POLS 1503 – Globalization

University of the People

Learning Journal Unit 8

Country debt and aid significantly influence the economic landscape and social dynamics of

nations, especially in the developing world. These financial factors are central to discussions on

poverty alleviation and sustainable development. However, their impact extends beyond mere

financial aid, affecting the socio-economic stratification and perpetuating the gap between the

rich and poor. This paper focuses on my country Myanmar to explore the dual role of debt and

aid in shaping economic inequality and societal well-being, utilizing course readings and

observational analysis to shed light on the complex relation between global economic

mechanisms and local realities.

Impact of Country Debt and Aid On a Nation

Country debt and aid significantly impact a nation's economic and social development. Aid,

or Official Development Assistance (ODA), is aimed at eradicating poverty and fostering long-

term development. However, the actual delivery of aid has been criticized for being insufficient

and ineffective. A substantial amount of aid is tied to conditions that serve the donor countries'

economic and political objectives, rather than the recipient countries' development needs. For

instance, it is estimated that 58% of aid is conditional, often requiring the purchase of goods and

services from the donor country, which can undermine the effectiveness of the aid (STWR,

2008). Debt in developing countries further complicates the situation. Many developing nations

accrue significant debts by borrowing from international institutions like the IMF and World

Bank, often with stringent conditions attached, such as Structural Adjustment Programs (SAPs).

These conditions can divert resources away from essential public services, perpetuating poverty
and inequality. The total debt of developing countries is around $2.5 trillion, and despite

campaigns for debt relief, the existing frameworks have achieved limited success (STWR, 2008).

The ineffective and conditional nature of aid, combined with the heavy burden of debt,

stifles economic growth and sustainable development in poorer nations. Aid has often been

politicized or tied to the strategic interests of donor countries rather than the developmental

needs of the recipient countries. This approach has led to a situation where aid and debt relief are

not sufficient to catalyze genuine development and poverty alleviation. A fundamental

restructuring of global economic priorities, focusing on equitable sharing and cooperation, is

necessary to address these issues effectively (STWR, 2008).

Inequality & Widening Gap between Rich and Poor

In my country Myanmar, the gap between rich and poor has been a significant issue,

influenced by various socioeconomic and political factors. The country's economic history shows

periods of growth and decline, with recent events like the military coup in 2021 and the COVID-

19 pandemic exacerbating poverty and inequality. Prior to these crises, Myanmar had made some

progress in reducing poverty, with the rate declining from 48.2% in 2005 to 24.8% in 2017.

However, these gains were reversed due to political instability and the pandemic, with

projections suggesting that nearly half of Myanmar’s population could fall into poverty (Al

Jazeera, 2021).

The World Bank (2022) notes that Myanmar's economy has faced numerous disruptions,

hindering recovery and straining livelihoods, with about 40% of the population living in

challenging conditions. The internal conflict and economic mismanagement have led to
significant disparities in income and access to basic services like education, healthcare, and clean

water.

The Myanmar Living Conditions Survey reported by Choragudi, 2020, highlights the

disparities across different regions and communities within the country. For instance, rural areas

and certain states like Chin and Rakhine have higher poverty rates and lower income levels

compared to urban centers like Yangon. The survey also points out that a substantial portion of

the rural population relies on agriculture for income, yet these activities are often not sufficiently

remunerative, exacerbating the rural-urban income gap.

The inequality in Myanmar is not just limited to income but extends to access to essential

services, reflecting broader socioeconomic disparities. Efforts to address these issues have been

slow, and structural reforms are necessary to enhance public services and create more equitable

economic opportunities. Policies focusing on improving the productivity of agriculture,

expanding access to education and healthcare, and ensuring social protection for the vulnerable

are crucial to mitigating the impacts of inequality and poverty in Myanmar (Burma News

International).

Country’s Debt and Aid Impact- On Overall Well-Being of a Society

The overall well-being of a society can be significantly impacted by the country's debt and

aid. Debt relief and aid can improve societal well-being by resolving debt overhang, enhancing

access to credit, and fostering investment and economic activity. High levels of household debt,

common in both developed and developing economies, can lead to financial instability,

prolonged recessions, and reduced income growth. Policy interventions, like debt moratoria or

debt relief for highly-indebted households, are debated solutions that can potentially resolve debt
overhang and stimulate economic activity, despite concerns about moral hazard and impacts on

borrowing culture (World Bank, 2018). Therefore, the success of such interventions depends on

their design and the balance between immediate economic relief and long-term financial

stability.

Observation and Analysis

Reflecting on Myanmar's situation, it's evident that the widening gap between rich and poor

is deeply entwined with the nation's political and economic turmoil. The widening gap between

rich and poor in Myanmar is significantly influenced by political instability, economic

mismanagement, and global crises like the COVID-19 pandemic, which have exacerbated

poverty and inequality. My observations align with the insights from STWR (2014) and Shiva

(2008), highlighting the detrimental effects of inadequate global economic sharing and the failure

of aid and debt initiatives to address the root causes of poverty. The country's history of military

rule and recent coups have disrupted economic growth and development efforts, leading to

increased poverty and reduced social services, which disproportionately affect the poor (Ferreira,

2022). In Myanmar, the rich often benefit disproportionately from economic activities,

particularly in sectors like mining and telecommunications, which are controlled by military

elites and their associates. This control perpetuates income inequality and restricts access to

resources and opportunities for the poor. The aftermath of the military coup and the COVID-19

pandemic has further exacerbated these inequalities, plunging more people into poverty and

heightening the disparity between different societal segments. The situation in Myanmar

underscores the necessity for a global economic system that prioritizes sharing and equitable

development to bridge the gap between the rich and the poor.
 Conclusion

In summary, the analysis of country debt and aid, as seen in Myanmar, underscores the

complex relationship between financial mechanisms and socio-economic development. While

aid aims to support development, its effectiveness is often compromised by conditionalities that

do not align with the recipients' needs. Debt, on the other hand, can limit economic growth and

deepen socio-economic divides. Myanmar's experience illustrates how these financial factors are

entangled with political and economic issues, driving the disparity between the rich and poor. To

address these challenges, a global approach focused on equitable economic sharing and fair

financial practices is essential, highlighting the importance of understanding and reforming the

global economic systems that underpin national and international development.

Al Jazeera. (2021). Almost half of Myanmar risks falling into poverty by 2022: UNDP.

https://www.aljazeera.com/economy/2021/4/30/almost-half-of-myanmar-risks-falling-into-

poverty-by-2022-undp#:~:text=The%20coronavirus%20pandemic%2C%20coupled

%20with,Nations%20Development%20Programme%20(UNDP).

Choragudi, U. (2020). Survey shows inequality a serious problem in Myanmar. BNI.

https://www.bnionline.net/en/news/survey-shows-inequality-serious-problem-myanmar

Ferreira, I., Salvucci, V., & Tarp, F. (2022). Poverty and Vulnerability Dynamics in Myanmar.

LSE. https://blogs.lse.ac.uk/southasia/2022/02/18/poverty-and-vulnerability-dynamics-in-

myanmar/

STWR. (2008, May 19). Aid, debt and development: an overview. Share The World's Resources.

http://www.sharing.org/information-centre/articles/aid-debt-and-development-overview

STWR. (2014, June 17). A primer on global economic sharing: Part 2 why nations need to share.

Share The Worlds Resources. http://www.sharing.org/why-nations-need-to-share/global-poverty-

inequality2.
Shiva, V. (2008, December 30). Globalization and poverty. Centre for Research on Globalization.

http://www.globalresearch.ca/index.php?context=va&aid=11540

World Bank. (2018). What Does Debt Relief Do for Development?

https://www.worldbank.org/en/events/2018/11/05/what-does-debt-relief-do-for-development

World Bank. (2022). Myanmar economy remains fragile, with reform reversals weakening the

outlook. https://www.worldbank.org/en/news/press-release/2022/07/21/myanmar-economy-

remains-fragile-with-reform-reversals-further-weakening-the-outlook