Will globalisation benefit or disadvantage the poor in the world?

During the past decades, we have heard steady proclamations from the International Monetary Fund (IMF) and the World Bank stating that their main aim to push for globalization is to help the poor and alleviate their suffering. However, in recent years, critics of globalization have claimed that globalization does not benefit the poor but on the contrary, disadvantage them. Now, whose claims are correct? And more importantly, does globalization help the poor and if so, to what extent?

Before I begin with my response to the above question, I would like to define the word - globalization. Globalisation can be defined in many different ways but I would like to define globalization as the process of transformation of local or regional phenomena into global ones, a process by which people of the world are unified into a single society and function together. Hence, according to this definition, globalization is not limited to the economic aspect but can refer to any aspect like the social aspect whereby cultures are exchanged. In my response, I would talk about the benefits of globalization to the poor and then, the disadvantages followed by a conclusion which weighs the benefits and disadvantages on the whole.

The benefits of globalization for the poor are many.

Firstly, globalization enables developing countries to engage with the rest of the world and in so doing, increase their economic growth, solving the poverty problem in their country. In the past, developing countries were not able to tap on the world economy due to trade barriers etc. and as such, they were left out on the shelves, not sharing the same economic growth that the developed countries had. However, with globalization, the IMF and the World Bank encouraged developing countries to undergo market reforms and structural changes through large loans. Most developing countries started to take steps to open up their markets by eliminating tariffs and deregulating their economies etc. and eventually, multi-national corporations (MNCs) from developed countries were able to invest in these developing nations, creating jobs for the poor. For example, rapid growth in India and China has caused world poverty to decline. Between 1987 and 1998, the share of the world's population that is poor fell from about 25 percent to 21 percent; the absolute number fell from an estimated 1.2 billion to 1.1 billion.

Secondly, through increased economic growth, living standards and life expectancy for the poor are inevitably improved. With more wealth, developing nations are able to provide better health care services and sanitation for its people. The poor will not be plagued with diseases which arise from dirty water and improper health care and as such, people fall ill less often, increasing life expectancy. In fact, with more money, the government of developing countries can also provide education for the poor. Illiteracy rates will thus decrease. This is seen in Morocco, a developing country, whose illiteracy rate fell to 39 percent just recently, in 2009. All in all, living standards and life expectancy of developing nations increase through economic gains from globalization. According to the World Bank, with globalization, more than 85 percent of the world’s population can expect to live for at least sixty years and this is actually twice as long as the average life expectancy 100 years ago.

However, apart from the benefits of globalization, we must also note the many disadvantages that globalization has created for the poor.

Firstly, globalization increases the inequality between the rich and the poor. As mentioned in my first point, globalization enables developing countries to increase their economic growth. This may seem like a rosy picture for world poverty but in actual fact, this is not the case. Many developing nations do benefit from globalization but then again, many of such nations do lag behind. In the past two decades, China and India have grown faster than the already rich nations. However, countries like Africa still have the highest poverty rates, in fact, the rural areas of China which do not tap on global markets also suffer greatly from such high poverty. Now, why do some developing nations benefit while others do not? The answer lies with the theory of globalization in itself. Those countries which have successfully used the ideal policies which the IMF and the World Bank (the IMF and World Bank push for globalization) have proposed will stand to benefit more while those who fail to, will be on the losing end. As such, when we look at globalization, it’s actually not the case that globalization has caused some of the developing nations to benefit a lot but rather it has caused many to be left out altogether.

Another reason for the inequality between the rich and the poor is the fact that there’s always something at stake whenever developed countries help the developing nations. Hence, there’s some kind of condition put in place which benefits the developed country and to some extent, enables them to exploit the poorer nations. For example, after giving financial aid to Tanzania, the IMF demanded the sale of its water system to foreign owners and an 80 percent increase in the price of its cooking oil and all these did not alleviate but rather worsened the poverty problem in Tanzania.

Secondly, globalization facilitates the spread of new diseases in developing nations. As mentioned in my second point, globalization increases living standards and hence, decreases the development of diseases. However, from another perspective, globalization does enable the spread of diseases from developed nations to developing ones. Due to increased trade and travel, diseases like HIV/AIDS, SARS and bird flu etc. are facilitated across borders. One good example will be that of Africa. In Africa alone, the AIDS crisis has reduced the life expectancy of its people to less than 33 years. In fact, the in surge of MNCs onto developing nations’ soil also causes diseases, which are common in developed countries, to develop in developing nations. For example, with globalization, fast food restaurants like McDonald’s and cigarette-producing firms are likely to tap on the cheap labor in developing countries. When these MNCs arrive, the locals will tend to be influenced by them and thus, start to consume fast food and smoke cigarettes. Eventually, diseases, like obesity and lung cancer, will plague the poor and this will become a serious problem, causing a huge financial burden to the developing nation.

Thirdly, the indigenous and national cultures and languages of developing nations are usually eroded by modernized globalised cultures. With globalization, the locals of developing nations have more contact with the people of developed countries and hence, they get influenced, changing their once simplistic mindset and start seeing things in a different light. In fact, they start to acquire new languages like English etc. and modernized cultures like fast food too. With knowledge of greener pastures out there, locals also start to migrate to developed nations to enjoy a better quality of life. Hence, when such locals return to their homeland, they speak with a different accent, behave differently and become a totally different person, losing their traditional cultures and lifestyle. In fact, they too relate their experiences to the younger generation and encourage them to go abroad. As such, this becomes a vicious cycle and the traditional way of life is lost in the process. In the social aspect, globalization thus becomes a disadvantage for the poorer nations.

In conclusion, globalization brings many benefits and disadvantages to the poor in the world. However, the disadvantages tend to outweigh the benefits on the whole and hence, globalization is definitely not the solution to solve world poverty. Governments of developed nations should actually collaborate to formulate a new policy or strategy which would enable the progress of more developing nations, leaving fewer of such nations behind. However, we must also note that every strategy has its benefits and costs and hence, there are bound to be countries at the losing end.

Brian Sim, Jamie Chow, Yong Sheng, Toan, Bao Rong