How has globalisation contributed to slum formation? Trade, deregulated capital, labour markets and the withdrawal of the state have all influenced levels of poverty and inequality. This chapter from ‘The Challenge of Slums’ argues that the insecurities created by globalisation far outweigh any benefits to poorer people. Slums are a result of urban poverty. Creating cities without slums is essentially a search for sustainable urban livelihoods.
The 1990s saw expanded trade, new communications technologies, cheaper production and increased capital flows. According to neo-liberal thinking, this should have been a decade of prosperity and social justice. However, instead of greater equality, the gap between rich and poor increased. As agricultural productivity improved, people moved to the cities to find work. Instead of being a focus of growth, cities have become hubs for surplus populations working in unskilled, unprotected and low wage jobs.
Periods of ‘boom and bust’ have a strong correlation with urban in-migration and with the development of slum areas. Several factors contribute to the relationship between globalisation, poverty, inequality and slum formation:
- Trade: Increased exposure to international trade means economies are more likely to become volatile. Poorly policed borders in developing countries mean that informal or illegal trade is commonplace.
- Deregulated capital: Enormous increases in the speed and flow of finance and capital around the world have been a worrying feature of globalization; as evidenced by cases of corporate disaster, rogue traders and devalued currencies.
- Labour markets: In a globalised economy, there are few opportunities for unskilled workers in less developed countries. Often these individuals have no option but to join the informal sector and live in slums.
- The retreat of the state: Neo-liberalist policies of the 1980s and 1990s were focused on individualism, competition and self-reliance which severely threatened the idea of income redirection via taxation or social safety nets. These policies have been a major cause of increases in poverty and inequality.
With more cities open to the forces of international trade, ‘booms and busts’ will continue to increase inequality and distribute wealth unevenly. The slums associated with these economic cycles will continue to form in the rapidly developing areas of the world. The solution lies with country and city governments who must decide what will benefit their people and design appropriate strategies in partnership with citizens and donors.
- Globalisation is now happening against a background of increasing urbanisation flows. Developing countries will need help to prevent their cities going under due to congestion, environmental degradation and social unrest.
- As slums are a manifestation of urban poverty, strategies to avoid slum formation must address fundamental problems: unemployment, lack of income generation opportunities and rising income inequality.
- Where country goals are unequivocal and have universal support, evidence suggests they will be reached. Progress has been made with health and in connecting urban services. Similar progress can be made with other social goals.
