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Does globalization help or hurt the world's poor?

Dave » 14 years 8 weeks ago

I came across an excellent piece in the journal Scientific American (April 2006 issue), by a certain Pranab Bardahn, economics professor at the University of California, that takes a comprehensive look at the forces of economic globalization and how it affects the world’s poor — does it help them or hurt them?

Bardahn’s closing sentences really put the article in context:

Simplistic antiglobalization slogans or sermons on the unqualified benefits of free trade do not serve the cause of alleviating world poverty. An appreciation of the complexity of the issues and an active interweaving of domestic and international policies would be decidedly more fruitful.

He explores the expansion of foreign trade and investment, and how it affects the wages, incomes and access to resources for the poorest people in the world. It’s a complex issue, to be sure.

The debate among economists is a paragon of civility compared with the one taking place in the streets. Antiglobalizers’ central claim is that globalization is making the rich richer and the poor poorer; proglobalizers assert that it actually helps the poor. But if one looks at the factual evidence, the matter is rather more complicated.

He goes on to explore some of the little statistical information we do have about the local effects of economic globalization. It seems that where the forces of globalization are greater, often so too is the quality of living. Yet poverty has local roots, and there are a host of domestic factors that must be considered, and can be addressed.

[O]pening the economy to trade and long-term capital flows need not make the poor worse off if appropriate domestic policies and institutions are in place—particularly to help shift production to more marketable goods and help workers enter new jobs.

[…]

[G]lobalization is not the main cause of developing countries’ problems, contrary to the claim of critics of globalization—just as globalization is often not the main solution to these problems, contrary to the claim of overenthusiastic free traders.

Many argue that the forces of globalization lead to the squandering of resources and abuse of the environment. These too are largely domestic issues and can be addressed.

Like persistent poverty, lax environmental standards are ultimately a domestic policy or institutional failure. […] To be sure, if a country opens its markets without dealing with these distortions, it can worsen the environmental problems.

Bardahn says some measure of agreement is slowly developing amongst both sides of the globalization debate, and talks about some of the measures being discussed.

Going beyond the contentious debates and building on the areas of emerging consensus and cooperation, international partnerships may be able to make a dent in the poverty that continues to oppress the lives of billions of people in the world.

Read the full article, then come back here and share your thoughts.