Can globalization be the solution to world poverty?

When talking about globalization, one does not stop at the mere economic and political meaning of it; many other events, such as the spread of diseases (AIDS), the advanced development of new technologies and the internet, along with ever-new communication and transportation ways, are consequences of a world that is constantly evolving.[1]

All these factors put together have one common denominator: integration. The simple fact that most of the elements mentioned above are available to most of the world’s population is a stand-alone proof that every single culture is converging into one, new, melting pot.

What is to be argued, however, is the impact that this never stopping cultural evolution train has on poor countries and forgotten realities of our world.

It is generally true to say that globalization could help fight, -and reduce-, poverty because when an economy is integrated it tends to pick up a fast-growing pace, usually followed by a widely diffused growth, and ends up giving people the opportunity to step up in their lives, moving out rural realities to take advantage of more advanced location, such as cities and towns. And as they integrate and restructure themselves, adapting to these new locations, so do their wages and productivity.

However, although this fancy idea of integration and globalization, it is also, and sadly, true that a fair share of rich countries maintain strong barriers against products and skilled individuals of the poor ones; a worker, whatever their job and responsibilities are, of a less-developed country, earns and produces not as much as one who has the random privilege of being born in a rich –or richer- Nation.[2]

Going back to the 19th Century, starting from the Seventies, a first big wave of globalization took place, with about sixty million people migrating from Europe (the less-developed part of it, mostly), floating to North America and other parts of the world. And with the labour, so did goods and capital, in an effort that should have redistributed global wealth. But due to a not-fast-enough rise of per capita income, incompetent economic policies and excessive nationalism of governments, which led to a damaging protectionism, the gap between globalizers and all those countries left behind led to a grown inequality.[3]

Yet again, from 1950 to 1980, a second wave of globalization had its wasted momentum: most countries in development, exporting primary commodities, had protectionist policies, and although developing countries started growing again, so did their poor people, with numbers rising due to a slower rate of growth. Resulting in, once again, a widened gap between rich countries and poor ones.[4]

Among all the effects and consequences that globalization has on countries and their population, one of the persistent and most dangerous ones appears to be the growing differences and inequalities between and within nations, with a disturbing marginalization of the poor in less-developed countries and the tendency to totally leave behind the poorest ones.[5]

Despite the possibility to migrate, like it happened over a century ago, most workers are stuck in a reality which could be described as depressing; taking India as an example, the offer is a tempting high level of skills with an extremely cheap labour cost (about a third of that of the UK), which way too often ends up in mere exploitation of Indian resources by industries of intensive labour, taking advantage of poor legal restrictions of this Less Economically Developed Country (LEDC) and policies issued by the World Trade Organisation.[6]

Nevertheless, there are other realities where immigration played a big role on globalization: taking into consideration its impact on the United States, it is true to say that this country is probably the most attractive to skilled workers coming from abroad; almost half of its foreign born population have higher levels of education, with over 900,000 skilled people from Russia, China, India, Germany, Canada and the UK emigrated to the US.

And again, another great example is the German one: in 2000 an immigration card scheme was issued in order to hire about 20,000 IT specialists coming from abroad; mainly coming from Russia, Poland and chiefly Eastern European countries, what Germany did could be seen and evaluated as the right direction to take in the matter of globalization. [7]

Yet, the double-edged sword of globalization-related immigration highlights the unhappy situation of low-skilled workers, who are subjects to an integrated global labour market greatly influenced by a constantly increasing competition; the abundant supply of workers and cheap labour available to host nations is a deep risk and serious effect that stands as a threat to native professionals, who find themselves impeded in entering the labour market. [8]

Considering immigration and the problem of cheap labour as the main flaw in a constantly globalizing world, there are few aspects to be thought of: immigration and its primary goal is supposed to be set to enhance the benefits of less-skilled workers, maximizing the productivity of an economy and, mostly, minimizing the threat and the expense of such immigration to native-born citizens. [9] But also, it is not to be underestimated the ever-standing problem of world poverty: the wealthier countries get richer, thanks to an increasing use of third world countries resources, the more the gap between these two worlds widens.

It is by now clear that transnational companies which use poor countries as a field of prosperity are no good but to themselves. Despite what the UK Government’s White Paper says in this regard (“A central feature of globalization has been the substantial increase of movement of capital around the world”, para. 150 — “The attraction of capital inflows is an essential element of a strategy to speed up sustainable development and poverty reduction”, para. 154), showing enthusiasm for unrestricted and unregulated foreign investment, history provides us proofs, such as the East Asian crisis of 1997, that globalization and financial liberalization, especially when it is matter of short-term investments seeking easy and quick profits, cause nothing but a destructive impact in poor countries: what happened to Indonesia, with millions of people falling in the poverty pit, is a clear warning that something, if not everything, has been done the wrong way. [10]

When talking about poor countries and the third world, there is a widespread political hypocrisy which deliberately ignores equal redistribution, probably the only mean to ease poverty and give lesser wealthy countries the political voice they deserve; it is in fact indicative how the politicization of markets and a free market policy, derivate of a globalized economy, only protects and benefits the powerful, giving even more volume and attention to voices that are already too loud to be ignored, or at least considered at the same level of the weaker ones.[11]

So, going back to the main question: globalization could be the solution to the issue of world poverty, but it simply refuses to be it; as long as weak policies will continue to exist, letting powerful transnational corporation weight their influence on governments and leaving them the freedom to act in their own interest, the spread of wealth between Northern and Western countries and third world ones will continue to grow, pushing millions of people behind the poverty line, again and again.

The World Trade Organisation needs to reset its standards, taking every single country into the same consideration, redistributing rights and keeping everyone behind the equality line. Because it is far too easy to win a singing competition, when your opponents have no voice.

[1] World Bank, Globalization, Growth, and Poverty (New York, Oxford University Press, 2002), Foreword, p. ix

[2] World Bank, Globalization, Growth, and Poverty (New York, Oxford University Press, 2002), p. 1

[3] World Bank, Globalization, Growth, and Poverty (New York, Oxford University Press, 2002), pp. 3–4

[4] World Bank, Globalization, Growth, and Poverty (New York, Oxford University Press, 2002), p. 4

[5] Giulia Paola Luongo, Hugo Menendez, Theresa Pautzke, Daniel Rupp, Justin Tait, Globalization and Public Policy: A European Perspective (Springer International Publishing, 2015), pp. 5–37

[6] BBC Bitesize website

[7] Andrés Solimano, Globalizing talent and human capital: Implications for developing countries Vol. 15 (United Nations Publications, 2002)

[8] Daniel C. Hickman, William W. Holney, Globalization and investment in human capital, Industrial and Laboratory Relation Review, 64 (2010), p. 654

[9] Harry J. Holzer, Immigration policy and less-skilled workers in the United States: Reflections on future directions for reform, No. 22 (IZA Policy Paper, 2011)

[10] Gordon Crawford, Eliminating world poverty: is neo-liberal globalisation the answer? A challenge to the UK government’s white paper, Review of African Political Economy, 28:88 (2001), pp. 261–266

[11] Gautam Sen, Is globalisation cheating the world’s poor?, Cambridge Review of International Affairs, 14:1 (2000), pp. 87–88

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