The End of Poverty by Jeffrey Sachs: Book Review by Shekhar

The end of poverty

By Jeffrey Sachs

In his book The End of Poverty, Jeffrey Sachs proposed a global roadmap for eliminating extreme poverty by 2025. He repeated that such a roadmap was a ‘viable’ way to tackle the worst of poverty.It sounds like, despite the stark global economic disparities of the past two centuries, the author has several real reasons to be optimistic about equal, broad-based global economic growth. This book brings some of Jeffrey Sachs’s stunning insights and experiences to inspire us to rethink the current situation of poor countries on the road to prosperity and happiness.

Every time he describes the imbalance in the global North-South development model, he asks: Why is it that one-sixth of the world’s population enjoys a relatively high standard of living and has all their needs met, while the “bottom billion” still struggle to meet the minimum living requirements?

Why is Africa trapped in the poverty trap? How do India and China influence the global economy and politics? Can the Millennium Development Goals be achieved? Why has such a huge amount of foreign aid failed to effectively help the poorest people? How can some poor countries escape the poverty trap and step onto the ladder of economic growth and sustainable development? How can we eliminate extreme poverty by 2025? These questions are some of the epitomes of Jeffrey’s search for truth in this highly crowded and divided world.

Growth over the past two centuries

What went right and what went wrong in the past two centuries? According to Jeffrey, the population in 1800 AD was 900 million and grew to 6.1 billion in 2000. In these two centuries, the world’s per capita income increased 9 times, but we still find such a large income gap between Africa and Europe, Asia and the United States. Statistics show that despite many efforts made by countries to eliminate poverty, these income gaps have been widening due to technological innovations, industrialization waves, urbanization, smooth international trade, and favorable political and social environments in various countries.

Jeffery pointed out the different economic growth rates in different regions on the world map. He acknowledged that the United States maintained an annual growth rate of 1.7%, so the per capita income in the United States increased 25 times, while Sub-Saharan Africa and East Asia were trapped in extreme poverty.

Major economic events and participants

Jeffrey argues that various macroeconomic events such as the two world wars, the Great Depression of the 1930s, the oil boom in the Gulf countries of the Middle East, the spread of colonialism by powerful nations, and the decline of European-led globalization have played a major role in determining the world’s view of the current world economic situation. He explains how savings and capital accumulation, trade specialization, technological progress, and social and structural adjustments in overall economic policies have led to economic prosperity in different developing countries. At the same time, he claims that growth can only be captured by self-sustaining economic growth, rather than making people rich by implementing discriminatory economic policies.

In his article, Sachs mentions important statistics from the 9/11 terrorist attacks on the World Trade Center. In this tragic event, 3,000 Americans died in the terrorist attacks. And in Africa, 10,000 people die every day from AIDS, tuberculosis and malaria. Sachs believes that these “10,000 people” can be saved by shifting economic energy to Africa instead of spending huge military resources to defeat terrorists in Iraq and Afghanistan.

He acknowledged the role played by multilateral institutions such as the United Nations, the World Bank and the International Monetary Fund in eradicating poverty in Asia, Africa and Latin America. He had no doubts about the effectiveness and efficiency of these institutions in allocating funds and resources to help the poorest. He believed that the Millennium Development Goals should not only eliminate income disparities, but also eliminate vulnerability to disease, lack of education, chronic hunger, environmental degradation and uneven global economic growth.

Lessons from India and China

Jeffery lists India and China as two of the world’s “most watched” emerging economies that will impact global economics and politics. He first points out the reasons why these two countries lag behind the United States and Europe economically. He then provides historical context and describes policy-level interventions to elevate the two countries’ position in the global economy.

Sachs argues that China’s failure to grow is due to various flaws in its trade policies, which were constrained by political changes led by Chinese leaders influenced by Mao Zedong Thought. He wonders how China, which was still emerging from the chaos of the culture wars 25 years ago, became one of the world’s most important trading powers. Since 1978, China has been the world’s most successful economy, with an annual per capita growth rate of 8%. It’s hard to imagine, but the poverty rate has dropped from 64% to 17%. As the book explains, China’s technological innovation, open trade, and democratic principles have enabled China to occupy its current position in the global economy.

At the same time, he also talks about India’s entrapment in various cultural hierarchies and the British rule of the East India Company that slowed down its development path. The book clearly explains how impoverished India in 1978 overcame major obstacles under the economic leadership of great development economists such as Manmohan Singh and built the country into an information technology hub. Today, India is known for textiles, clothing electronics, pharmaceuticals, auto parts exports and a religious tourism center, which has driven India’s economic growth rate of 6% per year. With such explanations, Sachs hopes to eliminate the West’s dominance in shaping the global economy and politics. The only way to do this is the return of China and India.

Lessons from Nepal

“Nepal is a poor country” – this is the social reality. This country, which has long been recognized as the “Land of Mount Everest” and the “Birthplace of Gautama Buddha”, has actually failed to escape the cycle of poverty. Why has Nepal not continued to climb up the development ladder despite numerous political changes, abundant natural resources and tourism potential? I think this question is the most difficult to answer for Nepal’s policymakers and development actors, because no matter how hard they try to convince people through development theories and case studies, the reality that “Nepal is poor” is cruel.

Sachs raises some interesting questions that could be the “mantra” for poor landlocked countries like Nepal. Sachs argues that a country can break the vicious cycle of poverty and move towards progress if the international funds flowing into the country are used effectively. Sachs implicitly touches on the various obstacles faced by landlocked countries such as Nepal, which is mired in civil war, political unrest and unemployment despite having so many resources and geopolitical opportunities (India and China are neighbors). Sachs argues that high transportation costs, the government’s failure to promote peace and security to create the right investment environment, cultural barriers such as gender discrimination and exclusion, and geopolitical barriers such as India’s monopoly on the Nepali market could be the main reasons for Nepal’s sluggish development trends. Sachs emphasizes that multilateral and bilateral funds are inefficient, have high operating costs due to corruption, and fail to benefit the poor.

Taking the Chinese economy as an example, Sachs praised the Chinese Economists Association, a group of young Chinese economists who have received higher education in the West, for pointing the way to a sustainable direction for China’s economic prosperity. In Nepal, Kathmandu University—arguably the best university—has the potential to produce outstanding graduates who will provide effective avenues for Nepal’s development in today’s critical tax collection process. Similarly, Nepal can learn lessons from India’s poverty intervention programs such as the “Asian Green Revolution,” “Agricultural Revolution,” and “Family Planning Promotion.” India’s economic policies, which aim to end the most severe bureaucratic restrictions on international trade and investment, may be an ideal strategy for Nepali policymakers to follow. With the contribution of the Indian Institute of Technology (IIT)—whose graduates are employed by the United Nations, the World Bank, and the International Monetary Fund—Kathmandu University (KU) can meet the demand for such talent.

So, Sachs’s “end of poverty” does offer hope for the poor, but his lessons and insights will only be true if poor countries can break out of the vicious cycle of poverty by 2025. As Sachs says, this is the greatest challenge facing our generation.

Shekhar KC (08)

MDEVS First Year

Book Review Assignment 2