Oxfam report: Global institutions breed global inequality and need reform

This year’s Oxfam report declares that former colonial powers in the Global North extracted and continue to extract billions of dollars of wealth every year from the countries of the Global South.

January 21, 2025 by Abdul Rahman
Sanju Maholi, 30, lives in English, a Dalit hamlet in Bihar's Banka district in India, and has been weaving baskets since he was 15. Photo: Shreya Katyayini/Peoples Archive of Rural India

The current format of global institutions such as the IMF and World Bank prioritizes the interests of the rich countries in the Global North and perpetuates global inequalities. They need urgent reforms to make them more representative and effective, says Oxfam in its new report.

The report, titled “Takers not makers: the unjust poverty and unearned wealth of colonial inheritance” was released on Monday, January 20 at the beginning of the annual meeting of the World Economic Forum at Davos.

The report also calls for immediate steps to halt the rising global inequalities both within the countries and across the globe.

The report claims that governments across the world have failed to impose repeatedly recommended wealth taxes on the ultra rich that makes them even wealthier and powerful with every passing day.

According to Oxfam’s study, the cumulative wealth of all the billionaires in the world rose by a staggering USD 2 trillion in 2024 taking it to a total of USD 15 trillion.

The increase in billionaires’ wealth last year rose three times faster in comparison to 2023 with 204 new billionaires added to the list of the existing 2,565 billionaires.

Each billionaire’s wealth increased by USD 2 million a day on an average in 2024, with the richest 10 men in the world adding USD 100 million everyday to their existing wealth. The pace of wealth accumulation is so high that Oxfam had to revise its own estimates of the world having a trillionaire within a decade. It now says with the current pace, the world will see at least five trillionaires within a decade.

Oxfam claims that contrary to popular belief, 60% of all the wealth of billionaires comes from inheritance, monopoly, or crony connections. In other words most of the billionaires’ wealth is unearned.

Rising inequality has a grave repercussion on governance and the management of common resources. The power wielded by the rich defeats all hopes of an effective system to tackle problems of poverty, food insecurity, health crisis, and so on.

Oxfam International Executive Director Amitabh Beher says that “the capture of our global economy by a privileged few has reached heights once considered unimaginable. The crown jewel of this oligarchy is a billionaire president, backed and bought by the world’s richest man Elon Musk, running the world’s largest economy.” He calls the report “a stark wake up call that ordinary people the world over being crushed by the enormous wealth of a tiny few.”

Colonial loot and extraction

This year’s Oxfam report highlights the role of colonialism and extraction in global inequalities claiming “many of the super rich, particularly in Europe, owe a part of their wealth to historical colonialism and the exploitation of the poorer countries.”

The report quotes Indian Marxist economists Prabhat and Utsha Patnaik’s work noting that the UK drained USD 64.82 trillion from India between 1765 and 1900. Out of it more than half (USD 33.8 trillion) went to just 10% of the UK’s population and over USD 17 trillion to just 1% of the UK population.

In Africa, Britain and France alone extracted USD 2.4 trillion worth of commodities just between 1825 and 1947. Several other European countries, such as Belgium and Germany also had colonies in Africa, and similarly extracted billions.

This extraction from the Global South continues even today with countries in the Global North extracting almost a trillion (USD 921 billion) from the Global South in 2023 alone through the financial system. This is four times more than what the Global North spends on different kinds of aid to countries in the Global South.

The extraction works at various levels such as in the form of the wage gap between Global North and Global South which is almost 95% for the same skill.

“Despite contributing 90% of the labor that derives from the global economy, workers in the low and middle income countries receive only 21% of global income,” the Oxfam report claims.

Economic dependency and underdevelopment

In clear terms, colonial loot created cycles of economic dependency and underdevelopment. While exploitation of labor and resources in colonies like India helped in the development of multinational corporations in the Global North, the South struggled with poverty and stagnation.

The Global North, which has only around 20% of the world’s population, is the home of 77% of billionaires’ wealth and 68% of all billionaires.

The countries in the Global South, meanwhile, witnessed massive deindustrialization and poverty. For example, the colonial loot in India led to massive deindustrialization with its share in global industrial production falling from 24% in 1750 to just around 2% in 1900.

Because of the dependency on external debt, low and middle income countries are forced to spend, on average, nearly half of their national budget on debt repayment to mostly rich lenders sitting in the Global North. Between 1970 and 2023, countries in the Global South paid USD 3.3 trillion in interest alone. 

The spending on debt repayment is far higher than the combined spending on health and education in most of the countries in the Global South.

The report also argues that most of the environmental and climate related problems the world is facing today, stem from policies practiced during colonial times. The climate breakdown is affecting the countries of the Global South more than the countries of the Global North.

Global institutions such as the WTO and the World Bank have been perpetuating global inequality by prioritizing the interests of the Global North over the Global South, Oxfam alleges, making their structure unjust and unrepresentative.

“The average Belgian has about 180 times more voting power in the largest arm of the World Bank than the average Ethiopian,” the study writes.

To fight against rising inequalities, the report recommends taxation of the rich including a tax for inheritance and abolition of tax havens across the world to control the rise in inequality.

The report calls for the cancellation of the debts of the poorest countries and the restructuring of voting power in the IMF, World Bank and UN Security Council as well, apart from raising the issue of reparation by all former colonial powers to the societies affected by their colonial loot and extraction.