Globalization Has Increased Poverty In A Developing Nation Economics Essay

sphericalisation Has Increased scantness In A Developing state of matter sparings EssayNowadays, the term inter bailiwickisation is the main focus of attention. It is frequently described as a process of inter statealization easy intercourse regard slight of geographical boundaries cod to advance technologies, easy and fast fiscal capital flow across the globe and countries become more mutualist portionicularly in thrift. It is believed that globalization provides consumers with variety of choices with affordable equipment casualty. So, is the globalization simplification or increasing penury? This flying field ordain attempt to curtly answer this question.though both the unify Nations and India prepare celeb countd lambert long time, they perk up been criticized for failing to translate the stated mandate for the disadvantaged millions. fractional a century after Independence, as of now, we see the largest population of deplorable slew in the demesne, i odin third of our rural population is chthonian the exiguity line and despite the UN agencies massive aid projects, the suppuration attention of the knowledge base depone, bilateral aid, the Center and State goernments intervention, the gap among the racy and the unworthy has doubled in the last three decades fifteen age ago the lowest 20 per cent of global population receive 2.5 per cent of global wealth whereas at present, the sh atomic number 18 has been reduced to less than 1.3 per cent. For example, the 1999 UNDP Human Development business relationship records that the gap in the midst of the privileged and the poor among nations as well as within nations has widened. Even the World marge in its Report for 1999 concedes that raising the GNP is not enough to melio compute human development, early(a) genial measures argon needful. The trickle-down theory of economic development cannot bring out(a) the desired proves. It has also pointed out that India is a state of matter of stark contrasts and disparities. Among the widening contradictions near seem to be glaring. Un queryedly nutrient grain production has increased fourfold only if 653 per cent of children under four remain undernourished literacy has doubled, yet half the population is illiterate, disembodied spirit expectancy has improved but only 927 females survive for e real universal gravitational constant males. As we have entered into the twenty-first century, it is imperative on our part to carry at the scenario with bare facts and figures.The problem statementDoes globalisation increase or reduce pauperisation.Objective and scopePoverty in India is wide ranch with the nation estimated to have a third of the worlds poor. jibe to a 2005 World Bank estimate, 42% of Indias f entirelys below the inter matter impoverishment line of $1.25 a day (PPP, in nominal legal injury Rs. 21.6 a day in urban areas and Rs 14.3 in rural areas) having reduced from 60% in 1980. Acc ording to the criterion utilize by the Planning Commission of India 27.5% of the population was active below the poverty line in 2004-2005, down from 51.3% in 1977-1978, and 36% in 1993-1994Among the causes ascribed for the high level poverty in India are its autobiography under British rule, large population, and low literacy. Also important is Indias social construction, including the caste system in India, and the use of goods and services of women in Indian society. Economic ripening has in the past measure been dampened by a dependence upon agriculture, and the economic policies adopted after its independence.Since the 1950s, the Indian government and non-governmental organizations have initiated s perpetuallyal programs to facilitate poverty, including subsidizing food and other necessities, increased access to gives, improving awkward techniques and price supports, and promoting education and family planning. These measures have helped eliminate famines, cut absolut e poverty levels by more than half, and reduced illiteracy and malnutrition.(I) delimitate globalization and poverty (II) Does globalisation reduce poverty, (III) Does globularization increase poverty, (IV) What are the other reasons contributing to poverty, (V) What role The World Bank, IMF and WTO play in growing countries, (VI) Who emolument the most from globalization.Defining Globalization and PovertyGlobalization has been destined in various dimensions. Among umpteen established definitions, these are some of them. Globalization as globalization in which is sensible horizoned as simply another(prenominal) adjective to describe cross-border relations between countries Globalization as liberalization which refers to a process of removing government- impose restrictions on carryments between countries in order to wee an exposed, borderless world prudence.Defining poverty is controversial. interpretation of poverty in developed countries may not be relevant to the o ne in developing countries. However, United Nations and World Bank define poverty line as supporting on less than a $1 and $2 a day for low income countries. Sociologists define poverty a lack of essential items such as food, clothing, water, and shelter needed for proper living .Since Globalization and Poverty is a huge and very broad topic, this short paper is to attempt looking at one of the heated debate questions on whether globalization reduces or increase poverty. legion(predicate) studies on this issue have been carried out. However, the findings are conflicting.(II) Globalization Reduces Povertyneoliberal economists widely believe that globalized merchandise arrive ats not only the affluent but also the poor through mountain integration. Neoliberal economic theorymore open economies are more prosperous, economies that liberalize more experience a instant(prenominal) rate of progress Wade (2004, p-567). The belief is that as countries open up their frugality such as by slashing down the trade barriers for instance obligation, custom duty and quotas, price of imported goods will be affordable for the poor outside(prenominal) direct investings come in and create jobs in local thrift. consequently, this increases trade growth and GDP. Millions of poor peoples living tired improves because of jobs created. China, India and Vietnam are often cited as good examples for success of globalized economy.(III) Globalization Increases PovertyOn the contrary, many economists are unconvinced by the neoliberal economists view that globalization reduces poverty. Pilger (2001) in his TV report on Indonesia presents that despite investments from transnational corporations (eg. Nike, Levis, Reebok Classic, Calvin Klein Jeans, Adidas, Gap Inc.), poverty remains unchanged in Indonesia. On average, Indonesian workers are paid only slightly over Rupiah 9,000 (US$1) per day which is unspoiled over half of a living wage.Harrison (2006) finds similar situatio n in Mexico. Mexico is a member of North American Free Trade cartel (NAFTA) signed in 1993 with Canada, Mexico and USA. If trade integration is to reduce poverty and benefit the poor as neoliberal economists suggest, poverty in Mexico should be declined. solely, Harrison (2006, p-7) concludes that poverty grade in Mexico in the social class 2000 were higher than they had been ten age earlier. This reinforces that neoliberal economists view on decline of poverty is unconvinced.(IV) Other reasons possess to povertyWade (2004, p-571) states that more than 1.2 billion people are settle down living on less than US$1 a day. The sidelines are some of the most recognized reasons contribute to poverty lack of inherent resources, internal disaster long period of draught, corruption and sanctions imposed against peculiar(prenominal) dry land.For example, according to United Nations, Cape Verde is one of the most stable parliamentary countries in Africa and the government is relat ively mild in corruption. It ranks 49 out of 179 in Transparency Internationals 2008 Corruption Perceptions Index . But due to cycles of long-term drought, lack of natural resources, shortage of water supply and lack of foreign investments, the state is still among the poorest nations on earth despite its good governance.Countries with rich endowment of nature resources also remain in poverty due to wide spread corruption, bad governance, political instability and economic sanctions imposed by powerful countries. For example, my acres, Myanmar (Burma) is still among the worlds poorest countries despite rich endowment of natural resources from oil to various gem stones. It is due to political instability, severe corruption, lack of reliable judiciary system, basic infrastructures and economic sanction imposed by The US. Consequently, unemployment rate is remarkably high and rule of economic success for large-mouthed major(ip)ity of population is slim unless economic and political amend take place.(V) Role of World Bank, IMF and WTO on development in poor countriesThe World Bank, International Monetary Fund (IMF) and World Trade Organization are widely known as driving forces of trade liberalization. Pilger (2001) interviews several antecedent executive officials of The World Bank and IMF in his TV report on Indonesia. Those officials explain that the roles The World Bank and IMF have played in Indonesias economy and various criteria a country to comply with order to get loan from them.World Bank and IMF are supposedly to help poor countries. In reality, powerful countries use the dickens cosmoss as tools to suck up resources from developing countries via multinational corporations, according to the TV report. To get loans from the institutions, a country has to reform its economy which mainly means to open up grocery stores and all in all in allow multinational corporations to access to countrys resources and privatize industries. Thus, complying wit h the criteria implies serving the ruff interests of multinational corporations.In sum to opening up food markets for multinational corporations, the loans also come with so called technical foul experts or consultants. So, significant sum of the loans go back to developed countries as salaries of those experts.To get loan from the institutions, a country also has to have a good relationship with the US because it controls 16.77% of summate votes in IMF and 16.39% of The World Banks total vote. For instance, N-Korea and Cuba cannot get loans from the institutions because of sour relationship with The US.World Trade Organization (WTO) is another driver of trade liberalization. It forces member countries to open up their markets and eliminate trade barriers. New members are also required to fulfill these criteria. Members are required to comply with intellectual property laws which were mainly written by the wide corporations.WTO is widely criticized for being ineffective to pro tect the interests of developing nations. When trade disputes occur, chance of getting success in legal battle for poor country is very slim even if it has a good ground because the weapon is so expensive and complicated. Besides, it cannot force developed countries to stop subsidizing agricultural rap musicience because farmers from poor countries are unable to compete with those heavily subsidized farmers in developed countries. Thus, poor countries always have less advantage in global trading system.(VI) Who benefits the most from globalization? at that place is no doubt that globalized trades/economy benefits all the parties concerned. However, various studies show that advanced countries are benefiting from the trades more than poor countries. Yotpoulos and Romano (2007, P-21) state that free markets and free trade work best if there are supported by extensive institutional structure such as business infrastructures, reliable legal system and political stability. Thus, globa lization is more likely to favour the countries which are laden and institution rich, at the expense of those that are poor.On the other hand, developing countries with ardent infrastructure base, political stability, dependable legal system and abundant crowd forces also benefit from globalization. China, India and Vietnam are often cited as ideal examples. Furthermore, United Nation (2007, P-23) asserts that countries with bargaining strength are more likely to benefit more from bilateral trade agreements and impose more onerous terms on the weaker parties.We must ensure that the global market is embedded in broadly divvy upd values and practices that reflect global social needs, and that all the worlds people share the benefits of globalization. Kofi Annan .(VII) ConclusionIn short, it is hard to find persuade data to support either globalization reduces or increases poverty. However, it is clear that globalization is more beneficial to developed countries than to developing countries mainly because of wide spread corruption, bad governance, lack of necessary business infrastructures.Unless world leaders share Kofi Annans concern We must ensure that the global market is embedded in broadly shared values and practices that reflect global social needs, and that all the worlds people share the benefits of globalization., the following remarks are unfortunately likely to keep to be true.George Monbiot (Environmentalist) summarizes, Globalization is used to suggest a coming together of people of all races, all countries. It will relieve poverty and dish out wealth. What is actually happening is precisely the opposite. The Poor become markedly poorer and wealthy become staggeringly wealthier.United States Space Command (1997, p-6) remarks The globalization of the world economy will also continue, with a widening between haves and have-nots.ReferencesAnn Harrison, globalization AND POVERTY NATIONAL BUREAU OF ECONOMIC RESEARCH, Working Paper 12347, Cambridg e, 2006. www.nber.org/written document/w12347John Pilger, Globalization New Rulers of the World, Carlton Production, 2001. (TV report)Pan A. Yotpoulos and Donato Romano (editors), The Asymmetries of Globalization, Routledge, USA Canada, 2007.ROBERT HUNTER WADE, Is Globalization Reducing Poverty and Inequality? London School of Economics and political Science, World Development Vol. 32, No. 4, pp. 567-589, UK, 2004.United Nations, The Employment Imperative Report on the World Social Situation 2007 New York, 2007.Significance of the studyIndia opened up the economy in the early nineties following a major crisis that led by a FOREX crunch that dragged the economy pixilated to defaulting on loans. The response was a slew of national and orthogonal sector form _or_ system of government measures part prompted by the immediate needs and partly by the demand of the multilateral organisations. The new policy regime radically pushed forward in favour of a more open and market oriented economy.Major measures initiated as a part of the liberalisation and globalisation strategy in the early nineties included scrapping of the industrial licensing regime, decline in the number of areas reserved for the public sector, amendment of the monopolies and the restrictive trade practices act, step up of the privatisation programme, reduction in tariff grade and change over to market determined exchange rates.Over the years there has been a still liberalisation of the current nib transactions, more and more sectors opened up for foreign direct investments and portfolio investments facilitating entry of foreign investors in telecom, roads, ports, airports, insurance and other major sectors.The Indian tariff rates reduced sharply over the decade from a weighted average of 72.5% in 1991-92 to 24.6 in 1996-97.Though tariff rates went up slowly in the late nineties it fey 35.1% in 2001-02. India is committed to reduced tariff rates. Peak tariff rates are to be reduced to the minimum with a peak rate of 20%, in another 2 years most non-tariff barriers have been dismantled by March 2002, including almost all quantitative restrictions.Globalization has increased poverty, although there is a school of thought that it has reduced poverty.India is GlobalThe liberalisation of the domestic economy and the increasing integration of India with the global economy have helped step up GDP growth rates, which pickinged up from 5.6% in 1990-91 to a peak level of 77.8% in 1996-97. ontogenesis rates have slowed down since the country has still bee able to carry out 5-6% growth rate in three of the last six years. Though growth rates has slumped to the lowest level 4.3% in 2002-03 mainly because of the worst droughts in two decades the growth rates are expected to go up close to 70% in 2003-04. A Global comparison shows that India is now the hurrying growing just after China.This is major improvement given that India is growth rate in the 1970s was very low at 3% and GDP growth in countries like Brazil, Indonesia, Korea, and Mexico was more than twice that of India. Though Indias average annual growth rate almost doubled in the eighties to 5.9% it was still lower than the growth rate in China, Korea and Indonesia. The pick up in GDP growth has helped improve Indias global opinion. Consequently Indias position in the global economy has improved from the 8th position in 1991 to 4th place in 2001. When GDP is calculated on a purchasing power parity basis. globalisation and PovertyGlobalisation in the form of increased integration though trade and investment is an important reason why much progress has been made in reducing poverty and global inequality over recent decades. But it is not the only reason for this often unrecognised progress, good national polices , sound institutions and domestic political stability also matter.Despite this progress, poverty remains one of the most serious international challenges we face up to 1.2 billion of the d eveloping world 4.8 billion people still eff in extreme poverty.But the attribute of the world population living in poverty has been steadily declining and since 1980 the absolute number of poor people has stopped rising and appears to have fallen in recent years despite strong population growth in poor countries. If the proportion living in poverty had not fallen since 1987 alone a further 215million people would be living in extreme poverty today.India has to concentrate on five important areas or things to follow to achieve this goal. The areas like technological entrepreneurship, new business openings for small and medium enterprises, grandeur of quality focal point, new prospects in rural areas and privatisation of financial institutions. The manufacturing of technology and management of technology are two different significant areas in the country.There will be new prospects in rural India. The growth of Indian economy very much depends upon rural participation in the glob al race. After implementing the new economic policy the role of villages got its own signification because of its unique outlook and branding methods. For example food processing and packaging are the one of the area where new entrepreneurs can enter into a big way. It may be organised in a incorporated way with the help of co-operatives to meet the global demand.Understanding the current stance of globalisation is necessary for setting course for future. For all nations to reap the full(a) benefits of globalisation it is essential to create a level playing field. chairman Bushs recent proposal to eliminate all tariffs on all manufacture goods by 2015 will do it. In fact it may incense the prevalent inequalities. According to this proposal, tariffs of 5% or less on all manufactured goods will be eliminated by 2005 and higher than 5% will be lowered to 8%. Starting 2010 the 8% tariffs will be lowered each year until they are eliminated by 2015.GDP Growth rateThe Indian economy is passing through a tricky phase caused by several unfavourable domestic and external developments Domestic output and Demand conditions were adversely affected by poor doing in agriculture in the past two years. The global economy experienced an overall deceleration and recorded an output growth of 2.4% during the past year growth in real GDP in 2001-02 was 5.4% as per the Economic Survey in 2000-01. The performance in the first shadower of the financial year is5.8% and second quarter is 6.1%. merchandiseation and ImportIndias Export and Import in the year 2001-02 was to the extent of 32,572 and 38,362 million respectively. Many Indian companies have started becoming respectable players in the International scene. Agriculture exports account for about 13 to 18% of total annual of annual export of the country. In 2000-01 Agricultural products valued at more than US $ 6million were exported from the country 23% of which was contributed by the marine products alone. Marine produc ts in recent years have emerged as the single largest contributor to the total agricultural export from the country accounting for over one fifth of the total agricultural exports. Cereals (mostly basmati rice and non-basmati rice), oil seeds, tea and coffee are the other big(a) products each of which accounts fro nearly 5 to 10% of the countries total agricultural exports.Where does Indian stand in terms of Global Integration?India clearly lags in globalisation. Number of countries have a clear lead among them China, large part of east and far east Asia and eastern Europe. Lets look at a few indicators how much we lag.Over the past decade FDI flows into India have averaged close to 0.5% of GDP against 5% for China 5.5% for Brazil. Whereas FDI inflows into China now exceeds US $ 50 billion annually. It is only US $ 4billion in the case of IndiaConsider global trade Indias share of world merchandise exports increased from .05% to .07% over the pat 20 years. Over the same period Ch inas share has tripled to almost 4%.Indias share of global trade is similar to that of the Philippines an economy 6 times smaller according to IMF estimates. India under trades by 70-80% given its size, proximity to markets and bear on cost advantages.It is interesting to note the remark made last year by Mr. Bimal Jalan, Governor of RBI. Despite all the talk, we are now where ever close being globalised in terms of any commonly used indicator of globalisation. In fact we are one of the least globalised among the major countries however we look at it.As Amartya Sen and many other have pointed out that India, as a geographical, politico-cultural entity has been interacting with the outside world throughout score and still continues to do so. It has to adapt, assimilate and contribute. This goes without saying even as we move into what is called a globalised world which is distinguished from previous eras from by faster go away and communication, greater trade linkages, denting of political and economic sovereignty and greater acceptance of democracy as a way of life.ConsequencesThe implications of globalisation for a national economy are many. Globalisation has intensified interdependence and competition between economies in the world market. This is reflected in Interdependence in regard to trading in goods and services and in movement of capital. As a result domestic economic developments are not determined entirely by domestic policies and market conditions. Rather, they are influenced by both domestic and international policies and economic conditions. It is thus clear that a globalising economy, while formulating and evaluating its domestic policy cannot afford to ignore the possible actions and reactions of policies and developments in the rest of the world. This constrained the policy option available to the government which implies loss of policy autonomy to some extent, in decision-making at the national level.