Resolved: On balance, economic globalization benefits worldwide poverty reduction 3
A2: Globalization Increases Inequality
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- East Asian growth resulted in inequality reduction AND poverty reduction
- Relative inequality is a distinct issue from poverty
- Agreement that globalization increases inequality but reduces poverty
- A2: Globalization Reduces Wages
- Most studies support the claim that globalization boosts development and reduces poverty
A2: Globalization Increases InequalityAn increasing inequality does not mean an increase in povertyNina Pavcnik, Associate Professor of Economics, Dartmouth College, 2009, How Has Globalization Benefitted the Poor?, Yale Insights, http://insights.som.yale.edu/insights/how-has-globalization-benefited-poor DOA: 1-1-15 It’s very country-specific, and it depends on where countries started off and on the nature of trade reform. Oftentimes, when we try to look at what globalization has done for the poor, we focus on workers in developing countries: what types of factories they work in, and what wages they earn. We often find that wages are lower than similar workers would be making in a country like the United States and working conditions are worse. But another way of looking at the consequences of globalization for poor countries is to actually look at how workers in these countries were doing prior to globalization and compare that to how they are doing now. Recent research has focused on how trade can affect inequality and poverty by affecting relative prices of goods and wages of individuals. And what that literature has found in India and in many Latin American countries is that inequality between the more educated and less educated has increased. The extent of the increase varies somewhat from country to country, but the evidence suggests that the more educated are benefiting more from the trade reforms than the less educated. But greater inequality doesn’t necessarily mean greater poverty. The effect that trade has on less educated laborers in these developing countries depends in part on where they are employed and how mobile they are across sectors. Workers, both educated and less educated, in export-oriented sectors tend to benefit. However, workers who were employed in sectors that were initially shielded by higher tariffs experienced a drop in relative wages as tariffs were eliminated. Many countries, such as Mexico and Colombia, had shielded industries that employed a high share of less educated workers. When the tariffs were eliminated, these unskilled workers were disproportionately affected by declines in industry wages. These are short-term costs of globalization, and over time you would hope that these workers would be able to move toward the exporting sectors and share in the benefits of globalization. But that is not occurring as fast as we would like because worker mobility in many of these countries is quite constrained.
The East Asia experience was crucial to the policy debates of the 1970s and 1980s and to the turn in policies that one began to see in the rest of the developing word from the 1980s and 1990s onward. The 1960s and 1970s saw what has been dubbed the “East Asia miracle” of growth with equity. Not only did this group of countries have historically high growth rates, and higher growth rates than their contemporaries, they also managed growth with falling levels of inequality. The combination of high growth and falling inequality meant a sterling record in poverty reduction as well. Relative inequality is a distinct issue from povertyAnish Bharadwaj, 2014, International Max Planck Research School for Competition and Innovation, Munich Centre for Innovation and Entrepreneurship Research, Advances in Economics and Business 2(1): 42, p. 42-57 In this paper, I shall limit myself to interpreting globalization simply as openness to foreign trade and capital flows such as Foreign Direct Investment (FDI). I shall ignore here the important issues arising from the devastation caused to fragile economies by billions of dollars of volatile short-term capital stampeding around the globe in herd-like movements, or the substantial poverty-reducing potential of international (unskilled) labor flows from poor to rich countries (even if allowed in temporary and regulated doses). By poverty, I shall refer to absolute poverty in low-income countries. A large part of the discussion around globalization is around its effect on relative inequality, which will largely be skipped in this paper.
Okungbowa, Florence. O. Ewere, Eburajolo, Ose Courage, Benson Idahosa University Department of Economics, Banking and Finance Benin-City, Nigeria, September 2014, International Journal of Humanities and Social Science, Globalization and Poverty Rate in Nigeria; An Empirical Analysis, http://www.ijhssnet.com/journals/Vol_4_No_11_September_2014/13.pdf DOA: 1-2-15 p. 88Despite the increasing interests in the influence of globalization on economic growth and inequality, there are not many empirical studies examining the links between them. The limited empirical evidence is a result of a lack of theoretical development, limited data and unsatisfactory measures of globalization. In recent years, several researchers have been developing methods of measurement of globalization to test the relationships mentioned. The limited evidence also suggests contradictory views on the issue. For instance, some argue that globalization provides benefits by enhancing economic development and the reducing inequality of people with high economic opportunity, while others are against globalization due to its restricted beneficiaries. In general there is an agreement that globalization increases inequality but it reduces poverty while its regional concentration increases. A2: Globalization Reduces WagesBy reducing prices, globalization creates real value to wage gainsDaniel Griswold, CATO, 2000, The Blessings and Challenges of Globalization, DOA: 1-2-15, http://www.cato.org/publications/commentary/blessings-challenges-globalization The greatest beneficiaries of globalization are the long-suffering consumers in those nations that had been “protected” from global competition. Globalization expands the range of choice, improves product quality, and exerts downward pressure on prices. It delivers an immediate gain to workers by raising the real value of their wages. It transfers wealth from formerly protected producers to newly liberated consumers, with the gains to consumers exceeding the loss to producers because the deadweight losses to the economy are recaptured through efficiency gains. The greatest beneficiaries of globalization are the long-suffering consumers in those nations that had been “protected” from global competition. Globalization expands the range of choice, improves product quality, and exerts downward pressure on prices. It delivers an immediate gain to workers by raising the real value of their wages. It transfers wealth from formerly protected producers to newly liberated consumers, with the gains to consumers exceeding the loss to producers because the deadweight losses to the economy are recaptured through efficiency gains Most studies support the claim that globalization boosts development and reduces povertyOkungbowa, Florence. O. Ewere, Eburajolo, Ose Courage, Benson Idahosa University Department of Economics, Banking and Finance Benin-City, Nigeria, September 2014, International Journal of Humanities and Social Science, Globalization and Poverty Rate in Nigeria; An Empirical Analysis, http://www.ijhssnet.com/journals/Vol_4_No_11_September_2014/13.pdf DOA: 1-2-15
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