Does globalization cause poverty?
Many people who are concerned about the fate of the world's poor now attribute their plight to globalization. They argue that globalization has weakened the position of poor countries and exposed poor people to harmful competition. Their concern is understandable, especially since the gap between rich and poor has indeed become more glaring in recent decades. However, proving a direct link between economic globalization and poverty is a complex task for several reasons: Globalization as a single cause. Specifying how globalization affects the economic status of countries or individuals is not easy. The effects of "globalization" may be due to competition among workers, or foreign investment, or trade, or government borrowing. There is no single measure of integration into the world economy. Each aspect of integration can have variable effects. Poverty as a multidimensional phenomenon. Poverty can be measured in different ways-for example, relative to a country's average, by consumption capacity, or in terms of overall well-being. Many people in many places historically have been poor for many reasons. Attributing (increases in) poverty to globalization therefore requires proving that globalization has become a dominant factor in producing a new kind of poverty. Globalization and overall global poverty. By common consent, globalization has proceeded rapidly since the 1980s. Yet according to the recent Global Poverty Report, the proportion of the world population living in poverty has declined from 29% in 1988 to 26% in 1998. Moreover, social indicators for many poor countries also show improvement over several decades. Globalization and poverty in specific countries. If globalization causes poverty, then countries that become more economically integrated via trade and investment should do worse. But some that have become more integrated into the world economy, such as China, have made progress. Others, for example in sub-Saharan...
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