GLOBALIZATION

GURMANNAT SINGH(N01201653)

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HUMBER COLLEGE

 

 

INTRODUCTION

Increased
Integration among the different countries of the world has given rise to the
phenomenon of globalisation during the last three decades. Steger (2013,p.39)
argues that this has affected the economies, world over in terms of their
growth rate, technological advancement, modes of governance, standard of living
of the masses and poverty levels. International Monetary Fund is an
organization that is working towards providing the financial stability to help
grow the economy as in whole. It has helped by providing financial aids and
support to various countries. The neo liberals strongly argue in favour of
globalisation. Among others, alleviation of poverty the world over has often
being quoted as the positive outcome of globalisation. Their findings substantiate
the declining trend in world poverty level since the inception of globalisation
process.

MAIN CONCEPTS

·      
NEOLIBERALISM (Angelini,
2015, pp. 26, 31): It refers to extremely liberal policies of the government
towards economic activities which favours privatisation, free trade, and
deregulation with minimum government intervention. Minimum government
expenditure is also recommended.

·      
GLOBALISATION (Steger,
2013, p. 13): It refers to the reduction in tariff walls and quantitative
restrictions on trade in goods and services, removal of restrictions on inter
country flow of investment, dismantling exchange controls and adherence to the
rules governing intellectual property rights. The basic idea of globalisation
is increasing degree of openness with regard to international trade,
international investment and international finance. The process of
globalisation has following factors-

Ø  ECONOMIC
FACTORS: The collapse of Bretton wood system of fixed exchange rates and
subsequent reforms in international monetary systems.

Ø  POLITICAL
FACTORS: Relatively greater success of capitalistic economic system vis-a-vis
the communist economic systems.

Ø  TECHNOLOGICAL
FACTORS: The Information Communication Technology Revolution converted the
whole world into the global village as the distance between the residents of
the different countries and products of different countries have been reduced
to the minimum possible.

·      
POVERTY (Steger, 2013, p.
42): There cannot be a common definition of poverty which can be broadly
accepted in case of all the countries. However, it can be stated that poverty
is a situation where a section of the society does not have access to even
basic necessities of life i.e. food, clothing and shelter. As being the
greatest threat to prosperity this is the greatest challenge faced by the world
community. The concept of poverty is defined in two terms, either in absolute
or in relative terms. In absolute sense, poverty is not related to the
distribution of income and consumption expenditure, which is usually the case
when the relative poverty is measured. While measuring absolute poverty,
monetary value of minimum consumption basket of goods and services required for
healthy living along with the access to essential non-food items is considered
to define Poverty Line. For international estimates of poverty, one dollar
consumption expenditure per capita on purchasing power parity basis is accepted
as the measure of absolute poverty. However relative poverty considers the
aspect of distribution and the major emphasis is on the extent of inequality in
the distribution of income; Gini coefficient is calculated for this purpose.

THESIS ARGUMENT
(Steger, 2013, pp. 57-58)

International Division of Labour and Specialisation:
Globalisation supports the classical norm of free trade which results in
international division of labour and specialisation. Removal of barriers to
trade, which is the idea governing globalisation, leads to specialisation of
different countries in production of those commodities for which their relative
cost is lower. It further increases the rate of production, reduction in cost
of production, economies of scale, greater size of the market, competition etc.
When each country specialises in the production and export of those goods for which
it is most suited to produce and import those goods which it can purchase
cheaper from the others, it derives gain from trade in the form of an increase
in real income and improvement in the consumption standard of its people which
results in greater availability of goods at a lower cost for the residents of
different countries of the world and hence, the standard of living of people
improves and absolute poverty has a tendency to decline.

OPTIMUM
USE OF WORLD RESOURCES AND EXPORT LED GROWTH

Globalization
leads to optimum allocation and utilization of all the productive resources of
the world as IMF has provided the world with more of the finance leading to
growth. The industrial growth via export sector ensures more of employment
opportunities and consequent increase in incomes and living standard. The
export led growth provides sufficient foreign exchange earnings which can be
used for the development of various other sectors of the economy. The
development exports like essential raw materials, machinery, equipment and
latest know how can also be financed through these earnings. Thus both the
underdeveloped countries like India and China and developed countries like USA,
UK get the gains of trade and transform these gains in terms of higher GDP, per
capita income and standard of living which further lead to reduction in poverty
levels.   

INCREASE
IN DEMAND FOR LABOUR AND IMPROVEMENT IN LABOUR STANDARDS

Globalization has led to increase in demand for
labour in the labour abundant countries through outsourcing services. This has
resulted in higher income per capita in these countries and hence helped to
reduce the incidence of poverty. Greater integration of countries through
globalisation has also resulted in better working conditions and labour
standards in the organised sectors especially in African Countries like
Somalia, Nigeria. Consequently, there is increase in wage rate and better
compliance with labour laws as per the international standards. 

GREATER
LABOUR MOBILITY

Globalization
has also facilitated greater labour mobility across the countries. This has
balanced the demand for and supply of labour in different countries.
Particularly the migration of work force from Asian and African countries to
the developed countries has increased income level of the dependents of
migrated labour in their countries of origin which helped to reduce the
prevalence of absolute poverty in these countries.  

CONCLUSION

The evidence strongly suggests that globalization has reduced
poverty in large number of countries including India, China, Mexico, Poland,
Malaysia etc. Therefore, it can be safely concluded that globalization
alleviates poverty level the world over. In spite of the fact there is
polarisation of views among the economists and politicians regarding the effect
of globalisation on poverty. The above arguments safely conclude that by
globalisation increased demand and movement of human resources can decrease
unemployment, inequalities which can go a long way in alleviating poverty.
However, this demands conscious and constant efforts on the part of the policy
makers.

 

 

REFERENCE

Steger,
M.B. (2013). Globalization: A Very Short
Introduction. (3RD Ed). Oxford: Oxford University Press. (Chapter
3: The economic dimension of globalization.)

Angelini,
P.U. (ed.) (2015). Global Issues:
Perspectives and Controversies. Toronto. Nelson Education Ltd.  (Chapter 2)