Globalization, Poverty and Inequality: are the criticisms vague, vested, or valid? Prepared for the NBER Pre-conference on Globalization, Poverty and Inequality October 24-25, 2003
By Emma Aisbett University of California at Berkeley This draft: September 20, 2003
Abstract: Lasting global economic integration is not the inevitable outcome of the process of globalization. Many alternative outcomes are possible, and many of these will be far less favorable to the poor. The best hope of achieving beneficial outcomes from globalization is to improve the quality of the dialog between participants on both sides of the debate. This paper contributes to this goal by explaining some of the reasons for the widely differing opinions of the impact of globalization on poverty and inequality in developing countries, and by suggesting ways in which researchers can better target their efforts towards allaying fears about globalization. It suggests that the public have more interest in poverty reporting based on total headcounts rather than poverty incidence, and which acknowledges non-monetary dimensions of poverty. In regard to inequality, statistics that focus on absolute gains from globalization and on income polarization are likely to have more resonance than statistics that attempt to summarize the shape of the income distribution.
Economic globalization is a surprisingly controversial process. Surprising, that is, to the many economists and policy makers that believe it is the best means of bringing prosperity to the largest number of people all around the world. Under this belief, proponents of economic globalization have had a tendency to conclude that dissent and criticism is the result of ignorance or vested interest1. They argue that anti-sweatshop campaigners do not understand that conditions in the factories owned by multi-nationals tend to be better than those in comparable domestic firms in developing countries; that environmentalists are denying the world's poor of the right to develop freely; and unionists in developed countries are protecting their interests at the expense of the workers in poorer parts of the world.
Bhagwati (2000, p.134) provides a good example of way that some proponents of globalization have reacted to critics: “No one can escape the antiglobalists today.....This motley crew comes almost entirely from the rich countries and is overwhelmingly white, largely middle class, occasionally misinformed, often wittingly dishonest, and so diverse in its professed concerns that it makes the output from a monkey's romp on a keyboard look more coherent.”
This sort of sentiment is not uncommon among proponents of globalization. It has its roots in the period of neoclassical economic triumphalism of the 90s, when deep economic integration seemed a singular outcome towards which the process of globalization was inevitably propelling us. 1
Proponents of globalization were able to dismiss criticism of globalization, feeling confident that history would see them both victorious and vindicated.
The first motivation for this paper is that in light of the collapse of the last two Ministerial meetings of the World Trade Organization, global economic integration of the type envisaged by its proponents is now seeming far from inevitable. Many alternatives are currently vying for the crown, including a reversion to something approximating historical patterns of isolation, or deep economic integration at a regional rather than global level2.
The second motivation for this paper is a belief that public support is necessary if global economic integration is to be achieved, and the best way to obtain public support for any policy is to engage them meaningfully in its development. This requires understanding their perspective, and addressing their questions.
The third motivation for this paper is that the absence of meaningful dialog between wellintentioned people on...
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