Poor countries essay

Globalization is a much-maligned word in political, intellectual and academic circles. The markets are flooded with Anti globalist works. Anti globalists have such literary and intellectual stars such as Joseph Stiglitz (Nobel prize winner and best-selling author-‘Globalization and its discontents’) vouching for their arguments. In this scenario comes “ In defense of Globalization’ by Jagdish Bhagwati, a faculty member at Columbia University with excellent academic and professional credentials and a scholar of world repute on Trade theory and economics.

“ In Defense of Globalization’ takes on the Anti globalists by the collar with relentless economic logic and puts forth a cogent argument in favor of Globalization. This brings a balance in the two viewpoints between the two opposing stances. The book addresses a slew of accusations against globalizations: that it increases poverty, encourages child labor and gender discrimination, threatens democracy and fosters cultural imperialism, lowers wages, brings down labor standards, damages the environment and helps in the new wave of global imperialism by the Multinational corporations.

Instead he puts forward the idea that globalization has the opposite effect. It rests on the argument that globalisation and free trade increases economic growth and economic growth reduces poverty. Thus globalization has helped to decrease poverty and that too with a socially benign and human face. The essence of this book is in various chapters devoted to proving this basic argument. In the first chapter he examines the philosophy and motivation behind the Anti Globalization movement.

It leads to the second chapter where he points out that globalization unlike the war cry of the opposition is not only economically but also socially benign. In this context, globalization is good but not adequate enough to deal with all the economic problems of the world. Next he addresses the role of N. G. O’s. Bhagwati’s book deals with an analysis of the N. G. O movement. He acknowledges the role of the movement in determining the salience, shape and content to the globalization debate the world over. The N. G.

O movement has acquired a global character with greater influence. He makes a complaint against American and European N. G. O’ that they lack transparency and that they speak for the poor without consulting them. Western N. G. O’s and developing country counterparts often have diametrically opposite views on issues but the former being wealthier and more media savvy tend to garner all the attention and weight age. He is critical of N. G. O’s that are engaged in campaigning against free trade and also rebuke their reservations against globalization as rubbish.

The next question addressed is whether poverty has been reduced or increased in the globalised era. To show that. Globalization eases poverty, Bhagwaty recounts the case of two continents-In 1970; average African incomes were 30 % higher than average Asian incomes. Thirty years later, African incomes were stagnant and at half the rate of Asian incomes. Bhagwati attributes this turnaround mainly to the fact that Asia had opened its markets to free trade while Africa had not. In 1970, Africa was home to 10% of world’s poor and Asia about 75%.

But thirty years later, Africa had more than a third of the world’s poor while Asia had only 15%. The case of India and China are also remarkable. During three decades that it was a closed economy, India grew at a slow 4% and poverty rate hovered at 55%. But since the two decades it opened its economy, it grew at 5%, and poverty dropped to 26%. China’s experience from protection to free market era poverty rates was a reduction from 28% to 9%. These figures prove that there is a positive relationship between trade liberalization and poverty alleviation.

The question of child labor is controversial. Facing the charge that free trade encourages child labor, Bhagwati cites the case of Vietnamese rice farmers in the 1990’s. When restrictions on their ability to export were relaxed, they could sell at higher prices in the world markets. They got higher incomes and surprisingly used the additional income to send their children to school, mainly girl children. Demanding poor countries ban child labor can backfire. In 1993 fearing an American legislation, the Bangladeshi textile industry fired 50,000 children from factories.

Tragically, these children did not return to school but entered other worse professions like prostitution and other degrading occupations. Women, Bhagwati points out, enjoy the benefits of earning additional income for their families and do not mind putting longer hours etc as long as they are able to enjoy this new found financial independence. Regarding labor rights and wages, the Multinational corporations are not the dragons as they are made out to be. Bhagwati refers to a spate of recent studies to show that Multi nationals when they operate in developing countries do not depress living standards.

They pay a wage premium above the local wage rate, mostly up to 10% and sometimes more. Nor is there any evidence that these companies deliberately seek out countries, which do not have labor laws or legal safeguards for workers. Bhagwati also addresses the question of cultural imperialism. The Rule of America or the culture of Mc World is looked upon with suspicion by the anti globalists. But Bhagwati points to the case of Salman Rushdie, a writer who blends Bombay slang and perfect English in novels borrowing techniques of magical realism from South American authors.

This is the era of the cultural hot pot, mixing of cultures and the reality of the global village. Bhagwathi also points out that economic growth coupled with environmental regulation will not lead to pollution. A country’s environment quality tends to improve with sustained economic growth because economic activity shifts from pollution intensive primary production and manufacturing to services. At between $5000 to $6000 annual per capita income growth and environment gains go hand in hand. Most countries are still far from this level.

But many are beginning to see that environment quality will improve at a lower threshold. Examples of environmental regulation are-He recommends a retroactive tax on carbon dioxide emission over the past century the proceeds of which could help developing countries reduce their green house gas emissions. He also recommends that multinational companies must practice the same environmental standards in the developing countries sin their home countries. The U. S. in my opinion should not impose labor and environmental standards in trade with poor countries.

Bhagwati points out those U. S. multi nationals are not in the bad habit of seeking countries with low labor standards but seek high wage high standard countries. If they do invest in a poor country they pay a wage that is some percentages higher than the local wage. The result is not a ‘race to the bottom’ but a ‘race to the top Bhagwati is less keen on the freer movement of capital across national borders. He attributes the financial meltdowns of the 1990’s to a ‘Wall street Treasury House complex’ that had put pressure on developing countries to liberalize capital flows.

He squarely blames energetic lobbying by Wall Street firms to be the original cause of these financial crises in East Asia. Bhagwati is not completely blind to the faults of markets and multinationals. For instance he deplores the lobbying by big Pharmaceutical companies for patent protection in the WTO to the detriment of developing countries. He also thinks that U. S. treasury and I. M. F should not have pressurized Asian countries to open up their financial markets before they were ready for it. Yet, Bhagwati does not give up hope on capitalism.

He thinks that the world is on the right track and that capitalism is a system that will undermine privilege and open up opportunity for many. Based on his arguments, I am also of the opinion that the best way for countries to escape from poverty is to better integrate with the world economy. At last, Bhagwati gives a cautionary message. Globalisation has to be managed, especially the speed at which it is progressing and also what policies and regulations have to be put in place to minimize its adverse negative social and economic effects.