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Article on Counterinsurgency Concepts

   

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Explore this journal >1.Previous article in issue: Counterinsurgency Concepts: What We Learned in Iraq2.Next article in issue: ‘New Thinking’ in the PentagonView issue TOCVolume 1, Issue 1January 2010Pages 118–120Practitioner CommentaryThe Impact of the Economic Crisis on the World’s Poorest CountriesAuthorsDouglas Alexander1.First published:27 January 2010Full publication historyDOI:10.1111/j.1758-5899.2009.00018.xView/save citationCited by (CrossRef):4articlesCheck for updatesCitation toolsWhen G20 leaders gathered in London in April 2009, they confronted the greatest challenge to the world economy sincethe Great Depression, as global output was falling, trade flows drying up and jobs disappearing around the world. Yet whereas the failure of world leaders to act together in the 1930s led to terrible consequences, the decisive action taken by the G20 in London – in the shape of the largest global fiscal stimulus ever – prevented the precipitous decline of theglobal economy into depression (G20, 2009a).

Today, while the recovery is not assured, the banking systemhas been stabilised, industrial output is rising again across major and emerging economies, international trade is startingto recover and confidence has improved.With the process of recovery far from complete and 61 million people unemployed as a result of this crisis (ILO, 2009), we must continue to guard against complacency. Sustained assistance will be vital not only for the G20 economies, but also for the more than 160 countries that lie outside that grouping – particularly the low-income countriesthat are home to the ‘bottom billion’ (Collier, 2007). Far from being insulated from the financial crisis, as many observers had thought, people in these countries are finding their livelihoods – even their lives – under threat.In this article I examine the impact of the global economic crisis on these low-income countries, outline the impact of the immediate response package agreed by the G20 and suggest three priorities for collaborative global action this year in order to ensure that low-income countries are part of the recovery: reforming the World Bank; completing the Doha Round; and committing to a partnership for development in order to meet the Millennium Development Goals (MDGs) by 2015.Impact of the Downturn on Developing CountriesThe impact of the downturn has varied widely across developing countries. While the larger emerging economies

of China and India still managed enviable growth rates of above 5 per cent, the average of low-income countries saw the growth of incomes per head fall nearly to zero, and in sub-Saharan Africa average real per capita GDP is contracting for the first time in a decade (IMF, 2009a). While the low-income countries were not as affected as the developed world by the first wave of the financial crisis, the resulting impact on market confidence saw the transmission of the crisis through falling trade, investment and remittances. The flight from risk has seen a rapid decline in net capital flows to developing countries – expected to fall from $1.2 trillion in 2007 to $363 billion in 2009 (World Bank, 2009). The Investment Finance Corporation estimates that 450 investment commitments in African infrastructure projects were cancelled in 2008 alone (IFC, 2008).Alongside this capital flight, world trade volumes are expected to have fallen by perhaps as much as 12 per cent in 2009 compared with the previous year (IMF, 2009a). The collapse of trade has particularly hit Southeast Asia, where recent impressive growth rates have largely been export led. In Vietnam, where the value of exports is equivalent to 77 per cent of GDP, the government estimates that as many as 400,000 people – most of them from the textiles and garments industries – will have lost their jobs throughout the course of 2009 (DFID, 2009).Yet the impact of falling trade has also reached Africa. Twelve African countries receive over 75 per cent of their export earnings from nonfuel commodities. Year on year, theInternational Monetary Fund’s (IMF’s) index of nonfuel

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