Should the financial crisis change the way we perceive poverty and economics in developing countries?
The financial crisis swept the world in 2007 shaking the very foundation that our economy is based on. Many economists argue we were hit by the biggest financial crisis since the Great Depression and the world is still feeling the repercussions of this event. The crisis was closely monitored by economists, academics, and professionals, including our very own CEO Espen Berg. He shouted about it several times, including:
The Global Financial System vs the Bretton Woods Regime
If I was king of the financial system
Financial Crisis and reserve accumulation
Why the economic system needs fixing
The argument made by Espen and many other economists such as Robert Wade, for example, is that the economic crisis was a result of fundamental flaws in the economy (see, for example, If I was king of the financial system). We know the current economic system is prone to crisis; there have been more financial crises since the world became an “open economy” than ever before. We also know developing countries are less able to tackle “shocks” to the system. The big question that comes to mind then is “should the financial crisis then change the way we perceive poverty and economics in developing countries?”.
It’s not a simple question to answer, and this question raises a set of subsequent questions, such as “is there an alternative way to perceive poverty and economics in developing countries?” and “would it be a good idea?”.
In fact, developing countries have attempted this before. The term “third world countries” came about during the Cold War to define those countries that did not follow capitalistic or communistic ideals, but rather chose a third and separate development path. However, as we progressed out of the Cold War, the third world also became a term to define less developed countries.
So what do we do? Do we encourage developing countries to develop into a crisis prone system or do we work with them in developing a new system which “developed” countries can eventually develop into?
What do you think?
