From Global Post, commentator Thomas Mucha desctibes some of the effects that the poor are still feeling from the increasingly connected world economy.
The question now is who will suffer the most from a crisis that swept from the casino canyons of Wall Street, to the smoke-choked factories of Guangdong, to the snowy peaks of the Andes. And, more importantly, what can be done about it?
We heard one troubling hint last week from World Bank president Robert Zoellick: the poor. The World Bank predicts an additional 89 million people will be thrown into extreme poverty by the end of next year, defined as those subsisting on less than $1.25 a day. “The poor and most vulnerable are at greatest risk from economic shocks — families are pushed into poverty, health conditions deteriorate, school attendance declines and progress in other critical areas is stalled or reversed," Zoelick said upon release of the Sept. 16 report, which focused on the world's 43 poorest nations.
So why does this matter, you ask?
While low-income countries contribute less in terms of output than G20 nations, they play an increasingly important role in the global economy. And most have been severely damaged by the darkness of the past 12 months, as GlobalPost coverage of the meltdown has consistently shown.
For starters, a drop in global trade is very bad news for countries that supply the raw materials and relatively cheap labor that go into making stuff. The World Bank says global export demand will drop as much as 10 percent this year. That's a staggering amount that has already triggered nightmarish consequences, from the 20 million Chinese migrant workers who lost their jobs last year, to the thousands of Mexican and Canadian auto workers laid off amid Detroit's collapse, to the army of South African and Zambian miners thrown out of work when global demand for copper, platinum and other industrial metals dried up.
Beyond trade there's private investment — money that goes to finance schools, hospitals, roads and other infrastructure projects critical to developing economies. This too, is way down amid the crisis: the World Bank estimates that net private capital flows to the world's poorest countries will drop to $13 billion this year, or less than half the amount in 2007 as private investors keep more money in their pockets.