, and climate resilience.
💡 Global Economic Governance Impact:
These frameworks show that poverty reduction is a shared global priority — with IGOs coordinating aid, development, and climate strategy to protect the most vulnerable.
- against UN
Global economic institutions (IMF, World Bank, WTO) are often seen as serving the interests of wealthy, developed nations rather than genuinely reducing global poverty.
💸 Structural Bias:
Voting power in both the IMF and World Bank is linked to financial contributions.
The U.S. holds ~16.5% of votes in the IMF, meaning it can veto any major policy change (since 85% is required).
Developing nations — the primary aid recipients — have limited influence over decision-making.
🌍 Example of Inequality:
The Doha Development Round (WTO) aimed to reduce trade barriers for developing countries, but collapsed after over a decade.
Rich countries refused to cut their agricultural subsidies, which distort trade and hurt exports from poorer nations.
🧠 Theory Link:
→ World Systems Theory argues the global economy is structured to extract wealth from the Global South for the benefit of the Global North — a cycle the current system maintains.
🌱 Climate Finance Failure:
Wealthy nations promised $100B/year to developing countries at COP15 (2009), and reaffirmed this at COP26 (2021) and COP28 (2023).
By 2025, the full target still hasn’t been met, showing developed countries often prioritize their own economic interests over global poverty or climate action.
How has global economic governance been effective in reducing poverty in India?
India’s economic opening in the 1990s, especially in IT & services, helped reduce poverty from 45% in 1993 to 6% in 2024
This supports the idea that globalisation and trade can drive poverty reduction.
How did China’s WTO accession help reduce poverty?
China’s entry into the WTO in 2001 integrated it into global supply chains, lifting 800 million people out of poverty and reducing its poverty rate from 88% (1981) to less than 1% (2019)
This highlights the impact of global trade on poverty alleviation.
What role does Nigeria’s oil dependence play in its poverty situation?
Nigeria’s dependence on crude oil (92% of exports) and volatile revenues has left 40% of the population in poverty
This supports Dependency Theory, which argues that developing countries are trapped in cycles of resource exploitation.
How did IMF-backed reforms affect Ghana in the 1980s?
The IMF helped Ghana with economic reforms that reduced inflation, stabilised the currency, and promoted growth
This was seen as a success for Classical Economic Development Theory.
What happened in Nigeria after IMF reforms in 1986?
IMF Structural Adjustment caused inflation, public service cuts, and rising poverty, increasing poverty from 28% to 66% by the early 1990s
This illustrates Dependency Theory, where IMF reforms worsen poverty.
How did Zambia’s economy suffer from IMF reforms in the 1990s?
Zambia’s economy worsened under IMF Structural Adjustment with mass layoffs and rising poverty from 49% to 80%
This shows the failure of free-market policies in resource-dependent economies.
How has global trade promoted poverty reduction worldwide?
The WTO and global trade have tripled global GDP from $33 trillion (2000) to $104 trillion (2023)
This shows how global integration and trade can reduce poverty.
How did the UN Millennium Development Goals (MDGs) impact poverty?
The MDGs successfully halved global poverty by 2015, showcasing the effectiveness of global cooperation and goal-setting in addressing poverty.
How do IMF and World Bank’s voting systems favour wealthy countries?
The US holds 16.5% of votes in the IMF and has veto power in the World Bank, limiting the influence of poorer countries in global economic decision-making.
Why did the Doha Development Round fail to address global poverty?
The Doha Round collapsed because wealthy countries refused to cut agricultural subsidies, harming developing countries’ ability to export and reduce poverty.
How have wealthy countries failed to meet their climate finance commitments?
Developed countries pledged $100B/year for climate finance to developing nations, but the funds are still insufficient as of 2025.
How have the IMF and World Bank contributed to poverty reduction through structural reforms?
In Ghana (1980s), IMF-backed reforms led to inflation reduction and currency stabilisation, suggesting that free-market reforms can be effective when properly implemented.
How did China’s government-guided economic development differ from a pure free-market approach?
China’s state-led growth model focused on strategic industrial policies, education, infrastructure, and protecting nascent industries.
How has Africa remained dependent on raw material exports?
Many African countries like Nigeria remain dependent on oil exports, with 40% of the population living in poverty due to price volatility and a lack of industrialisation.
How has the Bali Trade Facilitation Agreement (2013) helped developing countries?
The Bali Agreement reduced global trade costs by 14.3%, simplifying customs procedures for landlocked countries and small businesses.
