Globalization and Higher Living Standards

Topics: Developing country, World Bank, Emerging markets Pages: 5 (1587 words) Published: September 3, 2007
Globalization is spawning a rise in living standards

The main focus in this article is to illustrate how globalization has improved the lives of many in developing nations. Globalization in of its self is the trading of goods and services of a local economy into an integrated global economy. Technological advances have made this practice more feasible with in the last 50 years. The major milestones were the development of the internet and increased transportation technology. These two advances made the world coined "flat" and set the stage for higher living standards. Countries such as Asia and Latin America have really harnessed these technology advances. They have been exporting their products and services on to the world wide market at alarming rates. Due to increased productivity in there economy there overall score card "GDP" gross domestic output per person has increased significantly. The higher the GDP, the better off the country and its people are theoretically supposed to be. Asia has seen the most significant jump in GDP in the last 50 years. On average its people have seen a 5 times greater GDP per person due to an ever expanding economy. Globalization is the driving force behind increased GDP per person. Evidence has been studied linking that countries that tend to globalize faster have a directly proportionate increase of GDP of 5%. This study was conducted by David Dollar and Aart Kraay of the World Bank. They studied the countries between 1960 and 1990. The worlds two largest developing countries India and China make a perfect example. India increases its GDP per person from 2% to 5% by encouraging foreign trade and investment. It lowered its tariffs by more than half in one year to encourage this.

It also has been shown that foreign companies who operate in developing nations pay there employee's higher salaries than domestic companies. The increase is typically 12%- 30% more. Foreign companies can afford to pay employees higher salaries because overall they are cutting their operating expense significantly by operating in a foreign country where taxes, wages etc are significantly cheaper. Living standards can be calculated by literacy rate, life expectancy and school enrollment as well. Some believe that these truly measure how well peoples living standards are. The UN developed a study including all these variables and put them in an Index. Researchers then studied the comparison of these results with the GDPs of the seven largest emerging countries. The results showed that there is a direct relationship with the two. The countries with the highest GDP also had the highest Index ratings. Increasing a countries average wage is thought to increase the poverty as well. Research has also proven this theory false. In India 16 states have seen dramatic average income levels rise. In all 16 states the poverty has shrunk. There is no conclusive evidence that higher average wages increases the poverty level.

Globalization has been proven to increase the standards of living in many developing nations. The Emerging economies have seen significant prosperity due to international trade that has trickled down to its citizens in the form of better education, living conditions and jobs.

Globalization in my opinion is the key to how this world must survive. It has the ability to stop wars, chisel away poverty and share all the unique products and services different cultures foster. The internet has brought the ability for a small Moroccan leather shop to sale its merchandise to an infinite number of clients. Its potential for growth is virtually limitless. Globalization has allowed the world to experience the American Dream and given each person and country a fare shot at competing. As the ages roll on my belief is that each country will eventually have to begin specializing on the products and services they have the most utility in. Meaning, each country must export the products and services that...
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