What ails LDCs is basically the vicious of cycle poverty


Nov 10 - 16, 2003




The infrastructure for an economy is what a wheel is for a cart. In other words; factor efficiency and mobility, one of the most phenomenal contributory blend in successful economies, hinges upon the availability of effective and durable infrastructure. Without this benevolence, an economy especially when already entangled in vicious cycle of poverty; may reach a moribund state, rendering itself static one.

What ails LDCs (Least Developed Countries) is basically the vicious of cycle poverty, where huge budget deficits get churned out chiefly in the hands of the financial demise of public enterprises, unfeasible increase in social spending, and over grown public sector. To sustain such deficits, governments particularly in LDCs; number one cut back upon infrastructural development, and number two borrow heavily. This neglect regarding infrastructure brings about low investment or even disinvestment, pushes unemployment and lowers wage rate; which is coupled with consistency of high inflation rate. The workers, left with little disposable income, thus become demotivated and less productive ones. This poor productivity through linkages when spawned countrywide in turn gives poor returns which adversely reflect upon the investor confidence and also government revenues. Ultimately, squeezed government revenues again contain the government from development spending, with heavy debt still hovering over its heads, hence the economic quagmire.

Pakistan's infrastructure, though relatively much better than two of its neighbours; (India and Bangladesh), calls for a lot of up gradation. Take railways, despite (reported) annual losses and periodic increases in fares; there is still no phenomenal improvement in the quality of its service. The pathetic situation of roads was supposed to be met by a highly expensive solution; but the billion-dollar motorway project has just half served. On the other hand, in the last almost half decade, only 70,000 villages have been electrified; with 40,000 still remain without electricity. The state of the social infrastructure is even deplorable. Health facilities and educational standards are both shamefully second-rated. In the advance era of twenty first century, this only sounds to be an anomaly.

Polluted drinking water is fortune of some 35 percent of our population. Karachi harbor receives more than 200 million gallons of untreated sewage inflows every day and the Lyari River is now plagued so much so that it happens to be the most polluted river in the world, taking over the top spot from England's Mersey River.

High-growth developing countries face different problems; like in Bangkok, congestion has badly affected business and leisure. Over there, infrastructure, almost a fixed factor, fails to meet ever-increasing business development and economic expansion. But majority of LDCs experience almost similar plight as regards infrastructure. In Bangladesh for example, the railway and road networks are not only inadequate but also in a poor state of maintenance. By the same token, inland waterways, which are important means of transport over there, are insufficiently developed. The energy consumption is as low as less than 50 kilograms of coal equivalent per capita. On electrification front, 90 per cent of the villages grapple in the dark.

Similarly, India's infrastructure is also plagued with poor roads and pathetic railways resulting into frequent accidents. Minimal and poor housing forces millions of people to sleep on streets. An even greater number sleeps hungry every night. Bombay (India's richest city) is congested with plazas and arcades; Delhi at the same time has qualified for the most polluted city in the world.

So, the situation furnishes low standards of living and a banal state of well being in LDCs. Hence high population growth rate, unemployment, contemptible financial and strategic assets, high debt servicing eating into national exchequer, inadequate infrastructure (both physical and social) and nevertheless lower GDP; co-work and become perennial. Seen in the global perspective, such a predicament as a cumulative effect, unleashes a paradigm shift such as greater global coalition and interdependence, protectionism, growing economic blocs, overgrowth of multinationals, overly rapid technological advances in the DCs, and conflicting politics, tribalism, poor governance, global dependence, economic deprivation and growth of environmental concerns in the LDCs. As a result, for example, the non-tariff barriers like import licensing requirements, import quotas, surveillance practices, guarantees, arbitrary requirements and prohibitions against the exports of a particular nation have superseded tariff barriers during last twenty-five years, erecting hurdles for international trade; which subsequently happen to be degenerative towards LDCs' mettle for international competition who scarcely enjoy technological advancement, economies of scales and export surplus. Further, liberalisation in the new WTO regime, which is generally applied on a MFN (most-favoured-nation) basis, has opened ways for other economic blocs. More than hundred at the moment; these blocks discriminate against the rest of the world by providing trade preferential arrangements only to their member states, sparing sufferings for the LDCs.

The need of the hour therefore is to prioritize infrastructural development (both physical and social) which may engender resource generation, all human, capital, economic and physical; enhance productivity, redoubling in turn the government revenue and quality-export surplus, certainly supportive towards attainment of squeezed budget deficits and lowered debt burdens. This way, the development spending may give rise to accelerated positive economic activity also supported by DFI, which may ultimately trigger a break in the vicious cycle of poverty and enrich general well being, over some period of time.