A primary goal of the global community is to promote an economic system that will foster widespread growth and development for all nations. To help achieve this, economists have advocated for trade liberalization and a deeper integration through world trade. However, the prosperity promised by global interaction has not been attained in an equitable manner to all nations. Poverty has continued to be the prominent feature in many developing nations in the world. Various theories have been proposed to explain the stagnant economies and underdevelopment experienced by most African and South American states. Some people have argued that a lack of modernization and intensive integration with the global economy is to blame for the poverty and underdevelopment while others blame these conditions on too much integration and dependency among nations. This paper will argue that the poverty and underdevelopment observed in developing countries such as Haiti is the result of too much integration with the global economy.
A Case against Integration
An argument made by dependency theory proponents is that low-income countries are unable to improve their socio-economic conditions due to the exploitation from the rich countries. This argument holds true for Haiti where successive Haitian governments have adopted policies aimed at increasing economic integration with the global market even if this occurs at a great disadvantage to the citizens of Haiti. Because of the push to integrate with the global economy, the Haitian Government of the dictator Francois Duvalier developed a policy of creating low paying jobs to facilitate the export component of the Haitian economy (The Real News 2010). People were forced to move from their rural settlements into the urban areas where they served as cheap labour for the country’s budding manufacturing industry. While these measures had a negative impact on the local population, the developed nations benefited from them.
The dependency theory argues that the cycle of dependency, within which the poor nations of the world are trapped, is consciously created and maintained by the richer nations of the world out of their own self-interest. These suggestions can be supported by looking at the situation in Haiti. When the poorer nations try to separate themselves from the system, the developed nations take steps to frustrate these efforts. When Haiti attempted to fight neo-liberalism, the international community responded aggressively. The Real News (2010) asserts that when Haitians elected a government that had an anti neo-liberal agenda, the international community took up measures to force the government to accept the neo-liberal plans. The US and other Western powers have supported Coups against the anti neo-liberal governments and openly undermined such administrations. Due to their political power, developed countries are able to exert influence and promote their own self-serving goals. Poorer nations have to act as the rich nations want them to since they are in most cases unable to challenge the rich countries.
Integration with the global economy leads to a pattern of unequal and uneven exchange. Most developing nations deal in raw materials, which are of relatively low value, while the developed nations deal in finished products that are of higher value. Manzo (2009) notes that just like in the colonial days where European powers and their various agents controlled the global trading network, the reality today is the same with the developed nations controlling and benefiting from the global trading network at the expense of the developing nations.
High integration has led to the emphasis on foreign investment by developing nations that wish to achieve economic growth and development. Manzo (2009) argues that the method of financing development through foreign capital is detrimental to the economic development of developing nations because of the high rates of investment return. The foreign investors create a reversal in the balance of flows and benefit from high returns that would have been used to develop the country. Scott (2001) states that the opening up of poorer countries to foreign investment “gives larger firms from rich countries the opportunity for takeovers that are reminiscent of colonialism” (p.164).
Because of too much integration with the global economy, a country might be denied a say in its own economic destiny. Dependency results in the richer countries deciding on the role that the less developed countries play in the global economy (Rodney 1981). Foreign interference has led to the imposition of policies for sovereign states by the international community. This has been the reality in Haiti, where the Western powers have come up with economic development plans for the nation without consulting its citizens. Such plans, which are motivated by the self-interest of the Western nations, have then been imposed on Haiti. The plans will therefore lead to a further degeneration of the economic state in Haiti. Scott (2001) suggests that poorer nations can only achieve development if they are given freedom to come up with their own unique development strategies. Such strategies will be tailor made to suit the unique circumstances faced by the particular country.
Integration promotes poverty and underdevelopment by exposing a nation to an unsustainable debt burden. Most developing nations lack the necessary capital to finance their economic growth. They therefore turn to the developed nations for loans to promote growth and sustain public expenditure. If a country is unable to repay its loans in time, it incurs rising debt-service costs leading to greater national indebtedness (Manzo 2009). To offset these debts, most developing nations have turned to the IMF for financial assistance. This international agency imposes demands such as trade liberalization and currency devaluation, in exchange for the financial aid. Such conditions do not benefit developing nations and they increase poverty rates in these countries.
Internationalization of trade in the 15th century led to the movement of Europeans to other parts of the world. Due to the dominance of Europeans, their interaction with the rest of the world was characterized by a transfer of wealth from the rest of the world to Europe. Rodney (1981) asserts that in the early centuries of trade internationalization, African and South American countries helped to develop Western Europe in the same proportion as Western Europe helped to under develop these regions. This situation has not changed and trade internationalization continues to benefit the developed nations at the expense of the developing countries. Scott (2001) confirms that while proponents of globalization claim that it will lead to economic prosperity for all as greater market integration occurs, this has not been the case, and the gap between rich and poor countries has widened over the last two decades.
The modernization theory presumes that if developing countries adopt the values, norms and practices of the developed nations, they will be able to reap benefits of economic growth and development. Haiti has tried to adopt the modernization perspective of developing a working class and creating internal conditions that encourage foreign direct investments. In spite of these moves, the country has continued to languish in poverty. This suggests that Haiti can only achieve economic and social development if it follows its own path instead of following the path of the Western nations. Rodney (1981) notes that African and South American countries were developed in their own rights and had their own institutions and forms of government before they encountered European countries. However, contact with the Western world led to underdevelopment due to the exploitation of these nations. The Real News (2010) explicitly link colonization to the poverty and underdevelopment currently experienced in Haiti. Haiti has had a prolonged and extensive contact with European powers, beginning with the Spanish occupation of 1492. The interaction between Haiti and the Europeans was marked by exploitation and this fostered poverty and underdevelopment.
Haiti’s interaction with the global trade community has played a significant part in the country’s poverty and underdevelopment. Integration has led to the formulation of policies that exacerbate poverty among ordinary Haitians. The country has been unable to adopt anti neo-liberal policies due to punitive actions by the developed countries that obtain the greatest benefits from the global trade system. Haiti has continued to experience and underdevelopment in spite of integration and the significant aid offered to the country by Western nations. This suggests that integration is not the solution to the poverty problems faced by the county.
This paper set out to argue that the problem of poverty and underdevelopment in many third world countries is the result of too much integration with the global economy. To reinforce this claim, the paper has reviewed Haiti, a country labelled “most deprived nation in the Western Hemisphere”. The paper has demonstrated that modernization theory does not provide a sufficient explanation for poverty in Haiti since the nation has continued to suffer from underdevelopment in spite of engaging in some attempts at modernization. The dependency theory explains the situation in Haiti by demonstrating how integration has led to poverty and underdevelopment. While integration with the global economy offers opportunities for all nations to enhance their economic growth, most developing countries are not in a position to capitalize on the opportunities. Reducing the level of integration with the global economy might therefore be the solution to poverty and underdevelopment in third world countries.
Manzo, K 2009, “Do colonialism and slavery belong to the past?”, in J Edkins & M Zehfuss (eds), Global Politics: a new introduction, Routledge, London, pp. 244-270.
Rodney, W 1981, How Europe Underdeveloped Africa, Washington DC, Howard University Press.
Scott, BR 2001, ‘The Great Divide in the Global Village’, Foreign Affairs, vol.80, no.1, pp. 160-177.
The Real News 2010, Haiti and the Devil’s Curse, video recording, Web.