ETVT globalization has been effective in reducing poverty Flashcards
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structure
- impact of economic growth
- spread of FM capitalism
- impact of globalization
- for impact of economic growth
A key argument that globalisation has been effective in poverty reduction is that it has driven
global economic growth. Globalisation has facilitated trade liberalisation, expanded markets,
and increased foreign direct investment (FDI), which in turn has boosted industrialisation and
job creation, particularly in developing economies.
Global economic growth: Between 2000 and 2024, the global economy nearly tripled, with nominal global GDP increasing from $33 trillion to $104 trillion by 2023 (World Bank, IMF). 📊💰
Poverty reduction globally: Global poverty rates fell from 35% in 1990 to 9% in 2019. 📉
China’s growth: China’s GDP growth averaged nearly 10% annually over three decades, lifting over 800 million people out of extreme poverty. 🚀🌏
China’s manufacturing hub: After joining the WTO in 2001, China used cheap labor to become the world’s manufacturing hub, reducing its poverty rate from 88% in 1981 to less than 1% by 2019. 🏭🇨🇳
- against led to exploitation of labour
Race to the bottom in labour standards: Globalisation has led to companies moving production to countries with cheaper labor, resulting in low wages, poor working conditions, and human rights abuses. 💸⚖️
Vulnerable employment: According to the International Labour Organization, 1.5 billion workers worldwide are in vulnerable employment, often in precarious jobs created by global supply chains. 🚨🧑🏭
Bangladesh garment industry: As Bangladesh became a hub for low-cost production, many unskilled workers were employed, earning as little as $95 per month in dangerous factory conditions. 🇧🇩👚
Rana Plaza disaster: The 2013 Rana Plaza collapse, killing over 1,100 workers, illustrated the extreme consequences of low labor standards. 🏚️💔
Outsourcing and economic dominance: While cheap, manual labor was outsourced to the Global South, rich Western countries like the United States maintained dominance, with companies like Apple and Amazon benefiting from exploited labor. 💼🇺🇸
- for spread of FM capitalism
Another key argument in favour of globalisation being effective in poverty reduction, is that it
has spread free market capitalism, which proponents of modernisation theory argue is
necessary for development.
Modernisation theory: Argues that globalisation advances the global economy and reduces poverty by spreading capitalism and free market principles. 📈💡
Adoption of free market practices: As nations integrate into the global economy, they adopt practices like deregulation, privatisation, and market liberalisation, attracting foreign direct investment (FDI), promoting entrepreneurship, and driving technological innovation. 🏢🚀
Economic transformation: These reforms help developing countries move away from reliance on agriculture and raw materials, fostering industrialisation and service-based sectors. 🌾➡️🏙️
India’s economic growth: After opening its economy in the 1990s, India saw rapid growth (6-7% annually), particularly in IT and services, helping reduce extreme poverty from 45% in 1993 to 6% by 2024. 🇮🇳💻
IMF and World Bank reforms: The IMF and World Bank have promoted free market reforms by conditioning financial assistance on the implementation of such reforms. 💳💼
- against globalization has deepened inequality and marginalization
Flaws in modernisation theory: Modernisation theory and free market capitalism are flawed, as they may not benefit the poorest in the world and can deepen inequality within and between nations. ❌💰
State intervention: While countries like China and South Korea experienced rapid economic growth, much of it involved significant state intervention, not just free market capitalism. 🏛️🔧
Inequality in wages: Economic globalisation has led to higher-paying jobs for skilled workers, while wages for unskilled labour have stagnated or declined, contributing to greater income disparity. 💼➡️🔻
Wealth distribution: In 2021, the richest 1% controlled 38% of global wealth, while the poorest half held less than 2%, showcasing the deepening inequality. 💸👑
Displacement due to urbanisation: Globalisation has driven urbanisation and industrialisation, displacing rural communities and pushing them further into poverty. 🚜🏙️
Example of India: Over 50 million people in India have been displaced due to development projects, many linked to industrial and infrastructure projects meant to integrate into the global economy. 🇮🇳🏚️
- for politcal globaliation and int coop
political
globalisation has fostered a global commitment to poverty reduction. Institutions such as the
United Nations (UN), the World Bank, and the International Monetary Fund (IMF) have launched
initiatives aimed at reducing poverty and enhancing development, making them central to their
mandates and aims.
UN’s initiatives: The UN has fostered global commitment to poverty reduction through institutions like the UN, World Bank, and IMF. These bodies focus on poverty reduction as a central goal. 🌐🤝
Millennium Development Goals (MDGs): The UN’s MDGs aimed to halve global poverty by 2015, and this goal was met ahead of schedule through international collaboration. 📆📉
Sustainable Development Goals (SDGs): Launched in 2015, the SDGs aim to eliminate extreme poverty by 2030, focusing on structural issues like inequality, climate change, and access to education & healthcare. 🌱📚
IMF and World Bank’s role: These IGOs provide financial assistance and advice to reshape economies and reduce poverty. 💵🔧
Example of Cambodia: In the early 2000s, Cambodia modernised its central banking with IMF’s help, stabilising its banking sector and boosting economic growth. 🇰🇭💹
- against IMF reforms have deepened poverty In sub saharan Africa
Dependency Theory: These reforms entrenched African nations in exploitative global economic structures, leaving them reliant on raw material exports while importing expensive manufactured goods. ⚒️➡️💎
Extreme Poverty: As of 2023, 38% of Sub-Saharan Africa remains in extreme poverty, with 75% of exports consisting of unprocessed goods like oil and minerals, making the region vulnerable to global price fluctuations. 📉🌍
Flawed Economic Thinking: The free market reforms imposed on Sub-Saharan Africa were based on flawed assumptions and were met with resistance in many countries, but the reforms deepened poverty and dependence. 🚫💸
Structural Adjustment Programs (SAPs): In the 1980s and 1990s, the IMF and World Bank imposed free market reforms on Sub-Saharan African countries, making financial aid conditional on privatisation, deregulation, and cuts to public services like healthcare and education. 💰📉
Dependence and poverty: These reforms entrenched Africa’s dependence on exporting raw materials while importing expensive manufactured goods, leaving economies vulnerable to global price fluctuations. 📉💎
Example of Nigeria (1986): SAP reforms in Nigeria led to privatisation, deregulation, and currency devaluation, causing inflation, deteriorating public services, and a rise in poverty from 28% to 66% by the early 1990s. 💵🇳🇬
Example of Zambia (1990s): In Zambia, SAPs led to mass layoffs from state-owned enterprises, pushing poverty from 49% in 1989 to over 80% by the mid-1990s, while the country remained reliant on copper exports. 🇿🇲
What was the impact of China’s accession to the WTO in 2001?
Led to rapid economic growth, lifting over 800 million people out of poverty and reducing the poverty rate from 88% in 1981 to less than 1% by 2019
This integration into global supply chains significantly transformed China’s economy.
What effect did India’s economic liberalisation in the 1990s have on poverty?
Reduced extreme poverty from 45% in 1993 to around 6% by 2024
Driven by foreign direct investment and market liberalisation, particularly in the IT sector.
How did globalisation impact working conditions in Bangladesh’s garment industry?
Trapped millions in poverty with low wages and poor working conditions, exemplified by the Rana Plaza collapse in 2013
Wages were as low as $95 per month.
What argument does modernisation theory make about globalisation?
It suggests that the spread of free-market capitalism through globalisation is essential for poverty reduction
This includes promoting economic liberalisation, deregulation, and foreign investment.
What were the effects of the IMF’s Structural Adjustment Program (SAP) on Nigeria?
Led to privatisation, deregulation, and currency devaluation, resulting in inflation and a rise in poverty from 28% to 66% by the early 1990s
Public services also deteriorated as a consequence.
What impact did Zambia’s implementation of SAP in the 1990s have on poverty?
Increased poverty from 49% in 1989 to over 80% by the mid-1990s
This was accompanied by mass layoffs from state-owned enterprises and reinforced dependence on copper exports.
How have international institutions like the UN contributed to poverty reduction?
The UN’s Millennium Development Goals (MDGs) aimed to halve global poverty by 2015, which was met ahead of schedule
Progress was driven by international cooperation in health, education, and economic growth.
How did the IMF assist Cambodia in its economic development?
Provided technical assistance to modernise its banking system, stabilise inflation, and support sustained economic growth
This was achieved through improved financial management.
What impact have neoliberal free market reforms had on Sub-Saharan Africa?
Worsened poverty and entrenched economic dependence on raw material exports
In Nigeria, SAP policies in the 1980s led to inflation and cuts in public services.
How has globalisation affected inequality in developing countries?
Increased wealth for skilled workers while leaving low-skilled workers with stagnant wages
The richest 1% control 38% of global wealth, while the poorest half hold less than 2%.
