Neoliberal Globalization And Poverty

The argument thus far has been that the neoliberal globalization has contributed to the poverty in the developing regions through the means of neoliberal policy prescription and inadequate representation of the developing countries' interests on the global stage. Poverty rates on the other hand, seem to be correlated with crime rates. It was argued by Webster and Kingston (2014) that the weaker economy seems to correlate with higher criminal activity “A weaker economy usually quickly leads to more unemployed and underemployed people who may seek criminal opportunities as alternatives to poor or non-existent work.” (p. 24). By impoverishing the developing countries, neoliberal globalization creates perfect conditions for crime to thrive in as
illicit activities become an attractive alternative to the diminishing employment opportunities and wages. For instance property crime, it was stated by Webster and Kingston (2014) that the employment rates in 1980s and 1990s correlated with property crime rates “The steepest rises in the rate of property crime occurred during the 1980s and early 1990s, coinciding with sharp increases in the level of unemployment and inequality.” (p. 6). In addition, it was stated by Bourguignon (2009) that “...
a major recession leading to a sudden 5 percent drop in GDP would produce an instantaneous 50 percent increase in the robbery rate.” (p. 186). There certainly seems to be a connection between the economic performance of the country and property crime, but a connection between poverty and crime is yet to be established. Let’s turn to homicide rates in the developing countries. According to Bourguignon (2009) increase to poverty leads to a greater number of homicides “... a 1 percent point increase in the population of poor people would produce, on average, an instantaneous 2.5 percent increase in the number of homicides.” (p. 186). Furthermore, it was argued by Webster and Kingston (2014) that crime can also reinforce poverty and higher levels of crime “At the same time, people are more likely to be at home rather than at work protecting their homes from burglary and yet, motivation to seek other avenues to material gain like criminality opens up.” (p. 24). Although it is not certain whether crime causes poverty or the other way around, it seems convincing that there is a connection between these two
issues. A more concerning issue than property crime and perhaps a contributor to high homicide rates in the developing regions is that of organized crime.
Organized crime was defined by Jan Van Dijk (2007) as “...criminal activities for material benefit by groups that engage in extreme violence, corruption of public officials, including law enforcement and judicial officers, penetration of the legitimate economy (e.g. through racketeering and money-laundering)and interference in the political process.” (p. 40). According Van Dijk (2007) organized crime thrives in vulnerable states “Organized crime is more prevalent in countries where the rule of law is less well assured and vice versa.” (p. 46). As it was previously discussed, neoliberal globalization makes the states of the developing countries weaker that in turn weakens the public services such as law enforcement. According to Sung (2004) vulnerability of the state makes it easier for organized criminal groups to pursue their interests and to recruit people “Extortion is a core predatory activity of mafia power: it creates jobs for the lower cadres, offers a lucrative source of cash to the organization and, crucially, allows for the exercise of economic and political influence over a given territory.” (p. 115). Overall, although the connection is not definite between organized crime and neoliberal globalization, it explains the increasing crime rates, especially property crimes and homicides in the developing regions such as
Latin America & Caribbean and Africa. Furthermore, a country with prolonged organized crime problems can enter into a poverty trap where poverty will be constantly alleviated. First reason for that is the inability to attract foreign investments as it was argued by Sung (2004) in the following passage “These predatory criminal syndicates extract profits through the use of violence, or is threat, against legal businesses and make it difficult for host countries to attract the domestic and foreign investment enjoyed by less afflicted countries.” (p. 111). Lack of foreign investment can weaken the economic performance of a country and eventually lead to greater poverty levels that could in turn lead to a greater amount of illicit activities. Second reason for high levels of crime potentially leading into a poverty trap has to do with the additional business costs. According to Van Dijk (2007) additional business costs arise from the need to have security measures “crime...increases the cost of business, whether through direct loss of goods or the costs of taking precautions such as hiring security guards, building fences, or installing burglar alarm systems.” (p. 49). Even though a country might still attract foreign investments with the presence of high levels of crime, additional costs associated with the security measures are unavoidable. Additional costs will increase the production costs that would have to be compensated for by decreasing the expenditure on other factors in production, such as working conditions.