The Strategic Significance of Global Inequality.doc

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29 Mar 2012

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The Strategic Significance of Global Inequality
- Jeffrey D. Sachs
- The U.S. enjoyed rapid economic growth during the past 20 years
- Some of the world’s poorest countries had a generation experiencing an outright
decline in living standards
Is there a “strategic significance to global inequalities in income levels and economic
growth, and, if so, which policies might the U.S. pursue to address those strategic
- States that focusing on the scope and limitations of U.S. foreign assistance as a
policy instrument to address global income inequalities is helpful
- The economic success of developing countries enhances the well being of the U.S.
- National interests in successful economic growth abroad are multifaceted
- Basic economic interests; gains from trade and investment
- Poor economic performance abroad state failure jeopardize U.S. interests
- (Failed states are seedbeds of violence, terrorism, international criminality, mass
migration and refugee movements, drug trafficking and disease)
- If the U.S. wants to spend less time responding to failed states, it will have to spend
more time helping them achieve economic success to avert state failure; has certain
economic policy instruments at its disposal
Foreign Economic Performance and U.S. Strategic Interests
- Common that economic crisis abroad leads to a collapse of state authority abroad,
which in turn has adverse consequences for the U.S.
- Emphasize that not all political failures can be attributed to economic crisis; but it
does matter greatly and can translate into large costs
Types of Economic Failure
- These lead to widening income inequalities between rich and poor and to serious
strategic concerns for the U.S.
Poverty Trap
- A condition in which a poor country is simply too poor to achieve sustained
economic growth
- One key factor is physical ecology
State Bankruptcy
- The condition in which the state cannot service its currents debts
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