Resolved: On balance, economic globalization benefits worldwide poverty reduction 3
A2: Globalization Reduces Poverty
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- Financial integration makes the poor vulnerable
- Poor do not have the skills to take advantage of free trade
- Globalization doesn’t benefit Africa because outside firms build everything
- Globalization makes poor countries vulnerable to financial crises
- Trade openness does not benefit developing countries
- Even if total income increases, there is a net increase in poverty
A2: Globalization Reduces PovertyPro states are false – globalization has not reduced poverty, it has increased itJohn Hillary, 2013, Journalist, The Poverty of Capitalism, page number at end of card To many people, particularly those living outside the core economies of the capitalist world system, this was not news. The experience of colonialism had taught the peoples of the global South that the accumulation of capital in the metropolitan centres of empire required the violent suppression and immiseration of the colonised, to the extent that it negated the possibility of their historical development. 2 Nor was this experience confined to some dim and distant past, as the ‘new imperialism’ exercised through international financial institutions such as the World Bank and International Monetary Fund (IMF) had continued to condemn the same peoples to exploitation throughout the decades following their liberation from colonial rule. 3 The result of this systematic dispossession has been mass poverty on a global scale. In August 2008, one month before the collapse of investment bank Lehman Brothers sent financial markets into freefall, the World Bank acknowledged that it had previously overstated the numbers lifted out of poverty in the previous three decades of neoliberal globalisation, and that a staggering 1.4 billion people were still living below the extreme poverty line (the equivalent of what it means to be poor in the world's very poorest countries, such as Mali, Ethiopia or Chad). A total of 2.6 billion people – over half the entire population of the global South – were calculated to be living below the $ 2 a day poverty line, following the extensive structural adjustment programmes undertaken at the behest of the World Bank and IMF in order to ‘integrate’ their national economies into the capitalist world system. 4 Before the global economic meltdown, in other words, the majority world was already in crisis. Hilary, John (2013-10-09). The Poverty of Capitalism: Economic Meltdown and the Struggle for What Comes Next (Kindle Locations 203-211). Pluto Press. Kindle Edition. Financial integration makes the poor vulnerableAnish 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 While trade integration does not appear to increase vulnerability, and foreign direct investment flows have been remarkably stable, integration with financial markets can increase the propensity to develop crises. The increased susceptibility to and costs of crises are due to inadequacies in the domestic policy and institutional framework and larger and more volatile private capital flows. Although the increased prevalence of financial crises has not raised GDP volatility (with the exception of East Asia), it can have a large detrimental impact on the poor both through output declines and the socialization of large resolution costs (World Bank, 2000). Beyond these aggregate effects, globalization can increase insecurity of particular groups, especially workers, in a more footloose and fast changing world. Poor do not have the skills to take advantage of free tradeAnish 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 The poor in countries with an abundance of unskilled labor do not always gain from trade reform (Harrison, 2006). Many economists have used the Heckscher-Ohlin (HO) framework in international trade to argue that trade liberalization should raise the incomes of the unskilled in labor-abundant countries. Most researchers who use this framework to argue that globalization is good for the world’s poor make a number of heroic assumptions. These assumptions -- such as the necessity that all countries produce all goods are often challenged. In addition, the country studies show that labor is not nearly as mobile as the HO trade model assumes; for comparative advantage to increase the incomes of the unskilled, they need to be able to move out of contracting sectors and into expanding ones. Another reason why the poor may not gain from trade reforms is that developing countries have historically protected sectors that use unskilled labor, such as textiles and apparel. This pattern of protection, while at odds with simple interpretations of HO models, makes sense if standard assumptions (such as factor price equalization) are relaxed. Trade reforms may result in less protection for unskilled workers, who are most likely to be poor. Finally, penetrating global markets even in sectors that traditionally use unskilled labor requires more skills than the poor in developing countries typically possess. Globalization doesn’t benefit Africa because outside firms build everythingDerrick Owusu-Kodu, April 7, 2014, Poverty and the Impacts of Globalization on the African Economy, http://www.africandynamo.com/2014/04/poverty-and-impacts-of-globalization-on.html#mM4cowGoocBOQhUe.99 DOA: 1-2-15
Anish 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
Anish 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
Anish 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
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