Evaluate the view that globalisation reduces poverty

Question 1

Global North-South divide

Convergence between the Global North-South divide

Answer 1

• Coined by the Brandt reports 1980/83 - highlights the socio-economic tensions between the developed and developing world.
• EXAMPLE = high living standards, wages and industrial productivity are typically found in the northern hemisphere. Poverty, low wages and agricultural + structural disadvantages are typically concentrated in the south.

Question 2

Pro-Globalisation

It has resulted in a convergence between the North-South

Answer 2

Free-trade liberalism challenged this ‘stereotype’:
- Greater trade means greater gross world production (US$41,016T in 2000 and US$77,868T in 2014).
- Numbers living in extreme poverty fell as people have beter jobs and access to cheap food and medical equipment, even as the pop rose (e.g 1980 = 84% and 60% of China respectively lived in poverty. Fell to 12% and 33% by 2010).
- Enhanced trade opps means developing countries can break out into global markets - (outputs p/person doubled from 2000-09, with an average growth rate of 7.6% which was 4.5% higher than the rate shown in rich countries.).
- Tarrifs help protect domestic prospertity to protect their producers from competition = encourages them pay higher prices in a protected environment + specialise in what they produce most cheaply.

Question 3

Millenium Developmental Goals

How does this atribute to the convergence of N-S

Answer 3

• By opening up their markets to foreign investment, less-developed countries can climb the ladder and challenge the relevance of the world divide.
• CHINA = used cheap labour to manufacture cheap goods to sell globally - Chinese exports rose by 20.2% from 2011 with 26.3% of total exports in electronic equipment in 2015.
• S. KOREA = 6th largest exporter specialising in computers, cars and wireless telecom equip in 2015. Its companies (Hyundai, Kai and Samsung) have global recognition. Compared to N.K, its engagement in global free trade means its industrial output is 17x larger and they have better living conditions.

Question 4

Example of how African countries took advantage of new trading opportunities

Convergence of N-S divide

Answer 4

• Botswana (diamonds), Ethiopia (coffee), Kenya (tea).
• Investors are investing in Africa’s non-commodities sector, appreciating the potential value of its growing urbanised and better-skilled workforce
• E.G = Chinese understood the value of outsourcing labour in new urban centres, opening industrial parks. E.G the Haujian Group moved production to Ethiopia.
• The confidence means that foreign direct investment in Africa reached US$60B in 2015 - 5x higher in 2000 and second to the USA in terms of investor attraction.

Question 5

Globalisation and consumers

Answer 5

• Driving down the cost of consumer goods by economic/cultural globalisation provides most people with the opportunity to own the sort of sophisticated material possessions previously once confined to the most wealthy.
• In the developing world, 8/10 people owned a mobile phone and in 2016, the world’s cheapest smartphone, the Ringing Bells Freedom 251 launched on the Indian market for £2.79.

Question 6

Breaking out of the poverty cycle

Answer 6

• Creates immense employment opportunities, especially those who employ the IGOs’ liberal free trade policy, to allow the developing world to break out of a cycle of rural poverty.
• Protected economies stagnate, since markets are restricted, and a lack of competition encourages complacency and inefficiency.
• Factory jobs may not appear attractive but they can provide people with a regular wage and the potential for career developments, accumulating the capital necessary to give their children better education.

Question 7

General statement about how globalisation is bad and instead created more wealth inequality

Answer 7

Globalisation enables powerful TNCS to open factories wherever, by seeking the least regulated economy and cheapest workforce, leading to a ‘race to the bottom’. Therefore, poorer countries are swamped with cheaply made foreign imports so they remain in a peripheral stage of development, mainly producing raw materials and allowing worker exploitation by foreign investors.

Question 8

How does it enable greater inequality

Answer 8

• Created wealth but has dramatic negative consequences as it’s often concentrated with the elite, increasing the wealth gap.
• CHINA = estimated that the poorest 25% owns just 1% of the country’s total wealth, while the richest 1% of households own ⅓ of the country’s wealth.
• Concentrating wealth in small numbers means that resentment and dissatisfaction is created among the majority = undermines social cohesion and encourages the rise of destabilising political movements.

Question 9

Race to the bottom

Answer 9

As global capitalism is based on maximising profits, it suits international businesses’ interests to seek out the lowest costs, aka a race to the bottom.
- Deaths of 1,129 employees through the collapse of the Rana Plaza garment factory in Bangladesh in 2013.
- Chinese companies often have very low standards of corporate social responsibility and exploit workers.
- States cannot protect its own citizens and workers’ rights and job security is undermined.

Question 10

Democracy deficit

Answer 10

• Economic globalisation gives too much power to IGO bodies (IMF, World Bank and WTO) = severely lacks accountability.
• Too much power given to the undemocratic and unaccountable TNCS.
• Argued the same is true of regional bodies like the EU. How the EU negotiates treaties on the behalf of its member stages (proposed TTIP) = public are very removed from decision making

Question 11

Destruction of local cultures and environment

Answer 11

• TNC’s success in reducing labour costs and prices can lead to the destruction of traditional local communities, such as rice in Ghana and peasant farms in Jamaica. Cost effective but opening local markets to global competition has a social cost (family breakdown, crime and it undermines traditional observances).
• Abuses the environment and shows little care for indigenous cultures. For example, Shell has faced scrutiny for its degradation of the Niger Delta and in 2010, UN said TNCS caused $2.2B damage annually.

Question 12

Lack of job security

Answer 12

• Seeking the cheapest workers undermines global job security as TNCS withdraw factories where their labour costs have risen (Chinese firms moving operations to lower cost Africa and Vietnam). Even in the 2016 US Pres. Election, both Sanders and Trump generated mass support among blue-collar workers who felt they were losing their jobs to cheaper Chinese and Mexican factories.
• Anti-globalisation movements possibly encouraged some of the extreme nationalistic attitudes towards the EU in the 2016 referendum. Especially w/ the working class - believed Brexit would stop the free flow of goods, capital and labour that threatened job security.

Question 13

World systems (dependency theory)

Answer 13

• Left-wing sceptics argue globalisation can lock developing states into permanent dependency status. Opening the borders too early results in the ‘dumping’ of cheap manufactured products, becoming reliant on foreign imports and don’t develop their own industries and stuck in the peripheral stage.
• Prebisch-Singer hypothesis states that exporting the primary products that fuel EG means developing countries face declining terms of trade long-term - trapped into low-levels of development.
• Chang = developing world should initially protect its vulnerable industries with subsidies and tariffs to achieve a sufficient stage of development to withstand foreign competition.