Globalization is anti poor

What do we mean by globalization? We focus on two aspects: (1) international trade in goods and (2) international movements of capital including foreign investment, portfolio flows, and aid. The orthodox perspective on trade and poverty, based on the writings of David Dollar, Anne Krueger and others, is the following: openness to trade is good for growth, and growth is good for the poor. According to the orthodox view, it should follow that openness to trade should reduce poverty. But what if openness to trade is associated with increasing inequality? If so, then average income may increase while those at the bottom of the income distribution become poorer

1. different people mean different things by globalization. Some interpret it to mean the global reach of new technology (particularly in information and communications) and capital movements, some refer to outsourcing by domestic companies in rich countries, others protest against the tentacles of corporate capitalism or US hegemony 2. So it is better to be clear at the outset that it shall primarily refer to economic globalization in the sense of expansion of foreign trade and investment, and analyze how this affects the wages, incomes and access to resources for the poorest people in the world (they live mostly in the developing countries in Africa, Asia and Latin America). the absence of the capacity of many poor people to adjust, retool and relocate with changing market conditions, at least in the short run some redistributive policies are necessary, so that the winners from the policy of opening the economy actually share their gains with the losers. Much of the theory of comparative advantage is about the long run when people and resources are assumed to be fully mobile between activities, whereas much of the pain of adjustments is in the short run. clear that by international investment shall refer to long-term movements of capital (invested largely in durable plant and equipment and technology), not to the speculative short-term capital (invested in shares, bonds, currency, hedging instruments, etc.) that, often at the click of a mouse, stampedes around the globe in herd-like movements, sometimes causing massive damage to the lives of poor people in fragile economies 3.

4. some poor individuals are made worse off by trade or financial integration underscores the need for carefully targeted safety nets
More than 1 billion people live in extreme poverty, which is defined by the World Bank as subsisting on less than $1 a day

5. From an economic point of view, globalization represents a process of increasing international division of labor and growing integration of national economies through trade in goods and services, cross-border corporate investment, capital flows and migration of human resources. 6. Globalization is known to influence factor prices(technology, tastes, and public policy) 7. The issues of the impact of globalization on poverty alleviation, domestic income distribution and global income disparities have received a great deal of attention from policy mandarins and academics alike 8. Commitment to eradicating poverty was renewed in the Millennium Development Goals (MDGs). The first one of these goals calls for reducing the proportion of people living on less than $1 a day to half the 1990 level by 2015from 27.9 percent of all people in low and middle income economies to 14.0 percent. The Goals also call for halving the proportion of people who suffer from hunger between 1990 and 2015

9. distinct possibilities of globalization hurting the poor. It has been observed that the lower the skill level of the people, the greater is the probability of getting adversely affected by the onward march of globalization(employment) 10. The multidisciplinary and multifaceted nature of globalization is obvious from its economic, financial, business, political, technological, environmental, cultural, educational, international relations and national and international security related dimensions. They may frequently be mutually reinforcing but they are diverse in their origins Projected % Change 2011 2012 Real GDP 7.8 7.5 Consumer Prices 10.6 8.6 Source: World Economic Outlook (September 2011) there exists a country group that failed to benefit from globalization. Majority of the members of this group are located in sub-Saharan Africa. Not only poverty did not decline in these countries, but also in many cases it increased The causes include their inability to liberalize their domestic economic structures and integrate with the global economy. Additionally, these countries suffered from deeper problems of political strife, social tensions, ethnic conflicts, and poor governance.( In general, liberalization (or liberalisation) refers to a relaxation of previous government restrictions, usually in areas of social or economic policy.) globalization is a destroyer of cultures and that it is bringing about a global cultural homogenization(support the fact) trade in real world is not free, as the protagonists(Antagonists, opposer) Trade barriers and NTBs against the product range of interest to the developing economies in the industrial economies are high. Farmers and dairy product producers in the industrial economies are highly subsidized, thereby driving the poor unsubsidized producers from the developing economies out of the global markets in these products . Voting in the international financial institutions (IFIs) is weighted, which gives large industrial economies, like the US, virtual veto power in the governing boards of the IFIs. Although the WTO members have voting rights, members seldom vote except when they ratify the entry of a new WTO member. Traditionally the WTO decisions are consensus-based. More often than not, interests of the developing countries do not prevail in the consensus-based decision making mechanism. Therefore, one can say that globalization is unfettered capitalism, which serves the rich countries in making them richer For the pro-globalizers, the gut reaction is: how can a phenomenon that has immensely benefited so many economies over time hurt in any manner? But even the most ardent pro-globlizers has to understand that globalization can hurt the poor in several ways in the short-term. For instance, as the reform process takes hold and trade policy reforms advance, there is a distinct possibility of a rise in the short-term unemployment rate, resulting in greater poverty for the unskilled and semiskilled labor. Developing economies are known for a high degree of labor market distortions like a low degree of wage flexibility, and imperfect labor mobility across sectors as well as geographical regions. Which makes the low-skill or unskilled labor force more vulnerable at the time of trade reforms.

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16. Economic liberalization promotes the entry of global firms and TNCs, which intensify competitive pressure on the domestic firms, throwing some of them out of business. In the short term unemployment is sure to rise because workers cannot easily move across sectors or industries . 17. Many of the developing economies are technologically not highly advanced. Exports of many of these economies, although not all, are concentrated in non-dynamic, low-tech sectors like textiles or raw materials. Therefore, the immediate impact of globalization and liberalization is in many cases fall in the rate of trade expansion and growth rates. 18. Globalization and trade liberalization may also lead to diminished demand for low- and un-skilled labor, which in turn may worsen poverty and income distribution 19. Higher technology follows globalization and trade liberalization, which in turn requires highly skilled labor force. The relative demand for the old fashioned unskilled or semi-skilled labor force declines (Winters, 2002). Thus, there are distinct possibilities of globalization hurting the poor. 20. Current World Population Growth Rate: 1.17% In low-income countries more than a third of the population is under age 15, while in high-income countries less than a fifth is. 21. The worlds population is growing by 200,000 people a day. 22. Between 1980 and 2030, the population of low- and middle-income countries will more than double -- to 7.0 billion, compared with 1 billion for high-income countries. 23. In the next 35 years, 2.5 billion people will be added to the current population of 6 billion. a. population of the low-income countries b/e 1.5-1.9.

Population below US$1.25 poverty line Population (%) below US$2 poverty line (%) Severe poverty: Liberia (2007) 83.7 more than 50 per Burundi (2006) 81.3 cent of the population living Rwanda (2005) 76.8 below US$1.25 a day poverty line Malawi (2004) 73.9 Tanzania, United Republic of (2007) Madagascar (2005) Nigeria (2004) Zambia (2004) Swaziland (2001) Central African Republic (2008) 67.9 67.8 64.4 64.3 62.9 62.8

94.8 93.4 89.6 90.4 87.9 89.6 83.9 81.5 81.0 80.1

Chad (2003) Mozambique (2008) Congo, Democratic Republic of (2006) Burkina Faso (2003) Nepal (2003) Haiti (2001) Angola (2000) Congo (2005) Sierra Leone (2003) Mali (2006) Bangladesh (2005) Moderate poverty: more than 50 per cent of the population living below US$2 a day poverty line Guinea-Bissau (2002) Ethiopia (2004) Uzbekistan (2003) Niger (2007) India (2005) Benin (2003) East Timor (2007) Guinea (2007) Togo (2006)

61.9 59.6 59.2 56.5 55.1 54.9 54.3 54.1 53.4 51.4 50.5 48.8 39.0 46.3 43.1 41.6 47.3 37.4 43.3 38.7

83.3 81.8 79.5 81.2 77.6 72.1 70.2 74.4 76.1 77.1 80.3 77.9 77.5 76.7 75.9 75.6 75.3 72.8 69.6 69.3 66.0 65.0 64.5 62.2 60.9 60.3 56.7

Lao People's Democratic Republic (2008) 33.9 Comoros (2004) Uganda (2010) Lesotho (2003) Pakistan (2006) Senegal (2005) Gambia (2003) 46.1 37.7 43.4 22.6 33.5 34.3

Cambodia (2007) So Tom and Principe (2001) Ghana (2006) Tajikistan (2004) 1.

28.3 29.7 30.0 21.5

56.4 55.9 53.6 50.8

24. While GDP and per capital income are perhaps the best measures of material well-being, they are important because they help provide nations, societies and individuals the means to improve the other measures of human well-being. According to Goklany (2002) these measures include freedom from hunger, health, mortality rates, child labor, educational levels, access to safe water and sanitation, and life expectancy. With the rise in GDP and per capita income, this set of indicators improves, but there is no linear relationship between the two. At low levels of per capital incomes the improvements are rapid, but they slow down as per capita incomes rise. Improvements in these indicators stop as they reach their practical limits, notwithstanding the rising per capita incomes . 25. Three of the measures were the measures of human misery (namely, (i) availability of food supply, (ii) infant mortality, and (iii) prevalence of child labor). These three reflect negative wellbeing 26. When the per capita income rises and reaches the levels of countries like Colombia, Chile and the Czech Republic, the situation changes and the relative income of the poor (bottom deciles) and middle-income (intermediate deciles) people roses more compared to those of the rich. Thus, globalization makes within country income distribution worse before making it better

27. The lower the skill level, the greater is the probability of getting adversely affected by the onward march of globalization