How can poverty effect the political stability of a state? - page 1
Keywords: political stability poverty
By exploiit on 19/06/2010
Level: A Level (Year 13)
Page Number: 1 of 2 pages: 1 2
Poverty can act as a key factor in undermining any state’s political stability. Poor handling of fiscal policy and unfavourable economic circumstances can lead to subsequent destabilizing factors, which include high levels of immigration and domestic warfare.
Failure to produce effective economic policies can be disastrous in any state and, most notably, in developing or semi-developing countries. Pakistan for example, is currently experiencing high levels of instability because of failing adjustment programmes introduced by the International Monetary Fund (IMF) and the World Bank. Attempts to improve efficiency of resource use, enhance economic growth and remove macroeconomic imbalances have proven relatively ineffective. Criticism is common of the IMF in this case, which has allegedly focused too exclusively on these macroeconomic imbalances and has failed to address universal welfare for the poor and vulnerable. In fact, IMF policy reforms (including wage and employment restraints, cuts in development expenditure and increases in sales taxes and utility charges) have led to the inevitable increase of income inequality in Pakistan and have contributed to an increase in general poverty.
The mistiming of such reforms is also contributory to the state’s political instability. Referring again to Pakistani policies, the Financial Sector Reform Programme introduced by the World Bank raised interest rates on government borrowing, increasing the international payment burden of the government. Amjad argues that the deficit should have been reduced prior to financial reform in order to avoid government repayment. This failure resulted in the constraint of public sector development expenditure. This was further limited by an IMF loan agreement targeted at lowering the fiscal deficit, a policy which also led to decline in international developments.
Further instability can arise when the poor and vulnerable remain ignored by economic reform. Poverty-related subsidies in Pakistan were systematically phased out during the 1990s (this applied particularly to essentials, such as food). Public spending was not optimized; public works programmes were not sufficient in addressing the increasing problem of unemployment and little protection was afforded to workers in the way of decreasing wages, a position weakened with the introduction of the Industrial Relations Ordinancy Act of 2002 which forced many full-time workers to revert to contract or part-time work.
Civil violence is often a result of extreme poverty in a state and this can, of course, threaten political stability. For example, Somalia’s economy since its most recent civil war has been in a very poor state. Around 43% of Somalis currently live in
Last 5 comments…
There have been no comments posted for this article, but you need to register if you want to be the first!