Globalisation and Poverty Flashcards
how is extreme poverty defined?
according to the UN, extreme poverty is “a condition characterised by severe deprivation of basic human needs, including food, safe drinking water, sanitation facilities, health, shelter, education and information”
it is when someone is living on less than $1.25 a day
what goal did the UN set on poverty in 2000? and what were the results in 2015?
to reduce the number of people living in extreme poverty by 50%
the UN reports that 836 million people still live in extreme poverty, but this is down from 1.9 billion, which points to success or at least a lot of progress in reducing poverty
what are the World Bank predictions about poverty for 2030?
by 2030, the number of people living in extreme poverty could drop to less than 400 million, assuming that everything will keep improving as it has been
although climate change is a threat to these improvements in global poverty
how has globalisation and trade helped to reduce poverty?
the greatest contributor to reduction in poverty is globalisation and trade
the world’s economies and cultures have become more interconnected and free trade has driven the growth of many developing economies
world trade has been growing since the end of WW2 - free trade agreements and technological advances in transportation and communication have allowed goods and services to move around the world more easily than ever
advancements in technology like the mobile phone have reduced poverty - the economist Jeffrey Sachs says that mobile phones are the “single most transformative technology” when it comes to the developing world
they give people access to banking and payment schemes as well as better access to education and information
in some places, phones help farmers get information and get the
best price for the stuff they’re producing
mobile phone towers are also a lot cheaper to install than running thousands of kilometres of telephone lines - this is called leapfrogging, countries can skip straight to more efficient and cost-effective technologies that weren’t available in the past
what are some problems/criticisms of globalisation?
globalisation is a winners and losers process
companies produce labour-intensive products like shoes in countries with the lowest wages and the weakest regulations
the winners of this process include corporations and their stockholders, who earn more profit, but also the consumers who get products at a cheaper price
the losers are the high wage work workers who used to make those products, but their jobs moved overseas, as well as the low-wage workers who are often thrown into hazardous working conditions
globalisation leads to exploitation and oppression, it is essentially a form of economic colonialism that puts profit before people
how do defenders of globalisation respond to these criticisms?
multiplier effect - more money is being spent on local businesses, meaning that the jobs outlined above create more jobs
Paul Krugman said that “the Bangladeshi apparel industry consists of what we consider sweatshops or it won’t exist at all… and Bangladesh needs its apparel industry, it’s pretty much the only thing keeping its economy afloat”
companies do not follow the same rules they do in developed countries as some developing countries have no minimum wage laws or regulations that provide safe working conditions or protect the environment, and child labour laws are not always enforced but workers do not always receive mistreatment
especially since public awareness is growing, along with pressure from the international community to take steps to protect workers
for example, the US produces an annual publication called ‘The List of Goods Produced by Child Labour’ and if a company buys products from that list, they are likely to be condemned by officials and the media
low wage workers are making more money than they previously were as these jobs tend to pay more than the average wages in those countries - the pay would be unacceptable in developed countries but are often the best alternative in developing countries
arguments that economic globalisation resolves the issue of global poverty
developing countries attract investment by engaging in free trade, so allowing them to break out of the cycle of subsistence agriculture, especially since they also have an incentive to provide a better trained and educated workforce in order to attract this investment
nation-states are able to use their comparative advantage within a global market, so creating limitless opportunities for expansion
TNCs outsource employment to countries with the lowest labour costs, creating diversification in developing countries that export raw materials and/or manufacture products
there has been a dramatic decrease in levels of global poverty and a greater convergence between the GDP of the Global North and
Global South since developing countries have engaged in globalisation
the MDGs have been largely successful due to the effect of economic globalisation
international trade has also created new opportunities for people
to sell their products and labour in a global market place, which has helped millions to get out of extreme poverty
reduces the global cost of imports, enabling the world’s poorest to purchase subsistence and consumer goods more cheaply
arguments that economic globalisation resolves the issue of global poverty - free trade liberalism
free trade liberalism has done more than anything else to challenge the North-South divide by creating new jobs in manufacturing across the world
as a result, gross world production has increased from $41 trillion in 2000 to $77 trillion in 2014
and the number of people living in extreme poverty has dramatically decreased as people across the world gain higher paying jobs - the number of people living in extreme poverty in 1980 was 1.9 billion, but in 2015 it was only 702 million
developing countries have been able to break into global markets and use their comparative advantage in cheap labour to lift millions of their citizens out of extreme poverty
the employment opportunities created by economic globalisation provide people in the developing world with the chance to break out of the poverty cycle
jobs in factories may seem unacceptable to the developed world but the wages are above average in developing countries
arguments that economic globalisation resolves the issue of global poverty - reduced the costs of consumer goods
globalisation reduces the cost of imports, enabling the world’s poorest to purchase subsistence and consumer goods more cheaply
globalisation has driven down the cost consumer goods - 8 in 10 people now own a mobile phone and in 2016, the world’s cheapest smart phone was launched at only £2.79
arguments that economic globalisation does not resolve the issue of global poverty
job security in both the developed and developing world is threatened as businesses move production in order to take advantage of the lowest cost environment in which to produce
core states ‘dump’ cheap manufactured products on peripheral/ developing states so that they continue producing raw materials - this ensures that they remain in a state of neocolonial dependency, trapping them in low levels of development
global capitalism is volatile, encouraging crises such as the subprime mortgage recession of 2007-9 and the euro crisis, such instability threatens stable socioeconomic progress in states
proletarianisation leads to the disintegration of communities, with a corresponding rise in crime
arguments that economic globalisation does not resolve the issue of global poverty - wealth is concentrated in the hands of the elite
wealth generated through economic globalisation is concentrated in the hands of the elite, which dramatically increases the gap between the rich and the poor
in 2016, it was estimated that the poorest 25% of China owned just 1% of the country’s wealth, while the richest 1% owned around 33% of the country’s wealth
as the income gap between the rich and poor increases, both within and between countries, this creates resentment and dissatisfaction which undermine social cohesion
globalisation marginalises the poor instead of lifting them out of poverty - as Hans Rosling said: “the 1 to 2 billion poorest in the world, who don’t have food for the day, suffer from the worst disease: globalisation deficiency… the way globalisation is occurring could be much better, but the worst thing is not being part of it”
arguments that economic globalisation does not resolve the issue of global poverty - creates a race to the bottom
global capitalism, fostered by economic globalisation, is based upon the maximisation of profit, meaning that companies seek out the lowest cost in which to do business
this creates a ‘race to the bottom’ as states compete with eachother to attract business by keeping regulations as minimal as possible
Bangladesh, China and Cambodia are notable examples of developing countries cutting corners to attract business and investment, often at the expense of workers
governments reduce costs by limiting workers’ rights through organised commercial violence against workers
