Globalization Generates Poverty

What can two dollars buy you? A small coffee at Starbucks, a candy bar, bag of chips, and a soda, a slice of pizza. For nearly three billion people, approximately half of the world's population, two dollars a day is all the money that the person has to live on. Moreover, of the 2.2 billion children in the world, 1 billion grow up in poverty; 640 million without adequate shelter, 400 millions with no access to safe water, and 270 million with no access to health services (UNICEF 2005). One proposed reason for this harsh reality of high poverty rates is globalization - the growing integration of economies and societies around the world. The claim that globalization generates poverty has been the focus of many debates for the last twenty years, including the debate between Carlos Caretto, Gillian Crowl, Steve Grossman, and Annie Wong on February 21, 2005. Caretto and Crowl argued that poverty is an indirect result of globalization as is evident by high unemployment rates, wage inequality, and diminishing health and educational programs. Grossman and Wong contended that globalization does not generate poverty, but it in fact helps the world by promoting education, decreasing and shortening the length of wars, and increasing new resources. Close examination of the facts presented in lectures, readings, and the debates shows that each side presents logical evidence, but the facts confirm that globalization does in fact generate poverty.

Globalization does have positive effects that are felt throughout the world. If we look at the latter part of the 20th century alone, the evidence that globalization reduces poverty is overwhelming. Looking at a variety of measurements Ð'- poverty, life expectancy, health, education Ð'- more people have become better off at a faster pace in the past sixty years than ever before. And according to the World Bank, trade enabled the developing countries to grow at a rate of 4.3 percent per year during the 1990s, twice the rate of the developed world. As stated by Kanbur, "there is no question that there is now broad agreement that education and health outcomes are on par with income in assessing poverty and the consequences of economic policy" (2001). Globalization is a vital process toward transferring knowledge and education to the world as people from different regions, cultures, and knowledge bases interact with each other. As pointed out by the debaters in class and by George Russell of the Seattle Initiative "it is clear that without the major reduction of world poverty heralded by continued global expansion, violence and war will continue" (Russell 2004). This point is also endorsed by Stiglitz who stated:

One possible consequence of increases in economic globalization might be decreases in the danger of war. The argument in favor of this proposition begins with the point that as economic interconnections between two countries increase, each achieves greater welfare, and therefore each country develops a progressively a greater stake in the continuation and intensification of interconnections with its partner. The second step in the argument is that because war would lead to a breakage of their mutually profitable and beneficial economic contacts, partners have a progressively stronger incentive not to permit any particular political or diplomatic disagreement to escalate to military conflict. In general, then, as economic interdependence between two countries goes up, each nation's incentives to manage and resolve disputes short of war also go up, with the result being a lower overall danger of war as the world experiences intensified economic globalization (2000).

Grossman and Wong as elaborated on the fact that globalization will lead to new resources which "allows a country to capitalize on resources that would otherwise not be valuableÐ'... [and] as a results countries can grow their economiesÐ'... in ways that were not possible before" (2005). Grossman, Wong, and many others who advocate globalization use these positive affects of globalization to prove that it does not promote poverty, but actually does quite the opposite and assist third world countries. However, although globalization has helped several countries, "in some developing countries, foreign aid and investments are not relieving widespread poverty, and policies forced by global institutions like the International Monetary Fund (IMF) and World Bank have created more harm than good, because the policies are based on models constructed by the developed countries and are not customized for each developing country's situation" (2003).

Globalization has generated significant opposition because of concerns that it has decreased wages in all countries and decreased the number of all types of jobs, of both uneducated and educated statuses, that are available in developed countries. Statistics have shown that an increase in product trade with unskilled-labor-abundant, low-wage countries leads to an increase in the wage rate of skilled workers and depresses the wage rate of unskilled workers (Eckel). For some time, factory jobs have been moving to lower wage countries. More recently, high-speed Internet connections have allowed clerical and white-collar jobs to be done much more cheaply in places like India. Many times when a person calls a customer service line for an American Cooperation, they will be greeted by a person with an accent not native to the United States. This is because companies are hiring people from abroad for much less than they deserve and much less than they would have to pay people in the states. Even high skilled jobs such as reading X-rays are being outsourced and have started to be done by low wage radiologists outside the US. This practice not only affects developed countries that lose jobs, but it also affects poorer countries who receive the additional jobs. As Caretto and Crowl point out, there are locations called "free zones [which are] export factories that allow companies to invest their production in an area with less financial input and greater financial gain" (2005). As Geo-JaJa states in his article:

Globalization is diminishing the economic competitiveness of an increasing number of countries outside the Triad (the European Union, North America, and the Pacific Rim countries, notably Japan). Not only has it failed to "discommodity" development, it has also protected the interest of the triad that dominate world markets and financeÐ'... This action that has far reaching implications in the distribution of the benefits of globalization is directly correlated with social tensions and conflicts, poverty and underdevelopment in Africa today (2003).

People in these developing countries are getting paid less than what they deserve for the services they are providing.