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The economics of violence: Growth with inequality

The World Bank claims that poverty in Asia has been halved between 1990 and 2003. But, says John Samuel, the story looks good only until you see the underbelly of this economic growth - growing inequality, violence and pollution

Here's the good news. The economy of Asia is surging ahead. Sustained economic growth seems to have contributed to the reduction of poverty. The World Bank says that poverty rates in Asia as a whole (based on consumption levels of less than $1 per day) have been almost halved in the last decade, falling from 34.3% in 1990 to 19.3% in 2003. Most countries are making steady progress towards achievement of the Millennium Development Goals (MDGs) by 2015. China, Indonesia, Malaysia, Thailand and Vietnam have all witnessed more than a 50% poverty reduction since 1990 and these countries are supposed to be on track to meet the MDG targets of a further 50% reduction in income poverty by 2015. Literacy rates are going up, infant and maternal mortality is falling, and people are living longer. Asian cities are booming, with signs of prosperity everywhere. More and more billionaires are laughing their way to the banks year after year. The pundits say that the time of Asia has come -- it is an Asian Century, with China as the global factory, India as the global office, and the stock exchanges rocking. The story looks good!

The story looks good till you notice the underbelly of economic growth: unprecedented levels of inequality, violence, epidemics, congested roads, teeming slums, polluted rivers and failing democracies. The story looks good till you begin to hear the stories of dalits, tribals, ethnic minorities, women from the hinterlands of rural deprivation. Stories that you may never read in the newspaper, unheard stories of invisible people, people displaced from land and livelihoods, people who prefer to commit suicide rather than sell their dignity, children who go to bed hungry every single day. Two-thirds of the world's poor live in Asia. There will still be more than a billion people living on less than $ 2 a day in 2015. So is Asia shining? Is economic growth good for billionaires or billons of people?

What is the balance sheet of Asia's economic growth? Whose growth is it anyway? Who grows and who loses? Can economic growth alone eliminate poverty in Asia? What are the key challenges for development, democracy and human rights in Asia? We need to situate the story of economic growth in the well-being, human security and human rights of the most marginalised and excluded people in Asia. In spite of all the growth, if there are still more than one billion people living on less than $2 a day in 2015, the story can turn sour! But it seems the ruling elite and media barons cannot stomach the bad news.

Economic growth with inequality creates an economics of deprivation and violence. The present model of economic growth displaces millions of rural and urban poor from their land and livelihoods. As a result of unprecedented displacement due to mining, infrastructure projects and corporate farming, a new generation of social-economic refugees and new poor are emerging across Asia. They are growing in urban slums, rural areas and in highly concentrated pockets of extreme poverty. A new discontent is brewing and it can adversely affect development, democracy and human rights in Asia.

While economic growth helps to create more opportunities for the more educated section of the middle class and a 'trickle-down' effect on a section of the poor, it is creating unprecedented levels of inequality within countries and between countries.

Though China and India, two of the most populous countries in the world, are witnessing high rates of economic growth, there are regions lagging behind in both countries that have poor infrastructure or public service provisions. The urban and rural poor also face discrimination based on ethnicity, race, religion, caste, gender and place of origin. Women are more marginalised and vulnerable to a system that perpetuates inequality, discrimination and consequent poverty.

Economic growth is concentrated in a few urban centres and specially created economically dynamic zones in the costal areas of many countries. But two-thirds of the population in most populous countries -- like China, India, Indonesia, Bangladesh and Pakistan -- still live in rural areas depending on agriculture for their livelihood. Historically marginalised sections like the dalits in India, ethnic minorities in China and South-East Asia and religious minorities in many countries are alienated from economic growth and the mainstream political process.

This urban-centric, uneven and jobless economic growth perpetuates a sort of systemic inequality based on identity, gender and location all over Asia. Most communities at the receiving end of exclusion are historically marginalised in terms of economic or political opportunities. When inequality has a direct co-relation with identity, it gives rise to new discontents. Such a sense of discontent and shared sense of alienation can often give rise to a new politics of violence -- reacting to the prosperity of the dominant communities.

Surrounding these islands of prosperity is a growing sea of poverty, discontent and consequent reactionary politics. This can perpetuate a cycle of violence, erasing the benefits of growth as well as poverty reduction. So the paradoxical trend of growth with inequality may not be able to sustain growth on a long-term basis. Political stability is a prerequisite for economic growth. Inequality can create more political instability, adversely affecting sustainable economic growth. This can eventually perpetuate a new cycle of poverty, violence and violation of human rights in Asia.

The present economic growth is vulnerable as it is largely dependent on the service sector and the export-oriented manufacturing sector, often at the cost of the agricultural sector that provides livelihoods to the poor and marginalised sections in Asia.

This urban-centric growth, with very little investment in rural infrastructure, economy or agricultural, also leads to an unprecedented migration from rural areas to urban areas. This explosion of populations in urban centres without adequate infrastructure and gainful employment opportunities can create a new generation of urban poor. Urban poverty and inequality -- with direct links to identity -- can create more violence against women and escalating crime rates in many countries.

Thus the present mode of neo-liberal economic growth is not sustainable in the long run as the billions at the receiving end of marginalisation and poverty can spoil the party, giving rise to a new cycle of poverty in Asia.

InfoChange News & Features, April 2008