Foreign Policy Blogs

Globalization and Zambia's Debt

Globalization has had a profound effect on the world over the course of the past three decades. We are experiencing a technological revolution; it’s far from over.  Former Hewlett-Packard CEO Carly Fiorina began saying in 2004 that we were “at the end of the beginning” of the information age and that the last 25 years were just “the warm up act”.  Technology isn’t done with us yet.  We are now living in the formative years of Globalization 3.0 (Friedman, It’s a Flat World After All).  

Free trade is wise in many ways.  For one, if we are able to purchase everything we need from any country, we reduce the likelihood of nations invading each other to secure their wealth.  This was the cause of many wars in the past, including many of the wars fought in the U.S. between the Native Americans and European settlers.  This was the driving force for colonialism, without a doubt.  Colonialism lasted much longer than most people realize.  Many African nations achieved independence as late as the 1960s, including Zambia.

Zambia: the Rise, Fall, and Renewal

Zambia became independent in 1964.  They were, up until that point, ruled by the British for 75 years.  Zambian president Kenneth Kaunda expanded his nation’s economy and created over 10,000 jobs for the people.  They quickly ran low on funds, however.  One of Zambia’s primary exports was copper. As the value of copper plummeted, the nation requested help, advice and loans from the International Monetary Fund.  (The drop in the value of copper was not the only cause, of course, but one of the initial ones.)

According to Independent Lens’ T-Shirt Travel Documentary, which aired on PBS, “as a condition of borrowing the money, structural adjustment programs were imposed by these institutions. The government had to agree to impose very strict economic programs on their countries in order to reschedule their debts or borrow more money.” 

Mines and other businesses opened up to foreign investors, who frequently stripped the businesses of their assets and left them behind.  These businesses, 300 in total, were state-owned, but the sales did nothing to reduce the debt.  Zambia grew further and further into debt, despite the advice of the International Monetary Fund and the World Bank, to the point where, in 2002, less than 10% of Zambians were employed full-time and the nation owed $6.6 billion.   

As Zambia grew into their independence, their path became less rocky.  According to a press release issued by the International Monetary Fund on March 16, 2011, Zambia is now making positive strides. George Tsibouris, mission chief for Zambia, said in the statement that the GDP growth in 2010 was up 7.6% while inflation was down.  (It began to rise again at the outset of 2011, however.) 

“The good economic performance and prospects provide a strong platform for the government to pursue policies aimed at boosting employment creation and at protecting the most vulnerable so that the benefits of growth are broadly shared,” Tsibouris continued.  “As noted in the government’s Sixth National Development Program, economic diversification will be of key importance in this regard, including in the promising sectors of agriculture and tourism.”

Photo credit: independent.co.uk

A Tale of Two Indias

In another part of the world, globalization has had an interesting effect in India.  While creating extreme economic opportunity for some, it has ruined it for others.  As a result of the U.S. and other Western nations outsourcing their work, job opportunities abound in places like Mumbai and New Delhi.  On the other hand, many villagers have left their home countries in pursuit of work, leaving farms and an agrarian lifestyle.  It isn’t so much that globalization has had a negative effect on India, but that it has not had an equal effect. Some places flourish while others die.  You don’t even have to compare the urban areas to the rural; inequality exists in both. 

Enter Globalization 3.0.  With the advent of social media and instant access to world events, we know that this system needs a reboot.  The next wave will not be large corporations that are only concerned with the bottom line.  It will be social entrepreneurs; intelligent and ethical business men and women who want to combine global enterprise with a genuine desire to change the world.  

A group of individuals who want to purposefully level the playing field.

Coming Monday, April 12:  meet some socially responsible businesses!  Plus, an expansion on the discussion on India.
Resources:

IMF’s Press Release on Zambia:
http://www.imf.org/external/np/sec/pr/2011/pr1184.htm

Independent Lens: T-Shirt Travels; Zambia’s Debt  http://www.pbs.org/independentlens/tshirttravels/debt.html

 
  • Dapper Daisy

    I noticed most of your information is coming from the IMF press release. Has Zambia been taking out IMF loans and has that been the cause for the country’s debt? Just wondering if there was a connection to be made that the press release might have smoothed over. Thanks!

    • http://www.lostworldimports.com Crystal Huskey

      Thank you for your comment, I wondered the same thing. It would be safe to assume that it probably has been “spun”. I will post more information on that if I am able to find out!

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Author

Crystal Huskey
Crystal Huskey

Crystal Huskey is a freelance writer, musician and fair trade arts consultant. She has a B.A. in religion and will graduate with her M.A. in international relations in the spring of 2012. She is passionate about human rights and gender equality.

Growing up as the daughter of missionaries to refugee communities has given Huskey a heart for the outcasts and brokenhearted. She believes that much of the world's crime can be prevented by creating economic opportunities at every level of society.

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