The Impact of the Financial Crisis on the Developing World

DAVOS -- Gazing at the faces of contrite bankers and somewhat shell-shocked politicians who are in Davos trying to figure out how to right a capsized global economy, I wish to remind them that if the world's rich think they have never had it so bad, the developing world is having it worse.

As head of The Global Fund to Fight AIDS, Tuberculosis and Malaria, an organization which has put 2 million people on life-saving antiretroviral therapy since it was founded 7 years ago, I am acutely aware of how vulnerable developing countries are to getting caught in the brutal downdraft of the financial crisis.

In this regard, I welcome US financier George Soros's candid admission that the developing world is likely to be handed a particularly raw deal in a crisis that is not of its own making. Writing in the Financial Times on Jan. 29, Soros said "How unfair the system is has been revealed by a crisis that originated in the US yet is doing more damage to the periphery."

In the middle of this turmoil, rich nations cannot forget they have a responsibility to help narrow huge inequities between rich and developing nations, especially in access to healthcare. Now is not time for the richest countries to focus solely on their own back yards or to turn their backs on poverty and disease. Health is one area where we are really making a difference.

Although the proportion of people in developing nations living in extreme poverty, or on less than 1 dollar a day, has fallen since the beginning of the 1990s, the gap between rich and poor grows ever wider. For example, the share in national consumption in the developing world of the poorest quartile of the population fell from 46 percent to 39 percent between 1990 and 2004. Even more worryingly, wealth remains a key determinant of access to healthcare in developing countries.

Every year more than 100 million people are made destitute, falling below the absolute poverty line, because they are saddled with back-breaking health bills. Putting this situation to rights is in everybody's interest. Without access to proper healthcare there can never be real development. Health must be at the core of development; it is not just a desirable add-on. In a globalized world, the health and security of the poorest nations are inextricably linked with the health and security of the richest.

Nobel Prize-winning economist Paul Krugman has summed up the challenge neatly:

Investing in reducing inequalities in health, and in education, are not only important for reasons of ethics and equity, but contribute to restoring economic efficiency, functional markets and global growth.

These are the messages I will be sharing with world leaders at Davos this week.

Comments

[RedneckDem]

Seeing how big gov't and greedy corporations have fomented most of the lousy conditions in third world countries, has anyone ever thought that maybe some of these cultures just want to be left alone to work the land or be a part of a functional village? I bet there are a few million Chinese who wish they could have their land and village back. They lived a sustainable life with family and friends being the anchor. Sounds like what many of us are currently experiencing.

I see no problem with assisting countries with agriculture, natural resources, infrastruture, etc... but it should not be done based solely upon chasing cheap labor, nor should it be done at the expense of another's economy (as outsourcing has now done us).

[Erdgeist]

The U.S. let multinational corporations use their offices to exploit cheap labor in third world countries under the banner of free-trade. How this operates is best exemplified in John Perkin's book, *Confessions of an Economic Hit Man*. But not only did the U.S. help in the exploitation of third world countries, it helped these same corporations destroy the American middle class.

[cadsuch]

Remember those 2 boats full of people that got floated out to sea by the military in some asian country?

Thats us, kiddies. If we don't stick together. We have to figure out a way to stick together, because the Republicans buy ink by the barrel! And that can be us in those boats!

[curiousasheck]

Check with the non-nation floating jet setters. I understand 75% of all hedge fund earnings are in the Caymens.