How globalization makes the poor poorer

Globalization is a broadly used term. The extent of meanings attached to it seems to be rather growing than decreasing over time, taking on cultural, political and economic aspects. Generally, globalization identifies the integration of technology, communication networks, economic values and culture. Globalization of the markets suggests that national markets merge into one single marketplace that integrates all individual characteristics into one market. Globalization of production suggests that firms base their productive activities at optimum world locations to achieve optimum productivity, consequently producing global products.

One of the factors that suggest the trend towards globalization is the lowering of trade barriers that enables the free flow of goods, services and capital from one country to another. Producers are specialized in the manufacturing and export of goods and produce their goods more efficiently without governmental intervention or impose of tariffs, quotas and duties. In this context, the mobility of labor and capital is increased leading to production gains as the amount of commodities made available to consumers increase due to product specialization. Consequently, foreign investments are encouraged, while capital market liberalization lowers the cost of capital enabling firms to borrow lower and create job opportunities through foreign direct investment.

On the other hand, the debate against globalization is fierce. Globalization adversaries claim that the developing world does not have the same opportunities for production and specialization like the developed countries. Developing world cannot export their goods at the same prices that the developed world does because they don’t have the facilities to do so. So, in majority, they remain a favorite dumping soil for the developed world’s products.

Besides, manufacturing jobs in developed countries are destroyed because of globalization. The automobile industry in the U.S. has suffered a tremendous attack from foreign competitors that has put a downward pressure on the wage rate of unskilled workers. Besides, outsourcing has mostly affected low-skill, blue collar manufacturing jobs in the Western world. Globalization adversaries claim that lowering trading barriers has enabled firms to move manufacturing activities to countries with lower wage rates such Mexico, Brazil, China, Philippines, Malaysia and Taiwan, thus jeopardizing wage rates of unskilled workers at home.

Another source of concern regarding globalization and its impact on the developing world is its environmental abuse. In the absence of adequate regulations and policies to protect labor and the environment, the developed world moves its manufacturing facilities to less developed countries in order to avoid the costs associated with regulations of environmental protection that they have to face in their countries.

Finally, globalization enables the quick shift of economic power away from national control and towards supra-national organizations such as the World Trade Organization (WTO), the United Nations (UN) and the European Union (EU). Adversaries of globalization consider that this shift limits a nation’s ability to control its own destiny and undermines its sovereignty.

Conclusively, although one could argue that globalization has numerous positive effects on global economy, there is no doubt that is also has negatively affected the majority of poor people. It has put a remarkable pressure on underdeveloped economies, national governments and the environment to the extent that its economies policies have been customized to serve the needs of the developed world. Moreover, there is a clear indication that national industries strive for global competitiveness, without worrying for the environment and basing their aspirations on the overpowering command of the World Trade Organization (WTO) and the International Monetary Fund (IMF) on the developing countries.


BOLA TANGKAS