Globalization and Poverty
Many people today reveal their concerns over the fate of the world’s poor by attributing their present plight to globalization cycles. They assert that globalization often weakens the position occupied by poor countries, thus exposing the poor nationals to harmful and unfair competition from the developed world. This concern remains understandable, especially as illustrated by the glaring gap between the poor and the rich in recent decades. Nevertheless, revealing the direct link between globalization and poverty demonstrates a complex task. This arises from the fact that globalization has multiple aspects of integration with each contributing towards variable effects. Equally, poverty exists as a multidimensional phenomenon measured in various ways, including a country’s average, consumption capacity or overall well-being (Samman, 2013). In addition, many people have often experienced poverty for various reasons. In light of this, attributing the increases in global poverty to globalization obligates proving its dominant influence in leading to poverty.
Globalization leaves countries more economically integrated through trade and investment activities. If globalization were to cause a rise in poverty levels, then economically integrated countries should accomplish less. To the contrary, countries that become integrated into the global economy, including China, Brazil and India, demonstrate progress. Others in sub-Saharan Africa, that remain relatively isolated experience declines. This exhibit barely settles the contention that globalization causes poverty, but it casts doubt on the argument for isolated countries (Alkire & Sarwar, 2009).
Globalization demonstrates a catch-all arena, where arguments linking it to poverty may arise from the generalization of specific instances where grand global developments lead to impoverishment. For instance, though most governments assume debt from the private capital market sources, decline in the demand of their commodity depresses prices. This situation compels them to seek funding from the global institutions, such as the World Bank and IMF for them to service their due loans (Tibaijuka, 2013). Such countries agree to the conditions provided for the financial aids that often demand internal reforms. The provisions may impose hardship on their nationals, consequently tempting to conclude that globalization leads to poverty.
This research embraces a focus on economic globalization to examine the differing schools of thought on the aforementioned issues. It examines whether the evidence in the current debate favouring those holding that economic globalization is essentially positive, alongside the position that the process creates a race to the bottom driving more people into poverty.
The Globalization Process
The world system today has seen the term world market, global economy and globalization appear in sound-bites of media personalities, politicians and the unemployed individuals alike. While the initial two terms are known, few understand the history of the globalization process. Globalization involves the interaction and integration process arising among individuals, organizations and governments of various nations driven by international investment, world trade and information technology. The process draws and influences through its effect on the immediate physical environment, culture, political systems and economic prosperity, alongside the physical well-being in the societies. Globalization demonstrates a process of change comprising the flow of multitude elements: technology, capital, cultural ideas, people, and knowledge (Ritzer & Atalay, 2010). The implication of the aforementioned flow presents a continuous catalyst for social, cultural, economic and political adjustments. For this, Thomas Freidman a renowned foreign affairs writer with the NewYork Times asserts in The Lexus and The Olive Tree book that globalization presents the essential development and prosperity of international affairs since the end cold war.
The globalization of the economy today reveals an amplification of the interdependencies, collaborations and interconnections among various national states. This derives from the tendency to accomplish economic objectives exceeding the national borders. While this forms the obvious truth of defining globalization, it is essential to demonstrate the systematic proves to modern globalization (Radescu, 2002).
The globalization process traces its origin to the early fifteenth century following the evolution of capitalism. Equally, most cite the exploitation of the third world nations in Latin America, Asia and North America during colonial settlement as the inception of globalization. The process has its roots in the emergence of imperialism as most economies opened up favouring the first world countries at the expense of exploiting the undeveloped countries. At this point, nature depended largely on the perception of the imperialist rulers. They had the mentality of creating distinctions amongst individuals on the basis of social strata. This enabled them an easier exploitation platform where they would extract raw materials, manpower and other production factors to sustain their administrative and military needs. This allowed the richer countries to prosper while pushing poor nations towards poverty (Economy Watch, 2010).
The second globalization stage targeted inter-imperial commercial activities. This is characterized by the need to expand international trade. The national organizations sought expansion of their activities and operations in the external market, encouraged by the development of transport networks between 1870- 1914. Additionally, the liberalization witnessed in the 19thcentury sets the perfect ground for international trade and investment. The primary actors included the European imperial powers, the USA and Japan, which joined hands to form groups at regional levels. The governing powers generate cooperation and active competition across the commercial sphere leading to the birth of multinational corporations. These entities strove to gain control of their target markets, which led to interconnections that exploited the markets of most third world countries effectively. Although this enlarged their profits under an organized, self-sustaining principle, the expansion of national economies collapsed with the start of World War I (MacEwan & Miller, 2011). This forced most states experiencing incoherent economic policies embrace protectionist measures that significantly slowed the economic growth.
The process of globalization resumed following the liberalization of international trade. The period arising between 1950 and 1980 arose from the influence of the General Agreement on Tariffs and Trade (GATT) aiming to aid economic recovery. The reduction of tariffs allowed powerful economies to achieve huge expansion of exports. To the contrary, countries occupying the opposite pole committed to the export of basic products, therefore missing on benefits attributed to huge capital inflow (Radescu, 2002). This resulted in large differences between the developed and underdeveloped countries.
The final stage beginning in 1980 is fuelled by the accentuated development of telecommunication and exploration of cosmic prosperity. The period referred to as economy without borders depends on the increasing speed presented by modern technology. This aids long-distance transaction following the creation of the World Trade Organization (WTO). This organization facilitates the establishment of a legal platform to accomplish maximal liberty for commercial operations without undesirable effects. This translates to the current wave of opening economies both domestically and internationally. As many governments adopt free-market economic platforms, more productive potentials and opportunities in international trade and investment have increased (Obama, 2011). It allows corporations build foreign factories and establish complete production and marketing operations with franchised partners. This leaves globalization with a defining feature of accomplishing an integrated industrial and financial business structure.
Technology emerges as a principal driver of the globalization process besides the liberalization of market systems. Technological advances dramatically transform the economic scope that allows a level ground of collaboration and international dependency. For instance, information technologies have proven essential in allowing economic actors to identify and pursue emerging economic opportunities, including informed analyses of the world economy trends, asset transfer and collaboration with far-distance partners. This translates globalization into a deeply controversial scope where proponents assert that it allows economic prosperity and raised standards amongst poor countries and citizens (Obama, 2011). Oppositely, globalization is negatively criticized as the international free market system benefit multinationals from the developed nations at the expense of underdeveloped enterprises, local cultures and common individuals. This leads to increased resistance to the globalization taking the shape of a popular demand to manage the present wave of globalization comprising the flow of goods, ideas capital and other production factors (The Levin Institute, 2014).
An Inevitable Process
The emergence of globalization demonstrates an inevitable epitome of progress where optimal utilization of resources has led to the accommodation of economic prosperity and social growth in absolute and relative means. Initially, the process towards the present globalization generates a point of unity among people in pursuit of common goals. This reveals in the aforementioned process of globalization, where today’s economic system results from inevitable processes and factors pulling the world towards into collaborations, interdependence and connection. For example, liberalization efforts are essential to accomplish easier trade and strike the balance of needs, demand and supply forces. In addition, individual nations derive positive engines of economic growth and development. This yields an inevitable force exhibited by economists and politicians in facilitating unfettered free trading and market ideologies since the end of Cold War (Shah, 2006). This fuels the wheel of the globalization harder to accomplish even wider platforms supporting international trade.
The media platforms yield frequent debates on the realities of the cyclic economic globalization process. This translates to the examination of the successes and failures that either the proponents or opponents often cite to reveal its good or ill influence. The two sides bury their contention into the agreement that globalization is inevitable and neither a single individual nor a group will stop its relentless march. It represents the process of expanding economic liberty beyond the national borders. The proponents of free markets tend to view globalization as an invisible hand, leading to greater prosperity and essential self-regulation (Shah, 2006). This is supported by both economic theory and decades of a proven hard-earned experience where most nations have realized that the spread of the free market system and institutions offer the best hope of sharing the fruits of prosperity amongst a wider circle of mankind.
Contrary to the world destruction view shared by opponents of globalization, the reality of good things accomplished is a reality of its inevitability. The desire to establish and sustain a more efficient market where market forces of supply and demand strike balance, international connectivity is essential. The collaboration allows countries centre on productions they derive comparative advantages. The efficiency derived from the balance between supply and demand initiates economic growth. The link established in the global economy triggers a platform spurring growth in all the connected economies (MacEwan & Miller, 2011). In view of this, the after-effects of success felt across the world due to globalization would hardly been achieved in isolated economies.
The quest of sustaining peace following the disastrous events of World War II mandated to conduct mass adjustments to factors that would enhance the standard of living. This commitment has seen various factors, including political decisions; imperial processes and social adjustments arising in the last decades pull the world system towards interconnectivity. This results in partnerships between various countries and organizations. This yields stable relations where agreements are reached and upheld thus sustaining all in a world-cooperation. This illustrates globalization as a process where countries seeking stability and security have to subscribe to achieve the economic growth and political peace (Shah, 2006). Furthermore, raising the standard of living amongst nationals compelled countries to seek globalization as it allows improvement of infrastructure and employment platforms that enable people live at higher global levels every day.
The form of globalization process today results in institutionalizing a platform, striking the balance of power between states. This translates to a free trade where globalization has hardened the sovereignty of some powerful nations while reducing the autonomy of the weaker nations. This triggers the criticism of the worldwide free market where players in possession of power and knowledge enact rules that obligate compliance for others. While globalization generates hope for the world’s poorest in opening trade, promoting economic trade and reducing trade, it yields an unfortunate negative side. This fuels the opponent assertion that removing barriers in developing to enhance free trade causes imbalance that favours industrialized countries. Globalization translates into an inevitable process that has destroyed many customs leading to an increased gap between the rich and the poor but creates a positive impact of reducing poverty levels.