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social systems too.Maximum what can be done in the process of economic globalization is to achieve increase ofaverage income level, both worldwide as well as inside any individual country. In the end this will leadto social and economic stability, minimize poverty.Factually this means development of the large, powerful layer of the middle income countries, whilethe poorest will constitute the small minority with the average level of life considerably higher, thantoday. 27Fact that development transfer does not work very well in case of majority of the developingcountries, may be ascribed to the following two factors –1. Developing world is doing just enough to fulfill the tasks mentioned above, which is obviouslynot enough to ensure serious, successful economic transformation in developing countries.2. The model of development transfer adopted today as it is can not ensure success of theprocess – either the model itself is faulty, or developing countries for various reasons are notable to adopt it to their local settings.At least at the initial stage of the global economic transformation indices of economic growth for themajority of developing countries looked rather impressive. Both rival political blocks were engaged inpumping up economies of their client countries through huge amounts of financial, material,technological and logistical support and such approach worked for a while disregarding which model ofdevelopment (market or centrally controlled economy) these countries formally adopted. Trouble,precipitated by oil crises of 1970-s started when developing countries in general exhausted potential forextensive growth and faced need for deep structural reforms and institutional transformations.By this time the Soviet Union was to a large extent out of the race since its economy neededreforms itself, which ailing socialist system was not able to carry out. Thus almost unilaterallydeveloping countries found themselves within the confines of the Western type neo-liberal economicdevelopment model. Policy of structural adjustment suggested by this model called for carrying outmarket oriented strategies based on sharp reduction of the state involvement into economy andopening up for the Western investments. Economic policies had to be export oriented in order to payaccumulated debts. Besides it requested strict economy of government finances, which in majority ofcases led to folding of already weak social programs. These measures were augmented by floatingbank interest rates, which caused a dramatic increase of foreign debts of these countries, sharp drop ofprices of raw materials (leading export commodities for developing countries), and deteriorating tradeconditions when developed countries were applying protectionist trade barriers but denied thedeveloping ones the right to follow their example. Economies of majority of developing countries couldnot withstand such pressure and entered 1990-s with much worse performance indicators, than at thebeginning of 1970-s for instance.Besides even when any given country carries out structural adjustment by the book and to the endthis does not guarantee its eventual success. Such country simply starts to play by rules accepted bythe more developing countries with all the pending consequences, like for instance cyclic economiccrises with accompanying recessions and financial shocks. Whether such country is carrying outsuccessful and correct market policy does not matter much – it runs into the classic case of “marketfailure”, which manifests itself in a rather asymmetric way. Developing countries are relatively weaknewcomers in a highly competitive global market and suffer much more in case of crises than the moretraditional and more powerful players. In case of crisis they can not even apply problem solving toolsused by the more developed economies and for instance have to address strict fiscal and monetarypolicies in order to restore “market trust” instead of stimulating macroeconomic measures.Even when developing markets are functioning properly, the less developed and weaker are stillpunished. As it is the market does not create the equal opportunities. It obviously favours countrieswhich already possess productive capital – finances, land, other physical assets and the most importantin the current technology based economy – the human capital. Countries, which are already well aheadof the others possessing stable political systems, guaranteed private property rights, reliable bankingsystems, developed social services – are also enjoying much higher chances to employ theopportunities provided by the single global market. Countries, which do not have such capital oftenfound themselves inside so called “institutional poverty trap”, although these are the vast majority ofdeveloping countries (including many of the former Soviet republics). One of evidences of existence ofsuch “trap” is that the global capital is usually attracted to places where it is already abundant i.e. to27 I.e. the difference between the current and future poor should be approximately as it is today between the Americansand Africans formally living in poverty.138