Change to meet your Needs

Monday, November 19, 2007

Globalization differentiates people rich or poor...

Changes brought by Globalization…

It was proved that nations with better mass educated and trained workforce benefited more from globalization. It also led to a rise in inequality between the urban and rural populations and between the haves and have-nots. The need was to ensure that the benefits of globalization also helped in improving social parameters and states should be more accountable to their people. If the economic process of globalization continued to alienate people and increase social disparity, problems across the globe would grow further.

Rapid Globalization might create two classes Have’s & Have Not’s, few of my learned critic’s said. Globalization and the attendant concerns about poverty and inequality have become a focus of discussion in this post in a way that few other topics, except for international terrorism or global warming, have. In my last post about whether India & China is in the race to become Super Power few of my beloved readers had expressed concerns. Most people I know have a strong opinion on globalization, and ultimately all of them expressed an interest in the well-being of the world's poor.

The financial press and influential international officials confidently assert that global free markets expand the horizons for the poor, whereas activist-protesters hold the opposite belief with equal intensity. Yet the strength of people's conviction is often in inverse proportion to the amount of robust factual evidence they have.

The case for free trade rests on the age-old principle of comparative advantage, the idea that countries are better-off when they export the things they are best at producing, and import the rest. Most mainstream economists accept the principle, but even they have serious differences of opinion on the balance of potential benefits and actual costs from trade and on the importance of social protection for the poor. Free traders believe that the rising tide of international specialization and investment lifts all boats. Others point out that many poor people lack the capacity to adjust, retool and relocate with changing market conditions. These scholars argue that the benefits of specialization materialize in the long run, over which people and resources are assumed to be fully mobile, whereas the adjustments can cause pain in the short run.

The debate among economists is a paragon of civility compared with the one taking place in the streets. Anti-globalizers' central claim is that globalization is making the rich richer and the poor poorer; pro-globalizers assert that it actually helps the poor. But if one looks at the factual evidence, the matter is rather more complicated. On the basis of household survey data collected by different agencies, the World Bank estimated the fraction of the

Population in developing countries that falls below the $1-a-day poverty line (at 1993 prices)--an admittedly crude but internationally comparable level. By this measure, extreme poverty is declining in the aggregate. Though the recent data is suggesting Indian per capita income had grown to the level of $1100/month.

The trend is particularly pronounced in East, South and Southeast Asia. Poverty has declined sharply in China, India and Indonesia--countries that have long been characterized by massive rural poverty and that together account for about half the total population of developing countries. Between 1981 and 2001 the percentage of rural people living on less than $1 a day decreased from 79 to 27 percent in China, 63 to 42 percent in India, and 55 to 11 percent in Indonesia.

Globalization that triggered the flow of investments and growth in the developing nations brought millions out of poverty, particularly in India and China. After the Indian economy opened up, the level of poverty in the country declined, and had the reforms been pursued further and faster, the results would have been far better. The untapped potential of the economy remained and there are immense scopes for improvements in the bureaucracy and labor reforms in order to sustain the economic reforms.

If globalization increased competition, it also promoted protectionism and increased the divide between the young and the old. Globalization was not only about choice but also about more choices than one could handle. However, the more radical lot thought that it was creating a lack of faith among human beings.

Referring to the growing opposition by the West to migration, Britain and the U.S. were benefiting from Indian migrants and their children in the past, 30 per cent of the doctors and paramedics in Britain belonged to the Indian Diaspora, while Indians accounted for one-third of those working in the U.S. space program. Now a reverse flow is created and many NRI is returning back home or bringing their businesses in India or China, might be one of the major reason is “Globalization”, because everything and anything we get in US or abroad are now available in India within reach, except the quality of life and broad disparity in between rich and poor. These people might be returning with the hope that, very soon Globalization might show up the path of rapid Infrastructure development in India in every sphere, which might improve the better quality of the life within reach too.

25 comments:

Soledad Quiroz said...

Dear Dibyendu,
Globalizations does not CREATE the difference, it has been there all this time...and actually, globalization can help alleviate this problem by granting access of resources to poor people.

Soledad

Ray Miller said...

I think globalization can be a path to spreading resources across many classes. There are of course obstacles.
Governmental integrity issues and military interference are two of the greatest.

Tom Napier said...

Hi Dibyendu,

If nothing else, globalization takes from have countries and regions and gives to poorer regions. That is why there are so many groups (and individuals) against the global village concept. The have countries lose their manufacturing base and the poorer countries get the western influences that they do not like (similar to the Luddites in the early 19th century). Change is a strange thing to correctly perceive sometimes.

The real gap will soon be the inequality of knowledge, where the “Know’s” and the “Know-Not’s” will battle it out, very much like the Bible states that, “The meek shall inherit the earth.” I take the word “shall” to mean that we have time to change the content of this statement and we can learn and grow together.

Cheers...

Dr. Jujhar Singh said...

Dibyendu,
Based on my personal experience, I realize that globalization resulted in socio-economic reforms in India where poverty and inequality are major concerns. With fast economic growth, job opportunies are on increasing trend even for middle class population and people below the poverty line from villages are migrating to townships and cities to earn their bread and butter. The quality of life is improving due to availability of recent medicaments and other heathcare products.
On international scenario, the healthcare products are becoming cheaper due to global competetion.Migration of the people from one country to other in search of jobs and business opportunies has increased significantly. I expect that globalization will result in justified value of labour and greater career opportunities to talented and enterprising people whether they are from poor or effluent classes.
The important concerns are Government policies of the developed countries which should be aimed to healthy global population free from sense of insecurity due to poverty and feeling of inequality due to social injustice.

Regards,

Jujhar S.

Arnold Britto said...

Dibyendu,

In my view, People differentiate. Globalization does not!

Globalization facilitates countries, companies, people, etc to adapt to differences, cultures, views, etc.

"Reach out" is only possible through globalization and broadening horizons. Poverty and Inequality can only be eradicated through optimal utilization of resources globally. Globalization can only help in becoming a key catalyst in eradicating such anomalies.

Cheers,
Arnold

Stephen McPherson said...

Dibyendu,

Perhaps looking at this issue from the other end of the spectrum might provide an interesting perspective. The opposite of globalization is to have arbitrary trade barriers; to be insular. Insularity breeds narrowness of thinking, bigotry and contributes greatly to the disparity between the rich and the poor. Insularity got us to where we are today.

Look at the United States today. They literally want to put a wall around the country and cocoon themselves. The consequences of this insularity are being felt on the US Dollar. Look at just as insular an enemy: radical Islam. They want it all their way or no way. Their hatred for the US is not founded in rational thought.

While globalization may have some short term pain - and that is questionable - clearly it has and will continue to produce positive results for all. Insularity does no one any good. It could be argued that the gap between rich and poor today is the result of two millenia or more of insularity.

We only need look at Holland as an example of what open trading is capable of. Holland is arguably one of the most open societies in the world. That openess has come from centuries of being a trading nation.

Steve

Rajesh Natarajan said...

Hi Dibs
The earth was made as one large resource base. We divided it into territories.
Globalization in trade somehow is managing to put together resources.
Again, currency, trade, civilization, living, earning, rich and poor are concepts we invented. Therefore the differentiation has been around for as long as civillization.

Its best to globalize now and prevent further damage to the only planet we have.

Eileen Bonfiglio said...

Hi Dibyendu,

I respectfully disagree, the failure of each Republic has created this classification. Globalization is exposing it.

Eileen

Gaurav Chatterjee said...

Hi DADA,
Asha kori kaali pujo bhalo katlo.OK now I come to the point.

Based on my personal experience, The earth was made as one large resource base. We divided it into territories.
Globalization in trade somehow is managing to put together resources.

Globalization facilitates countries, companies, people, etc to adapt to differences, cultures, views, etc. Again, currency, trade, civilization, living, earning, rich and poor are concepts we invented. Therefore the differentiation has been around for as long as civillization.

On international scenario, the healthcare products are becoming cheaper due to global competetion.Migration of the people from one country to other in search of jobs and business opportunies has increased significantly. I expect that globalization will result in justified value of labour and greater career opportunities to talented and enterprising people whether they are from poor or effluent classes.

While globalization may have some short term pain - and that is questionable - clearly it has and will continue to produce positive results for all. Insularity does no one any good. It could be argued that the gap between rich and poor today is the result of two millenia or more of insularity.

But in my view, Its best to globalize now and prevent further damage to the only planet we have.

Globalization can be found in five different areas: economic, cultural, political, religious, and social systems.

It should not be narrowly confused with economic globalization, which is only one aspect. While some scholars and observers of globalization stress convergence of patterns of production and consumption and a resulting homogenization of culture, power, stress,and hunger, others stress that globalization has the potential to take many diverse forms. In economics, globalization is the convergence of prices, products, wages, rates of interest and profits. Globalization of the economy depends on the role of human migration, international trade, movement of capital, and integration of financial markets. The International Monetary Fund notes the growing economic interdependence of countries worldwide through increasing volume and variety of cross-border transactions, free international capital flows, and more rapid and widespread diffusion of technology. Theodore Levitt is usually credited with first using the term globalization in an economic context.
Curiously, the theme seen above (globalization would be economic imperialism), as well as the opposite one (developed countries would be now at an economic disadvantage), form the pretence of many recent critiques of globalization. Actually, the present phase of globalization, which also is something much broader than a pure economic phenomenon, has many differences with the former ones, and historical comparisons are not really relevant.
Globalization in the era since World War II was first the result of planning by economists, business interests, and politicians who recognized the costs associated with protectionism and declining international economic integration. Their work led to the Bretton Woods conference and the founding of several international institutions intended to oversee the renewed processes of globalization, promoting growth and managing adverse consequences. These were the International Bank for Reconstruction and Development (the World Bank) and the International Monetary Fund. It has been facilitated by advances in technology which have reduced the costs of trade, and trade negotiation rounds, originally under the auspices of GATT, which led to a series of agreements to remove restrictions on free trade. The Uruguay round (1984 to 1995) led to a treaty to create the World Trade Organization (WTO), to mediate trade disputes and set up a uniform platform of trading. Other bi- and trilateral trade agreements, including sections of Europe's Maastricht Treaty and the North American Free Trade Agreement (NAFTA) have also been signed in pursuit of the goal of reducing tariffs and barriers to trade grand.
The world increasingly is confronted with problems that cannot be solved by individual nation-states acting alone. Examples include over-fishing of the oceans, water pollution, global warming, global trade, and international terrorist networks . Solutions to these problems necessitate new forms of cooperation and the creation of new global institutions. Since the end of WWII, following the advent of the UN and the Bretton Woods institutions, there has been an explosion in the reach and power of multinational corporations and the rapid growth of global civil society.

Alyona Yakovleva said...

Dear Dibyendu, don't you think these two classes "Have" and "Have not" already exist...

Have a great week.

Michael Hick said...

That we will ever have an utterly uniform society in which all have precisely equal shares of anything you care to name seems, to me, to be so unlikely that we can ignore the possibility. (Apart from anything else it would be incredibly boring and de-motivating!)
If that is so, what we are discussing is "does it seem possible that there is, and we can ever achieve, relative levels of difference that will mean we do not see a need to categorise as "haves" and "have nots"?"
However, I don't agree with your starting point that globalization only differentiates people as rich and poor. As the globe "shrinks" and we come into contact with others more we also become more aware of cultural difference and all that this implies. Indeed, I think one could argue that this generates at least as much concern and friction as relative wealth.

David Dingley said...

That we will ever have an utterly uniform society in which all have precisely equal shares of anything you care to name seems, to me, to be so unlikely that we can ignore the possibility. (Apart from anything else it would be incredibly boring and de-motivating!)
If that is so, what we are discussing is "does it seem possible that there is, and we can ever achieve, relative levels of difference that will mean we do not see a need to categorise as "haves" and "have nots"?"
However, I don't agree with your starting point that globalization only differentiates people as rich and poor. As the globe "shrinks" and we come into contact with others more we also become more aware of cultural difference and all that this implies. Indeed, I think one could argue that this generates at least as much concern and friction as relative wealth.

Janet Bronte said...

Anyone, individual or company, NOT accepting the imminent new world market will be destined to become a "Have Not" ...

Aren't we already seeing that in the United States? With the increase of outsourcing to other countries, more and more Americans are becoming the "Have Not's". Americans need to wake up and accept this change.

Jim Turner said...

I'm not sure how globalization can create these two different groups. If anything it can help create more 'haves' along the way. More people are presented with opportunities now than ever before. There are service providers around the globe that I now have access to... but 15 years ago it wouldn't be feasible for someone to design my website in India. In fact, I would never have known they existed back then.

Globilization is allowing many citizens of the earth the opportunity to improve their lot in life while never having to leave the comforts of their own homeland.

Paul Staiano said...

These differences already exist, rapid globalization will speed up and exacerbate the issue. Also, the flip side is the opportunity globalization affords. I do not think globalization alone is the "bad guy", there are a great deal of other issues ahead of it.

Paul

Ravi Janardhan said...

I think that's good. The 'have not's recognizing the 'haves', which results in more 'Have's'. Earlier especially in India, the Have's were seen as anything but good. Now the situation is changing for the better.

I can only see good outlook about future. well somebody still crying aloud, that's normal. Politicians who have no power have to talk something foul, esp., communists, they live on that habit. They need some people to believe them, and they are still success to some extent.

Liviu Siteanu said...

The Globalization effort will grow, as more and more companies realize the benefits. The 2 classes you speak of already existed- but the differences are amplified by the [Rapid] part of your statement. Rapid Globalization can in some cases actually be detrimental at the inception, but overall I think that despite the arguments brought on by the critics, the benefits outweigh the initial discomfort.

Gopi Bulusu said...

I think if you turn the statement around a bit, globalization differentiates people as consumers and suppliers. Unless some one just consumes or just supplies - which is never going to be the case, the question of rich or poor has nothing to do with globalization. I would like to say that globalization is nothing new. I think it is a pheonmenon that repeats every couple of centuries with increasing amplitude. Of course, globalization is not just limited to capital, products or labour but extends to spread of knowledge -- like the discussion on this topic :-)

Mohammad Al Rasheed said...

Hi Dibyendu

Globalization is a short term for "the fastest way to deplete and drain the world's resources irrespective of the collateral damage it causes and turning that into cash in the hands of the few "rich" who think that by having all the world's cash they will be in a better position than those who don't and only when that happens they realize that they missed a very tiny bit in their vision: no more resources to buy or spend on! Then they will live happily ever after with the poor in the same caves faster than it was anticipated."

regards

Mars

Piotr Jelinski said...

Dibyendu,

Globalization does not create classes of people. It only gives people more possibilities and some people are better at using them then others.
Globalization is actually lowering any differences between countries e.g. if you want somebody to write you a computer program or prepare a set of financial statements you can hire a person disregarding their physical location in the world as the product can be delivered over the internet. This leads to equalization of income over the world, in insular world you would need to hire somebody local and then this person may have charged 20 times more then a person in another country - in a globalised world the price of a service is the same all over the world. This seems just as I can't think of any reason why an indian programmer should, for the same service, be paid 20 times less then an american.

Regards,

Piotr

Blake Ratcliff said...

"Haves" and "Have nots" is a tough issue. First, most of us start at 0. Does that make us a "Have not"? The truth is in a world that is gaining wealth the difference between "Have not" and a "Have" must be greater.

The key is to create a playing field where everyone has the opportunity to gain more. Also, the playing field needs to allow those who lose it all to build it back up.

Robert De Loght said...

do not think this is true. Globalisation tends to delocalise economic activity to lower cost countries. It allows a number of people over there to gain more money - become richer. On the other hand, this gives raise to the creation of new economic activities. The group of people earning money by the globalisation therefore increases.
But indeed, the poor do not necessarily get rich immediately. It takes time, lots of time, maybe a few generations.
In the older economies, we see a number of activities disappearing. That again creates unemployment that has to be filled in by new companies.
The migration of economic activity is clearly creating a shock wave.

Anil Venkatesan said...

Hi Dibyendu, Globalization is not the reason for differentiating people as rich and poor, it is the we the people who make such dividers, Globalization is a good platform for any country to grow into success provided it is utilized properly.

I strongly believe India is not completely taking advantage of Globalization, The previous government's mantra India Shinning which i really don't agree
with the same no doubt India did some progress in some sectors, only the urban was getting benefited , you will see big brands/corporates coming to India, opening their shops, units, manufacturing units etc, but what about the rural, there was no change in their lifestyle, no benefits to them.

The Government should come up with ideas/plans to eliminate the poverty, for this it can take ideas/support from the developed countries who are willing to support.

India has to really trained the unskilled labor force, to make them more competive, re-develop the ITIs

Georgiana Saftoiu said...

It is truth . Always will be poor and rich people . It is not justice in our world .

Anonymous said...

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