A rchive Date
[ 16-07-2002 ]
Category
[ International Relations ]
sub-Categoy
[ Globalisation ]
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[http://www.canoe.ca/Columnists/leishman.html
Globalization seen reducing world poverty
By RORY LEISHMAN -- London Free Press
July 16, 2002
What's wrong with globalized free trade?
Plenty, says the New Democratic Party. In an official statement on globalization, the party charges that, "Two decades of rapid export growth have left more than one billion people struggling to survive on less than $1 a day."
That is undoubtedly true. In a policy paper written for the European Commission entitled, Making Sense of Globalization, the non-partisan, London-based Centre for Economic Policy Research (CEPR) estimates, "About 1.3 billion people live in absolute poverty, defined as an income of less than $1 a day."
That's dreadful. But are New Democrats right to pin the blame for this tragedy on the impact of two decades of globalization?
Not at all. The CEPR study points out that over the last 50 years of globalization, the proportion of very poor people in the world has declined to about 25 per cent of the population, down from about 50 per cent.
New Democrats charge that, "Between 1980 and 1996, during the widest, most rapid trade liberalization, 28 countries in sub-Saharan Africa grew poorer."
That statement is also correct, but it, too, is misleading. Few multinational corporations have any major investments in sub-Saharan Africa, and there is little trade between this region and the rest of the world. For New Democrats, or anyone else, to blame globalization for the increasing rates of dire poverty among sub-Saharan Africans is absurd.
To the contrary, there is better reason to believe globalization fosters, rather than impedes, the elimination of poverty. According to the United Nations Human Development Index, countries such as Chile, Singapore, South Korea and Hong Kong, now part of China, that embraced freer trade well before the 1980s, now rank among the most prosperous and highly developed places in the world.
Other countries such as Brazil, China, Ghana, India, Malaysia and Mexico only got started on globalization within the last two decades, but are also doing well.
The CEPR study indicates that during the 1990s, these countries experienced average annual rates of economic growth of 5.3 per cent, while countries in sub-Saharan Africa and elsewhere outside the orbit of globalization saw their economies decline at an average annual rate of 0.8 per cent.
A major impediment to poverty-alleviating economic growth in sub-Saharan Africa is lawless, corrupt and incompetent governments. Both multi-national corporations and domestic entrepreneurs will remain shy of investing in the region so long as there is a serious risk the resulting assets will be blown up in civil ward, expropriated by a socialist government or simply looted by some crazed dictator.
In support of the wrong-headed notion that globalization serves to increase poverty, socialists are apt to observe that in many less developed countries, wealthy multi-national corporations pay their workers no more than $5 a day.
And that, certainly, is a paltry sum by industrial country standards. But it's an attractive wage for many workers in impoverished countries that have an average annual income of less than $2 a day.
Even so, some critics of globalization insist multi-nationals should be forced to pay the same wages to all their workers in rich and poor countries alike.
What, though, would be the results of imposing such a "fair wage" policy on workers in developing countries?
The CEPR study notes it, "would make them uncompetitive and force them back to the abject poverty they have fought so hard to escape."
While it's easy to cite specific examples of abuse by multi-national corporations, there can be no doubt about the overall benefits of globalization.
The CEPR study concludes that, "On average, economic growth is good for the poor and trade is good for growth. Trade also tends to be associated with lower inflation and less corruption, both beneficial for growth and especially helpful to the poor.
"The weight of direct and indirect evidence suggests a significant degree of openness to trade is at least a necessary condition for sustained economic growth."
Write Rory at The London Free Press, P.O. Box 2280, London, Ont. N6A 4G1 or fax 519-667-4528 or E-mail.
Letters to the editor should be sent to letters@lfpress.com.
 World Fact Book (CIA)]
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