Globalization and Its Impact on Poverty Reduction

Topics: International trade, World Trade Organization, Free trade Pages: 7 (1774 words) Published: October 25, 2010
Globalization and its Impact on Poverty in Pakistan

Sohail J. Malik Ph.D. Islamabad May 10, 2006

The globalization phenomenon
• Globalization is multidimensional and impacts all aspects of life – economic social, cultural and political.

• globalization in production and labor markets is leading to increasing outsourcing of parts, components, and services • the drive towards market liberalization has rapidly accelerated the pace of globalization during the past decade.

From Globalization to Poverty Reduction ……….
• The whole process is predicated on increased efficiency arising out of the international competition. • Requires the poor to constantly seek to improve their skills and human capital. • Investment in Quality control and standards • This also requires a set of specific interventions by the Government. • Increasing competitiveness is at the heart of the whole process.

This requires……………………
• Competitiveness of the domestic enterprises in the global economy • Reasonably good investment climates in which firms can startup, prosper and grow • Good governance – – – – control of corruption, well functioning bureaucracies and regulation, contract enforcement, protection of property rights .

• Strong forward and backward linkages of markets within a country and globally – e.g. transport and telecommunications infrastructure - not just for a good investment climate but also for including the poor. • Proper ‘management’ of the process of reform including sequencing of reforms

Also requires social safety net policies to catch the marginalized Because • the process by definition produces winners and losers • the inability to protect the losers can not only increase the damage • It can shatter national confidence and lead to a reversal towards protectionism

Competing in the globalized world requires
• new institutions and processes. • a new “culture” of doing business • increasingly sophisticated research requirements in order to stay competitive • Building awareness and consensus • Supportive Policy Environment

Theoretically
• globalization opens up markets and ensures competition • Removes inefficiencies and leading to greater growth. • ensures specialization takes place in areas of comparative advantage. • For labor abundant economies this means increased employment as well as growth.

Growth of the “globalizers” is associated with certain other characteristics These include: • flexibility of the exchange rate regimes and the ability to exercise fiscal discipline • investment in research and adaptation • investment in skill enhancements • the ability to re-adjust economic structures to bring these in line with comparative advantage • Safety nets for those that are inevitably marginalized in the short run by this process.

Globalization has led to
• A reduction in the number of poor people in certain parts of Asia, but not in other parts of the world. • This lack of uniformity in the poverty reduction impact of globalization is tied to the absence of the “other” characteristics

Three Important findings from international review of globalization • integration - not feasible without a wide range of domestic reforms covering governance, the investment climate, and social service provision and international action, which provided access to foreign markets, technology and aid • Inclusion varies both across countries and within. A number of countries (with around 2 billion people) are in danger of becoming marginal to the world economy over the past two decades. • homogenization popular fears at cultural and social level - despite the fact that societies that are all fully integrated into the global economy differ enormously

International Experience with Globalization
• Examples of Successful integration - Chinese provinces, Indian states, and the countries of Bangladesh and Vietnam. • Looking at the number of poor people rather than average national poverty levels, we find that...
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Globalization of Poverty Essay
  • Globalization and Poverty Essay
  • Essay on globalization
  • GLOBALIZATION Essay
  • Direct Impact of Fdi on Poverty Reduction Essay
  • Poverty Reduction Essay
  • Essay on Poverty Reduction
  • Globalization and Poverty Essay

Become a StudyMode Member

Sign Up - It's Free