Cycle of Exhaustion

Cycle of Exhaustion: An external causationist’s perspective to development in 3rd world countries

It is a 4 stage cycle (in which most of the 3rd world countries are trapped) which has led to severe problems ranging from political instabilities in most of the African countries to poor HDI in south Asian countries.

Stage 1:

Starting point: (a 3rd world economy, just after World War-II, if it is liberated)
• Independent and independent in policy formation and resource control
• Poor material strength, moderate trade and all the attributes of a nation after 2nd world war

Stage 2:

Introduction of free trade through Structural Adjustment Programs SAPs
Now, for most of the cases, imperialist powers who once have been colonizers, want to have resource and policy control in the target 3rd world country. For this, they follow three paths:
• Direct/indirect invasion: Iraq, Afghanistan,
• Creation of dummy governments: Somalia, Arabic countries, Pakistan, many countries in Eastern Europe, most of the African countries and until very recent past most of the Latin American countries.
• Crippling down the economy to bring Structural Adjustment Programs through World Bank, IMF and WTO.
In 2nd stage the overall target is to achieve policy control and market access by any means.

Stage 3:

Exclusive investment patterns and commoditization of economy
We can define exclusive investment patterns as:
• Capital intensive investments which lead to more investment but less employment generation or wealth creation in actual terms.
• Maximum investment in few competitive sectors and gross neglect of other sectors. In
• Contracted growth circle: At this stage, growth is enjoyed by a very small section of the economy so that most of the people are non-participants in the process. Also, there are a very large number of people forming the periphery of the growth circle and a larger no. of people is outside the periphery of the growth circle. All 3rd world countries are victim of this phenomenon that income gap between different sections of society is increasing at an uncontrollable rate.
• Neglect of pro-people policies which lead to deprivation of masses from basic necessities of survival. Neglect of health care facilities, abolition of different subsidies, absence of check in spread of genetically modified seeds, promotion of cash-crops at the cost of cereal crops (one cash-crop economies of Africa are the best examples). Over-exploitation of natural resources being the most important as most of the people is directly or indirectly dependent on them for their survival.
Commoditization of economy means that a particular country becomes a dependent on only few goods and services which earn foreign exchange for that country as well as the country is having a competitive advantage or specialization over other countries.

Stage 4:

4th stage can be said as bust as in this stage:
• Social, health and economic indicators go down leading to increase in poverty, unemployment, decrease in purchasing power, worsening health conditions, social instability and a lot more.
• Returning back of investments, decrement of balance of trade,
• Political instability, rise in extremism like insurgency, terrorism etc. Most of south Asia and Africa are facing it. Latin America has overcome it.
This cycle is supported by different economic principles and data from different countries.

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