Is Globalization Good for Both Rich and Poor Essay

Is Globalization Good for Both Rich and Poor Essay

To begin with, it should be noted that globalization and the attendant concerns for inequality and poverty have captured public imagination and become a focus of global discussion in recent years. Undoubtedly, as is common in contentious public debates, some people mean different things by the phenomenon of globalization. A close look on the data illustrates that person may interpret it to mean the global reach of any new technology in information or communications, and capital movements; some may refer to outsourcing by domestic companies in developed and rich countries; others can protest against the tentacles of global corporate capitalism or United States hegemony. Therefore, it is better to be clear at the outset that in this paper the discussion primarily centers on the economic globalization, which is analyzed in the sense of expansion of investment and foreign trade. Thus, it is important to understand how global economics affects the wages, incomes, and personal access to resources for the poor people, who live mostly in the developing countries in Asia, Africa, and Latin America. It is important to mention that these countries, for the twenty-five years after the World War II, mostly adopted autarchic policies that constantly blocked the forces of globalization, especially in economic sense. However, in the last quarter century unilaterally as well as under multilateral protection, most of these countries have opened up.

Thus, taking the examples of India and China, both of which were insulated up to the middle 70’s, it can be noted that trade in goods and services as a share of gross domestic product rose from ninety to thirty per cent in India and from twenty three to forty six per cent in China between 1980 and 2000. Generally, globalization opens opportunities, which some countries can utilize, largely depending on their domestic economic and political institutions. In such occasion net outcome is often pretty much complex and almost always seems to be context-dependent, belying the glib pronouncements against or for globalization, made in the opposing camps. Such position is close to the position based on International Monetary Fund Staff article “Globalization : A Brief Overview”, where the globalization is shown as a positive intention in the worlds’ economic development (International Monetary Fund Staff, 1-5). It should be mentioned that the arguments, given by the authors of the article are clear and can be proven by various facts.

Thus, small producers of poor countries usually lack the marketing network, quality reputation, or brand name for making inroads into rich country trade markets. This is where big transnational retail companies may help them, but the marketing fees and margins they charge are usually very high and the practices and standards they insist on are quite difficult for small producers to adopt. Unfortunately, restrictive business practices by big transnational companies are difficult to prove by empirical facts, but there is a great deal of circumstantial evidence. This problem has to be decided in the constant process of globalization, and specific organizations should be created in order to achieve good competitive conditions. Furthermore, there should be more international attempts to certify codes against restrictive business practices, and to establish a specific international anti-trust investigation agency, probably under the auspices of the World Trade Organization (International Monetary Fund Staff, 1). Thus, even if such an agency may not have serious enforcement powers, internationally publicized reports of different anti-trust investigations by a recognized scientific international body will have an impact on the monopolies, and probably strengthen the hands of local Competition Commissions in developing countries.

It should be noted, that over and above these, in export markets the major problems poor countries face is often due to the situation, when there is lack of globalization. It means that rich country protectionism and subsidization of food and farm products and such simple manufactures as textiles, clothing, or shoes seriously restrict their export prospects. Undoubtedly, it is better if anti-global protesters of rich countries turn their energies toward this protectionism and support the efforts of the poor of the planet to climb out of their poverty. It also proves the opinion of the reviewed article of the International Monetary Fund Staff. Researches show that the annual loss to developing countries from subsidies and agricultural tariffs in rich countries is estimated to be $45 billion, and their annual loss from rich countries trade barriers on clothing and textile is estimated to be about $24 billion. Undoubtedly, the loss is not equitably distributed among various poor countries. Evidently, some would benefit more than others in case if these protections are lifted.

Obviously, in many poor countries there is very little long-term and effective social protection available from the government (Lee, 4-7). Therefore, international organizations that have the benefits of free trade have to take the responsibility of facilitating and funding adjustment assistance programs in different poor countries that can help common workers in coping with potential job losses and being redeployed and retrained (Gerdeman, 2-4). The data yielded by this study provides convincing evidence that in poor countries a big number of the low middle class citizens work, not for wages, but on their personal household enterprises and shops or small farms and firms. The major constraints they often face are domestic, in access to marketing channels or credit, or poor conditions of available infrastructure like roads, extension service, irrigation, and power, or such government regulations as involving venal inspectors and insecure land rights. Thus, opening markets without relieving these serious domestic constraints may make things extremely difficult for these small enterprises in global market competition. However, these potential problems are the salvation for business and the possibility for low class to become a middle class, which is the main source of good democracy (International Monetary Fund Staff, 3-4).

There exists an opinion that globalization can bring negative consequences in the sphere of environmental pollution. Such position is not criticized in the observed article, but it has the logical answer. Environmentalists argue that international economic integration encourages overexploitation or destruction of the fragile natural resources such as forests or fishery, and therefore damage the livelihoods of the poor citizens. Similarly, a common charge against big transnational companies is that they flock to poor country “pollution havens” to take advantage of lax environmental standards there. It means that under lax regulations international exposure has the potential of worsening environmental degradation.

However, it seems fair to suggest that such position does not represent the truth, because, according to the international researches, foreign plants often use cleaner and safety types of energy compared to their local peers. Evidently, lax environmental standard is ultimately an institutional or domestic policy failure. Thus, a lack of well-enforced or well-defined property rights or of governmental regulations over state property resources often leads to their overuse. Furthermore, in some cases domestic government policies seem to be primarily responsible for environmental degradation. For instance, administered underpricing of some precious environmental resources like irrigation water in India, timber concessions in Indonesia and the Philippines, or energy in Russia, prolonged by the serious pressure from powerful political lobbies, can be a major cause of resource depletion. Additionally, domestic vested interests, which do not play with globalization rules, are responsible for the continuation of different socially damaging policies. Generally, while globalization creates the potential for personal and social development, opening the economy to long-term capital flows and trade, domestic policies and institutions may cause the gap between rich and poor. It means that in fact globalization is the main source in the 21st century that can open the door for some new opportunities for the poor. Without any doubts, a country can support the opportunities, given by globalization, but this politics is complicated and usually unpopular among rich class. Thus, helping poor people depends a great deal on the ability of domestic social and political institutions to work in the situation of inner struggle. Therefore, weak states, lopsided wealth distribution, unaccountable regimes, inept or corrupt politicians, and bureaucrats usually combine to block out the opportunities, given by globalization for the poor. Obviously, contrasting case studies of different countries involved in the modern global economy but having different domestic institutional and governmental structure make this situation quite apparent.

It should be mentioned that in many countries poverty alleviation in the form of marketing facilities, land reform, or expansion of credit and public works programs for the unemployed need not be blocked by the forces of globalization especially in medium and large sized countries where the biggest percent of the world’s poor live (International Monetary Fund Staff, 2). Obviously, substantial, though necessarily time-bound, support programs coupled with extension and retraining facilities for distressed farmers or displaced workers and small producers are essential to relieve the anxieties about economic insecurity that can be generated by globalization. Evidently, this requires a restructuring of existing budget priorities in problematic countries and a better and more accountable administrative and political framework, but the obstacles to these are usually largely domestic. Thus, closing the economy in order to prevent it from different globalization problems does not reduce the power of the local vested interests of corrupt politicians and bureaucrats, landlords, and the currently subsidized rich. According to the data yielded by this study, and to the arguments of the reviewed article, it means that for developing countries globalization is usually not the main cause of their economic or social problems, contrary to the claim of critics of globalization.

The other rational argument in favor of globalization shown in the reviewed article states that a general increase in awareness and transportation technology has allowed for people to move freely about the world in search of a new job, anew home, or to flee a place of danger. Nowadays, most migration takes place between or within developing countries, possibly due to lower wages and lower standards of living, which push individuals to places with a more significant chance for economic success.

Furthermore, it is important to mention that the good feature of the globalization is that capital is being moved globally with the ease of specific electronic transference and a constant rise in perceived investment opportunities. Therefore, developing countries are a popular place for various investors to place their capital due to the enormous room for growth. For instance, Google regularly invests a big sum of money in the development of free Internet in problematic regions, because they want to continue their economic growth.

The reviewed article brings the thought that the globalization influences the availability of easy credits and rising advantage. It happens because money flows easily across national and local boundaries, and creditors usually fail to distinguish between bad and good borrowers, setting the world economy into a virtuous cycle of employment growth and income; boosting aggregate demand; using fuel financial bubbles that feed into the market euphoria that perpetuates the virtuous cycle.

Taking everything into account, it should be concluded that although there are a host of challenges associated with the phenomenon of globalization, it has numerous positive effects that are shown in the reviewed article. Obviously, anti-globalization crusaders who represent international issues such as environmental degradation, loss of jobs in the host country, economic inequality have made their presence felt at different global conferences. Without any doubts, the issues that they raise are absolutely real and can have some catastrophic effects if not tackled earnestly. Nevertheless, the advantages of globalization, shown in the article are all pervasive and, therefore, a lot of developing countries are benefiting from it.

Thus, after reading the given facts about advantages of globalization, one can safely make a conclusion that it definitely has brought the whole world a lot closer in terms of economic trade and cooperation. There exist an urgent need to address all those important concerns which can make globalization a tool for rich countries to gain an upper hand over poor developing countries. Evidently, the world leaders need to give every economy and country, irrespective of its social and military status its real right in the comity of nations. This is an important thought that appears from the analyzing the article of International Monetary Fund Staff. People in developing countries who face abysmal compensation and poor working conditions people in developed countries who have lost their livelihood because of outsourcing are a harsh reality of globalization. The future of globalization is in the hands of the humanity, and any of us is responsible for the usage of good or bad sides of it. Thus, it is possible to conclude that globalization is good for both rich and poor.

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Works Cited

Gerdeman, Nina. “High-Tech Immigrant Workers Don’t Cost US Jobs”. 2014. Web. June 2, 2014.<http://hbswk.hbs.edu/item/7416.html >

International Monetary Fund Staff. “Globalization: A Brief Overview”. 2008. Web. June 2, 2014.<http://www.imf.org/external/np/exr/ib/2008/053008.htm>

Lee, Eddy. “The Social Impact of Globalization in the Developing Countries”. 2006. Web. June 2, 2014.<http://ftp.iza.org/dp1925.pdf>