Effect of Globalization on Poverty

Topics: Poverty, Wealth, Economics Pages: 2 (610 words) Published: May 2, 2013
Effect of Globalization on Poverty

According to our text, rapid trade expansion and economic growth which brought by globalization reduce the poverty rate in many third world countries. Does globalization, as its advocators suggest, help spread the wealth? Or, on the contrary, hurt the poor?  In process of looking up relevant information, I found that many experts believe that the relationship between globalization and poverty is far more complex. The export growth and incoming foreign investment seem to have reduced poverty everywhere. However, at the same time currency crises can cripple the poor. After the 1997 currency crisis, poverty rates in Indonesia have increased by at least 50 percent. The poor in Mexico have yet to recover from the pummeling of the peso in 1995. There is no denying that globalization has helped raise the standard of living for many people worldwide. It has also, however, driven many deeper into poverty. Some experts even pointed out that while some figures of economic growth make it look like the country is booming, globalization increases real poverty even. India, which is seen as one of the fastest growing economies, is a good case to support this idea. In the past decade, high growth under free market makes India the largest number of hungry people in the world. Why is such an agricultural country that used to have all the capacity to feed itself unable to feed its children today? On the one hand, workers in exporting sectors or in sectors with foreign investment gained from trade and investment reforms. On the other hand, small and medium corn growers were exposed to import competition; most of them saw their incomes halved in the 1990s, which made the poor poorer. In a word, trade reform benefits rural or urban consumers of those farmers' products,but hurt rural agricultural producers, which account for a significant proportion of India’s popularity. Furthermore, poorer countries can not gain enough...
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