Download of globalization that the Pro needs to defend. This is significant

The Pro is required to prove that economic globalization has resulted in a net
reduction in poverty. While it appears more difficult to prove that the reduction has
been a net reduction, it is actually easier to prove. The simple reason is that (almost)
every study has reached the conclusion that while economic globalization may have
increased poverty in some ways and in some areas, there has been an overall net
reduction.
Globalization and Poverty reduction
The growth in globalization has been correlated with rapid poverty reductions.
Yale Global Online, July 5, 2011 “With Little Notice, Globalization Reduced
Poverty,”http://yaleglobal.yale.edu/content/little-notice-globalizationreduced-poverty DOA: 1-1-15
A major success in a poverty-reduction goal for the new millennium –
halving the proportion of people whose income is less than $1.25 per day –
largely went unnoticed. The World Bank estimates poverty levels, but the
most recent data is from 2005. By combining the recent country survey
data of household consumption with latest figures on private
consumption growth, Brookings Institution
researchers Laurence Chandy and Geoffrey Gertz generated poverty
estimates to the present day. They conclude that the world – even
stubborn Sub-Saharan Africa – is in the midst of rapid poverty
reduction; they credit economic growth and widespread development
brought by globalization. Poverty reduction was one part of a key UN
Millennium Goal, and global observers may sit up and take notice after two
other key parts are achieved: full and productive employment for all and
halving the proportion of people who suffer from hunger.
This holds especially true when long-term results are considered.
Andres Bergh, Therese Nelson, October 2014, Lund University, Sweden,
Research Institute of Industrial Economics (IFN), Stockholm, Sweden, Is
Globalization Reducing Absolute Poverty? World Development, pp. 42-61
To capture the long-run effects of globalization, we estimate the
relationship by considering the differences over a longer time period, by
running the following regression: equation(2)
ΔPovertyi=α+β1(ΔGlobi)+β2(Xi)+εiΔPovertyi=α+β1(ΔGlobi)+β2(Xi)+εi
Turn MathJax on
In equation (2), ΔPovertyi and ΔGlobi refer to the change in poverty and
globalization in country i over a longer time period. Following Ravallion
(2006), we maximize the length of this time period for each country, and
the dependent variable might consequently correspond to changes in
poverty over different periods for different countries. In our setting we focus
on changes that take place over 10 or 15 years, but exclude countries for
which we only have information on poverty in two adjacent time periods.
To minimize potential reverse causality, globalization is lagged by one time
period. The spell length for poverty and globalization is the same, and a
dummy variable is included to control for the spell length and to control for
time effects. For example, in our sample there is information on poverty
outcomes in Zambia for all four time periods of the panel. We therefore
calculate the change in poverty by taking the poverty level in 2005 minus
the poverty level in 1990. Likewise, we calculate the Zambian change in
globalization using a 15-year time spell. In the Zambian example, this
variable is thus derived by using data on globalization in 1985 and 1970.
As a robustness test, we run the same regression on a sample of 15-year
periods only, which means regressing the change in poverty during 1990–
2005 on the change in globalization during 1970–85 for all countries
included in the exercise. This first difference analysis bundles all timeinvariant country characteristics into an error component, and estimates
the relationship between globalization and poverty robustly to latent
heterogeneity due to time-invariant effects. Specifications, however,
include information on economic growth and initial poverty, referring to the
poverty level in the earliest year in each country’s poverty spell.17 Table
5presents the results. The long-run first difference analysis confirms
baseline panel findings. The results that trade restrictions and information
flows matter for poverty are confirmed, while the positive poverty effect of
cultural proximity appearing in some of the panel estimations disappears
when applying a long-run perspective. Similarly, despite substantially
reducing the country sample analyzed, results are also more or less the
same when using only 15-year spells (columns 11–13).
And even 2005 estimates put the reduction at half a billion
Gertz & Chandly continue:
Official estimates of global poverty are compiled by the World Bank and
stretch back 30 years. For most of that period, the trend has been one of
slow, gradual reduction. By 2005, the year of the most recent official
global poverty estimate, the number of people living under the
international poverty line of $1.25 a day stood at 1.37 billion – an
improvement of half a billion compared to the early 1980s, but a long
way from the dream of a world free of poverty.
And poverty is not just falling in China, but in other places in Asia and even SubSaharan Africa.
Gertz & Chandly continue:
. Unsurprisingly, the greatest reduction has occurred in Asia. But it’s
not just the dynamic economies of East Asia, such as China,
recording great feats in poverty reduction; South Asian giants
including India and Bangladesh, and Central Asian economies such
as Uzbekistan also make great strides. Even Sub-Saharan Africa is
sharing in this progress. The region finally broke through the
symbolic threshold of a 50 percent poverty rate in 2008 and its number
of poor people has begun falling for the first time on record. This
stunning progress is driven by rapid economic growth across the
developing world. During the 1980s and 1990s, per capita growth in
developing countries averaged just 1 to 2 percent a year, not nearly fast
enough to make a serious dent in poverty levels. Since around 2003,
however, growth in the developing world has taken off, averaging 5
percent per capita a year.
Three decades of data prove a robust linkage between economic globalization and
poverty reduction.
Andres Bergh, Therese Nelson, October 2014, Lund University, Sweden,
Research Institute of Industrial Economics (IFN), Stockholm, Sweden, Is
Globalization Reducing Absolute Poverty? World Development, pp. 42-61
Using data from 114 countries (1983–2007), we examine the
relationship between globalization and World Bank absolute poverty
estimates. We find a significant negative correlation between
globalization and poverty, robust to several econometric
specifications, including a fixed-effect panel—a “long run” first
difference—and a pooled OLS-regression. Introducing two instruments
for globalization we also show that results are robust to correction for
potential endogeneity. We motivate and test the instruments in several
ways. In particular information flows and more liberal trade
restrictions robustly correlate with lower absolute poverty.
It’s a 50% reduction since the 1950s.
Jan Cienski, 2011, Globalization Cures Poverty:
Study,https://www.globalpolicy.org/component/content/article/162/27754.ht
ml DOA 1-2-15
Globalization is responsible for dramatically reducing the number of
abjectly poor people around the world, according to a new study that
contradicts the claims of skeptics who say it has worsened global poverty.
“On average economic growth is good for the poor, and trade is good for
growth,” said the study by the London-based Centre for Economic Policy
Research. The study, prepared for the European Commission by a group
of respected economists who surveyed existing literature and studies on
globalization, was unambiguous in saying that almost every criticism
levelled by free trade’s skeptics is wrong. Many globalization critics are
“poorly informed about the historical record, and appear not to be aware of
the contribution played by globalization in the struggle against poverty,” the
study’s authors say. They say closer economic ties between countries,
reduced tariffs and greater flows of investments have made the most
startling impact on global poverty. While acknowledging the number of
poor people in the world remains “disturbingly high,” the study says that in
1950 about 55% of the world’s population lived on less than US$1 a day
(in constant, inflation-adjusted dollars). By 1992, only 24% of the world’s
population had to make do with that tiny amount. During that time the
number of poor remained static at about 1.3 billion people, while the global
population grew rapidly.
The effect can be seen in Nigeria.
Okungbowa, Florence. O. Ewere, Eburajolo, Ose Courage, Benson
Idahosa University Department of Economics, Banking and Finance BeninCity, 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
This study investigated the relationship between globalization and Poverty
rate in Nigeria. The study employed the two basic channels theory to
explain the relationship that exists between globalization and poverty rate
within the Nigeria context. The study adopted a co-integration and error
correction modeling techniques on an annual time series data within the
periods of 1981 – 2009.A unique co-integration between poverty rate and
the explanatory variables in the study is found. In order to determine the
short-run dynamics around the equilibrium relationship, we estimated an
error correction model (ECM). The empirical findings in this study shows
that an
increase in openness by (1) one unit will bring about a decline in poverty
rate by 0.46209 percent in the current period showing a negative
relationship. However, openness has a positive and significant impact on
poverty in Nigeria during the period under study. Domestic investment
(INV) was statistically significant and has a positive impact on poverty
reduction, the current value of FDI responded negatively in terms of
relationship and insignificantly to poverty in Nigeria, whereas, the first
lagged FDI was statistically significant and also negatively related to
poverty. This however shows delayed response. The results of the study
suggest the need for
Government to encourage globalization, by embarking on trade
liberalization policies in order to accelerate and sustain industrial growth
and in turn reduce poverty also bearing in mind the growth and
development of home industries which is also paramount to development,
government should make sure that the globalization process is
implemented in a gradual pace. As rapid globalization could be
disadvantageous to industrial growth and this can in effect or breed more
poverty.
Controlling for Other Variables
While it is difficult to prove that it is globalization that has reduced poverty (there
could be other reasons poverty decline), there is evidence that even when other
variables are controlled for that poverty decreases.
Andres Bergh, Therese Nelson, October 2014, Lund University, Sweden,
Research Institute of Industrial Economics (IFN), Stockholm, Sweden, Is
Globalization Reducing Absolute Poverty? World Development, pp. 42-61
To gain knowledge about potential mediators in the globalizationpoverty relationship we add a number of control variables to the
baseline regression: The average level of educationin the population
over 15 years old, the share of the population residing in urban areas,
and the government final consumption expenditure as a share of GDP
and inflation. While an expected negative effect of education on poverty is
uncontroversial, there are different views on the poverty consequences of
urbanization, as noted by Leon (2008) who describes the more recent view
on urbanization as more optimistic for the poor than the older view. With
regard to government consumption, there are several reasons to expect
that states with larger welfare systems have lower poverty rates, but higher
government expenditure does not necessarily imply a larger welfare state.
For example, many developing countries allocate relatively large shares of
public expenditures to defense activities, and as shown by Mosley and
Suleiman (2007) such expenditures seem to hurt, not support, the poor.
Inflation is generally assumed to be harmful to the poor, whose assets are
typically less protected against inflation. Table 4 summarizes the results
from regressions including control variables, starting with the baseline
estimates to facilitate comparison. Next, we control for government
consumption as a share of GDP. This variable is not significant and does
not change other coefficients by much at all, suggesting that government
size is not an important mechanism for poverty reduction. Urbanization, on
the other hand, turns out to be negatively related to poverty, supporting the
newer rather than the older view as described above, but the variable
inclusion does not change the globalization coefficients. Surprisingly,
education seems to be unrelated to poverty, and inflation associates with
less poverty. Finally, including all the above control variables in the
same specification changes little except for small reductions in the
size of the globalization coefficients suggesting that there is
something else in the globalization process benefiting the poor. One
concern is that baseline results are driven by unobserved institutional
changes, not captured by the country- and time-fixed effects, which are
systematically related to globalization and poverty reduction. As a test of
robustness we include information of a county’s legal structure and
security of property rights, measuring the quality of the legal system, in
terms of judicial independence, impartial courts, military interference, and
integrity, and of the extent to which economic actors perceive the legal
system to protect their property and contracts. The variable refers to the
second area of the Economic Freedom Index (Gwartney, Lawson, & Hall,
2011).
Reasons Globalization Reduces Poverty
The primary reason that globalization leads to economic decline is that trade
increases economic growth. Countries can only growth with trade and there is NO
evidence that trade increases poverty
Nina Pavcnik, Associate Professor of Economics, Dartmouth College,
2009, How Has Globalization Benefitted the Poor?, Yale
Insights, http://insights.som.yale.edu/insights/how-has-globalizationbenefited-poor DOA: 1-1-15
Economic growth is the main channel through which globalization
can affect poverty. What researchers have found is that, in general,
when countries open up to trade, they tend to grow faster and living
standards tend to increase. The usual argument goes that the benefits of
this higher growth trickle down to the poor. It has been a bit trickier,
especially with aggregate data, to pinpoint how exactly the poor have been
benefited. One challenge is that when trade or globalization happens,
many other factors are changing, such as technology and macroeconomic
conditions. Another challenge is that high-quality data on the well-being of
the poor is often not available. It is thus really hard to tease out the effects
of globalization on poverty in a broad sense But, that said, it is virtually
impossible to find cases of poor countries that were able to grow
over long periods of timewithout opening up to trade. And we have no
evidence that trade leads to increases in poverty and declines in
growth.
Specifically, an increase in free trade benefits poor farmers.
Nina 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-benefitedpoor DOA: 1-1-15
Q: How do they end up being reached by globalization?
For the rural areas, it really depends on how much globalization involves agriculture
and that varies country to country. One example where the poor who were in
agriculture benefited substantially was Vietnam. In the mid-1990s, Vietnam
liberalized its trade. Prior to that, Vietnam limited the amount of rice that farmers
were able to export abroad. When the government eliminated that quota, demand for
Vietnamese rice increased and prices of rice in Vietnam increased. This led to higher
standards of living for Vietnamese rice farmers. Globalization helped lift many of
them out of poverty. Conversely, if you are a country that imports a majority of the
food stock, farmers might be made worse off by trade liberalization because prices
of agricultural products will fall. You can see how the result depends on the
underlying structure of the economy prior to trade liberalization.
Third, access to technology lowers prices and that benefits consumers.
Stephanie Rugolo, May 30, 2014, CATO, “Globalization Eradicates
Poverty,”http://www.cato.org/blog/globalization-eradicates-poverty DOA: 11-15
The Malaysia Chronicle and The Economist recently reported on how
globalization is improving the lives of Chinese villagers. Consider this
example:
Taobao is an online retailer like Amazon. There are few qualifications to
open an online store with Taobao. Chinese villagers, having little more
than their cheap labor to offer, sell handicrafts on the website. The
villagers get paid for their work and amass greater opportunities in return,
while money and prosperity flow into their previously sleepy villages.
Globalization is making Chinese villagers richer, contrary to critics who
claim that globalization generates poverty. Interconnected, free markets
generate wealth and pull people out of poverty. This occurs as the
connective technologies of globalization (like the Internet) increase
competition. That benefits consumers who can buy more, increasingly
inexpensive products to better their quality of life. That also creates
innovation and employment, as is the case for Chinese villagers.
Fourth, globalization connects countries to export markets where industries in
developing countries can export their goods. They also gain access to an expanded
set of consumer products that can benefit them.
Washington Times, October 6, 2014, “Economic Globalization Boosts Asia,
bogs down US Middle
Class,”http://www.washingtontimes.com/news/2014/oct/6/economicglobalization-boosts-asia-bogs-down-us-mi/?page=all DOA: 1-2-14
LDCs have the most to gain from engaging in the global economy. First,
they gain access to much larger markets, both for imports and exports. On
the import side, consumers gain access to a dramatically larger range of
goods and services, raising their real standard of living. Domestic
producers gain access to a wider range and better quality of intermediate
inputs at lower prices. On the export side, domestic industries can enjoy a
quantum leap in economies of scale by serving global markets rather than
only a confined and underdeveloped domestic market.
Fifth, globalization increases economic growth, which raises incomes.
Washington Times, October 6, 2014, “Economic Globalization Boosts Asia,
bogs down US Middle
Class,”http://www.washingtontimes.com/news/2014/oct/6/economicglobalization-boosts-asia-bogs-down-us-mi/?page=all DOA: 1-2-14
Any casual survey of the world today will confirm that nations relatively
open to trade tend to be more prosperous than nations that are relatively
closed. The wealthiest nations and regions of the world- -western Europe,
the United States, Canada, Japan, Hong Kong, Taiwan, South Korea,
Singapore—are all trade-orientated. Their producers, with a few notable
exceptions, must compete against other multinational producers in the
global marketplace. In contrast, the poorest regions of the world—the
Indian subcontinent and sub-Saharan Africa—remain (despite recent,
halting reforms) the least friendly to foreign trade. And those countries that
have moved decisively toward openness—Chile, China, and Poland,
among others—have reaped real (and, in the case of China, spectacular)
gains in living standards. Systematic studies confirm a strong link between
openness and economic growth.8 A study of 117 countries by Jeffrey
Sachs and Andrew Warner found that open economies grew much faster
than closed economies. Specifically, the authors found that the developing
countries that maintained open economies throughout the 1970s and ’80s
grew at an average annual rate of 4.5 percent, compared with an average
growth rate of 0.7 percent for closed economies. As a result, the open
developing economies tended to converge toward the slower-growing rich
economies, while relatively closed economies did not converge. A more
recent study, by Jeffrey Frankel and David Romer, produced similar
results. The authors found that trade exerts “a qualitatively large and
robust E positive effect on income.” In their study of 150 countries, they
concluded that increasing the ratio of trade to gross domestic product by 1
percentage point raises income per person by between 0.5 and 2
percent.10 The Organization for Economic Cooperation and Development
(OECD) concluded that nations relatively open to trade grew on average
twice as fast as those relatively closed to trade.
Sustained growth reduces poverty.
Washington Times, October 6, 2014, “Economic Globalization Boosts Asia,
bogs down US Middle
Class,”http://www.washingtontimes.com/news/2014/oct/6/economicglobalization-boosts-asia-bogs-down-us-mi/?page=all DOA: 1-2-14
Globalization offers hope to the world’s poorest. Just as more open trade
tends to promote economic growth, growth in turn leads to poverty
reduction. A World Bank study found that periods of sustained economic
growth are almost always accompanied by reductions in poverty.
Specifically, the study found that poverty fell in 77 of the 88 decade- long
periods of growth covered by the survey.
The greatest reductions in poverty in the last twenty years have occurred
in nations that have moved decisively toward openness and domestic
liberalization. The most spectacular gains have been realized in East Asia.
Between 1993 and ‘96, the number of people living in absolute poverty—
what the World Bank defines as less than $ 1 per day— declined in the
region from 432 million to 267 million. In China alone, the number of poor
people so defined fell by 150 million between 1990 and ‘97.13 The 1997—
98 financial crisis that began in East Asia brought a temporary halt to this
progress, but poverty rates in the hardest-hit countries—Korea, Thailand,
and Indonesia—have begun to decline back toward their precrisis levels.
Globally, the number of people living in absolute poverty has declined in
the 1990s to an estimated 1.2 billion in 1998.
Globalization facilitates the spread of modern medicine, which has helped
to extend life expectancy and reduce infant mortality in rich and poor
countries alike. On average, life expectancy in developing countries rose
from 55 years in 1970 to 65 years in 1997. This good news is tempered by
the fact that life expectancy has actually fallen in thirty-three LDCs since
1990, in large part because of AIDS epidemics, and remains far behind the
OECD average of 78 years. Infant mortality rates in Asia and sub-Saharan
Africa have fallen by about 10 percent since 1990.
Opponents of globalization try to blame poverty in the world on the spread
of trade and investment liberalization. But those regions where poverty and
inequality have been the most visible and intransigent for decades—Latin
America, sub-Saharan Africa, and the Indian subcontinent—for most of
that time self-consciously followed policies of economic centralization and
isolation.
Sixth, globalization increases access to financial services
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
There are, undoubtedly, significant potential benefits to globalization.
Openness to foreign direct investment, for instance, can contribute to
growth by stimulating domestic capital formation and improving efficiency
and productivity, as a result of greater access to new technologies. At the
same time, openness to capital flows may also increase opportunities for
portfolio risk diversification and consumption smoothing through borrowing
and lending; and producers who are able to diversify risks on world capital
markets may invest in riskier (and higher-yield) projects, thereby raising
the country’s rate of economic growth (Obstfeld, 1994). Increased access
to the domestic financial system by foreign banks may raise the efficiency
of the intermediation process between savers and borrowers, thereby
lowering markup rates in banking, as well as the cost of investment, and
again raising growth rates (Baldwin and Forslid, 2000). And to the extent
that financial openness helps to mitigate asymmetric information problems
and to reduce the fixed costs associated with small-scale lending, it can
improve the opportunities for the poor to access the formal financial
system.
Seventh, openness to trade increases efficiency of resources allocation
Similarly, openness to trade may generate significant gains, both static and
dynamic (Agenor, 2004). Static economic gains, as emphasized by
conventional trade theory, refer to the fact that under greater openness to
trade, productive resources tend to be reallocated toward activities where
they are used with comparatively greater efficiency and away from less
efficient activities (such as import-substitution industries or rent-seeking
activities). In addition, the literature on endogenous growth has
emphasized the existence of various mechanisms through which trade
may generate dynamic gains and thereby affect the economy’s rate of
growth in the long run. In particular, it has been argued that trade
openness may facilitate the acquisition of new inputs, less expensive or
higher-quality intermediate goods, and improved technologies, which
enhance the overall productivity of the economy. Romer (1994), for
instance, has argued that in an economy subject to trade restrictions, only
a narrow range of specialized intermediate goods or capital goods can be
profitably produced and therefore the full range of technological
possibilities, which rely on a potentially broader range of inputs, cannot be
exploited effectively,
Eighth, it provides countries with access to the services they need to grow.
Washington Times, October 6, 2014, “Economic Globalization Boosts Asia,
bogs down US Middle
Class,”http://www.washingtontimes.com/news/2014/oct/6/economicglobalization-boosts-asia-bogs-down-us-mi/?page=all DOA: 1-2-14
Fourth, openness to the global economy can provide the infrastructure a
developing economy needs for growth. Foreign capital can finance more
traditional types of infrastructure, such as port facilities, power generation,
and an internal transportation network, just as British capital helped to
finance America’s network of canals and railroads in the nineteenth
century. But just as importantly, multinational companies can provide an
infrastructure of what could be called “enabling services,” such as
telecommunications, insurance, accounting, and banking. As China and
India have realized, a protected and inefficient service sector weighs down
an entire economy, retarding the development of manufacturing and other
industries. LDCs need to shed the mistaken idea that opening their
economies up to international service competition is a “concession” to be
made to gain access to farm and manufacturing markets in the advanced
economies. In reality, liberalizing their service sectors by opening them to
foreign competition is a favor LDCs can do for themselves.
Globalization and the quality of life.
As discussed in the introductory essay, Con teams may argue that globalization may
undermine the environment and educational systems and that people who live in
poor environments and lack an appropriate education are “poor,” but there is strong
evidence that globalization has a net positive impact on human welfare.
Krieckhaus et al. 11 – Missouri political science professor [Jonathan,
“Globalization and human well-being”, International Political Science
Review, SAGE]
Globalization is increasingly prevalent in the modern world, and scholars
have therefore rightly explored both its causes and consequences. Human
well-being is also a heavily studied topic, given that citizens around the
globe desire healthy children and longer lifespans. Surprisingly, however,
there has been scant research on the myriad ways through which
globalization might influence human well-being. We have argued that there
are advantages and disadvantages to globalization, but that in spite of the
shortcomings, on balance globalization has a positive effect on human
welfare, due to its ability to bring increased development, technology,
knowledge, and foreign support. We tested three aspects of this argument,
namely the effects of economic globalization, social globalization, and
political globalization. We found that all three of these forms of
globalization have enhanced human welfare, and that these positive
effects are relatively robust to a wide range of statistical
specifications. These findings have significance for both social science and
public policy. Concerning social science, we contribute to the longstanding
debate as to whether the forces of globalization are a positive or negative
force in the world. Although our results speak only to the issue of human
physical well-being, we suggest that this is an important criterion for
evaluating globalization. Given that we find that three different dimensions
of globalization all have consistently positive effects on well-being, we
provide new evidence in support of globalization. Concerning public policy,
our findings have clear implications for child welfare advocates. While
organizations like the UNDP and UNICEF can, and should, continue to
advocate for the interests of developing countries, they should also keep in
mind that encouraging developing countries to incorporate themselves into
the global system (economically, socially, and politically) will also
encourage child welfare. For these same reasons, our results should be of
considerable interest to policymakers in the developing world, who often
face difficult choices concerning the political costs and benefits of
economic liberalization and decreased cultural autonomy. While we cannot
provide here a full cost/benefit analysis of globalization, we do note that a
new and important dimension must enter such calculations, namely
globalization’s positive effects on the well-being of children.
And since poverty undermines the environment and economic globalization is
associated with a reduction in tyranny, The Pro can claim that globalization improves
the overall quality of life.
Jim Chen, 2000, Minnesota law school professor [Jim, “ESSAY: PAX
MERCATORIA: GLOBALIZATION AS A SECOND CHANCE AT “PEACE
FOR OUR TIME”, 24 Fordham Int’l L.J. 217,p. 245-6
Of the myriad environmental problems in this mutually dependent world,
“persistent poverty may turn out to be the most aggravating and
destructive.” We must remember “above all else” that “human degradation
and deprivation … constitute the greatest threat not only to national,
regional, and world security, but to essential life-supporting ecological
systems.” The enhancement of individual liberty through globalization. By
dislodging local tyrants and ideologies, globalization has minimized the
sort of personal abuse that too often seems endemic to one place, one
population. The twenty-first century will witness “people voting with their
feet to escape from some village elder’s idea of how to live, or some
London School of Economics graduate’s idea of protecting Indian
folkways.” This changing social reality will undermine the conventional
assumption that capital is mobile but labor is immobile. Generations of
scholarship on trade and international relations hang in the balance. At the
very least we will have to recalibrate existing race-to-the-bottom models
and their sensitivity to “giant sucking sounds.” Nor has localism
propounded plausible solutions to challenges such as food security, AIDS
and other epidemiological crises, and barriers to full equality for women
and children. The localist package of autarky, retaliatory protectionism, and
isolationism would be catastrophic. It really is a shame that Ralph Nader
will probably not be named “the first U.S. ambassador to North Korea,”
where he could “get a real taste of what a country that actually follows [his]
insane economic philosophy – high protectionism, economic autarky, antimarkets, antiglobalization, anti-multinationals – is like for the people who
live there.” The policies preferred by the protesters at Seattle and Prague
guarantee penury for most, security for some, and power for an unjustly
privileged few. That way runs anew the road to serfdom.
And the quality of life is generally improving.
Dash 13 – Co-Founder and Managing Director at Activate, a new kind of
strategy consultancy that advises companies about the opportunities at the
intersection of technology and media co-founder and CEO of ThinkUp,
which shows you how to be better at using your social networks, publisher,
editor and owner of Dashes.com, my personal blog where I’ve been
publishing continuously since 1999, entrepreneur, writer and geek living in
New York City [Anil. “THE WORLD IS GETTING BETTER. QUICKLY.”
2/4/13. http://dashes.com/anil/2013/02/the-world-is-getting-betterquickly.html]
The world is getting better, faster, than we could ever have imagined. For
those of us who are fortunate enough to live in wealthy communities or
countries, we have a common set of reference points we use to describe
the world’s most intractable, upsetting, unimaginable injustices. Often, we
only mention these horrible realities in minimizing our own woes: “Well,
that’s annoying, but it’s hardly as bad as children starving in Africa.” Or
“Yeah, this is important, but it’s not like it’s the cure for AIDS.” Or the
omnipresent description of any issue as a “First World Problem”. But let’s,
for once, look at the actual data around developing world problems. Not
our condescending, world-away displays of emotion, or our slacktivist
tendencies to see a retweet as meaningful action, but the actual numbers
and metrics about how progress is happening for the world’s poorest
people. Though metrics and measurements are always fraught and flawed,
Gates’ single biggest emphasis was the idea that measurable progress
and metrics are necessary for any meaningful improvements to happen in
the lives of the world’s poor. So how are we doing? THE WORLD HAS
CHANGED The results are astounding. Even if we caveat that every
measurement is imprecise, that billionaire philanthropists are going to favor
data that strengthens their points, and that some of the most significant
problems are difficult to attach metrics to, it’s inarguable that the past two
decades have seen the greatest leap forward in the lives of the global poor
in the history of humanity. Some highlights: Children are 1/3 less likely to
die before age five than they were in 1990. The global childhood mortality
rate for kids under 5 has dropped from 88 in 1000 in 1990 to 57 in 1000 in
2010. The global infant mortality rate for kids dying before age one has
plunged from 61 in 1000 to 40 in 1000. Now, any child dying is of course
one child too many, but this is astounding progress to have made in just
twenty years. In the past 30 years, the percentage of children who receive
key immunizations such as the DTP vaccine has quadrupled. The
percentage of people in the world living on less than $1.25 per day has
been cut in half since 1990, ahead of the schedule of the Millennium
Development Goals which hoped to reach this target by 2015. The number
of deaths to tuberculosis has been cut 40% in the past twenty years. The
consumption of ozone-depleting substances has been cut 85% globally in
the last thirty years. The percentage of urban dwellers living in slums
globally has been cut from 46.2% to 32.7% in the last twenty years. And
there’s more progress in hunger and contraception, in sustainability and
education, against AIDS and illiteracy. After reading the Gates annual
letter and following up by reviewing the UN’s ugly-but-data-rich Millennium
Development Goals statistics site, I was surprised by how much progress
has been made in the years since I’ve been an adult, and just how little I’ve
heard about the big picture despite the fact that I’d like to keep informed
about such things. I’m not a pollyanna — there’s a lot of work to be done.
But I can personally attest to the profound effect that basic improvements
like clean drinking water can have in people’s lives. Today, we often use
the world’s biggest problems as metaphors for impossibility. But the
evidence shows that, actually, we’re really good at solving even the most
intimidating challenges in the world. What we’re lacking is the ability to
communicate effectively about how we make progress, so that we can
galvanize even more investment of resources, time and effort to tackling
the problems we have left.
Answering Additional Con Arguments
The most fundamental problem with Con arguments is that they do not establish that
there is a net increase in poverty. At best, they provide reasons that globalization
many increase poverty in some specific instances. This claim is no doubt true, but it
is far from a conclusion that poverty will increase.
In this section of the essay I will also answer some specific Con arguments.
Sweatshops. One common argument against globalization is that it increases
“sweatshops,” as companies move their factories to low wage areas in order to
generate the same good for less cost.
While these wages may seem low to Americans, they are benefitting the poor in
those countries.
Jan Cienski, 2011, Globalization Cures Poverty:
Study,https://www.globalpolicy.org/component/content/article/162/27754.ht
ml DOA 1-2-15
“Many of the charges against globalization are misguided,” says the study,
which says that while globalization does carry some costs, they are more
than outweighed by the benefits. The drumbeat of protest about
manufacturers such as Nike and the Gap using Third World sweatshops to
make their products actually harms the workers in those factories. While a
salary of $5 a day may seem “shockingly poor” to protesters in rich
countries, that is often five times more than the workers would have gotten
by staying in traditional industries such as agriculture, the study says.
And if children weren’t working in sweatshops, they would be working somewhere
even worse.
Nina Pavcnik, Associate Professor of Economics, Dartmouth College,
2009, How Has Globalization Benefitted the Poor?, Yale
Insights, http://insights.som.yale.edu/insights/how-has-globalizationbenefited-poor DOA: 1-1-15
Q: This suggests that the knee-jerk response of banning children
from working in any factory may not be the most effective way to
improve their welfare.
When you look at the images of children working in not-very-safe factories,
that is the knee-jerk reaction. What we need to be asking is, if we banned
child labor, if we shut down these factories, what would these children be
doing? We would like to see them attend school, but that might not be the
alternative for these children. They might take a job that is even more
hazardous, like prostitution or stone quarrying, or work in parts of the
economy that are even more informal than sweatshops.
Labor and environmental standards. A second argument against
globalization is that it encourages countries to lower wages and
environmental standards in order to attract industry. This is called a “Race
to the Bottom (RTB) where countries supposedly race to develop the
lowest possible standards in order to have the lowest possible costs for
business. The problem with this argument is that there really isn’t any
empirical support for it.
Although there is some proof that countries exporting energy and natural
resources such as timber underprice those products, causing
environmental harm, there is no evidence of a “race to the bottom” in
wages or environmental standards. Many critics contend that corporations
will relentlessly hunt for the cheapest place to do business, forcing richer
countries to gut their social safety nets and environmental rules to match
those of the lowest-cost country. “If low wages alone were enough of an
attraction, more [investment] would have flowed to the poorest countries in
Africa, rather than predominantly to a small number of middle-income
countries in Asia and Latin America,” it says. In fact, it is in Africa that the
study finds the weakest international performers, and failed economies that
drag down the statistics for the
Reduced wages. Some argue that globalization produces wage declines because of
increased competition, but even if wages decline, there is still a massive
overwhelming net gain.
Washington Times, October 6, 2014, “Economic Globalization Boosts Asia,
bogs down US Middle
Class,”http://www.washingtontimes.com/news/2014/oct/6/economicglobalization-boosts-asia-bogs-down-us-mi/?page=all DOA: 1-2-14
The migration of Latin American and Asian job seekers to the U.S. and
Eastern European and African job seekers to Western Europe also has
helped build wealth in the developing world, even as it has put “modest
pressure” on the wages of low-skilled native workers in the West who
compete with the migrants, he said. The availability of such plentiful, cheap
labor clearly has benefited the owners of corporations and other rich
people, even as it has presented competition for poorer Americans, he
said. Still, the era of globalization overall has brought big benefits to the
human race, he said. Moreover, the rise of the middle class in China and
other emerging countries adds to the pool of global consumers and
presents businesses and workers in the West with opportunities for growth.
“Although significant economic problems remain, we have been living in
equalizing times for the world — a change that has been largely for the
good,” Mr. Cowan said. “Policies on immigration and free trade sometimes
increase inequality within a nation yet can make the world a better place
and often decrease inequality on the planet as a whole.”
Increased US poverty. Some argue that globalization has increased poverty in the
United States because lower costs of producing goods abroad has resulted in
unemployment, but this unemployment is due to gains in technology, not
globalization.
Ravi Kanbur, Cornell University, 2015, Handbook of Income Distribution,
Volume 2, pp. 1845-1881
There is, however, the issue of how much of the rising inequality in the
United States can be attributed to trade, and how much to other factors,
specifically to technology. The overview by Pavcnik (2011)captures the
recent consensus: A large body of research on this topic finds little support
that international trade in final goods driven by relative factor endowment
differences can account for much of the observed increase in skill
premiums in developed and developing countries… . First, the Stolper–
Samuelson mechanism suggests that increased relative demand for skilled
labour in countries abundant in skilled labour occurs as a result of shifts in
the relative demand for skilled labour across industries… . However, the
employment shifts across industries have not been sufficiently large to
account for the large increase in wage inequality. Most of the observed
increase in demand for educated labour in countries such as the United
States is driven by increased relative demand for skilled labour within
industries. (p. 242)
There is significant debate on the relative role of trade. Although Krugman
(2008) argues against his own earlier view that trade was a relatively small
factor in explaining the rise of inequality compared to technology, there are
also criticisms of the “small role of trade” view by Irwin (2008), Katz (2008),
andAutor (2010). It would be fair to say that skill-biased technical change is
considered to be a major driving force, if not necessarily the dominant
force, behind rising inequality.7 This empirical and policy debate has in turn
fed into an emerging literature that goes beyond simple H–O/Stolper–
Samuelson formulations to consider within-industry wage differentials
between heterogeneous firms and how these could be affected by trade.
Inequality. There is very good Con evidence that globalization increases inequality.
The basic problem with this argument, however, is that it is meaningless within the
context of the resolution; all that the resolution asks that Pro to defend is that
globalization reduces poverty, and an increase in inequality does not mean an
increase in poverty.
Wu, economist, Cardiff University, 2012, International Encyclopedia of
Housing and Home, “Globalisation,” pp. 292-7
Potentially the most important transmission channel is growth. High rates
of economic growth such as those experienced in China and India today
translate into significant declines in the incidence of poverty even when the
growth pattern is dampened by increased income inequality.
And even absent this obvious point, Pro teams can argue that globalization will
reduce inequality (though, honestly, this is not the best side of the debate to be on).
Goklany 07 – Assistant Director for Science and Technology Policy [Indur,
“IS A RICHER-BUT-WARMER WORLD BETTER THAN POORER-BUTCOOLER
WORLDS?”,http://www.ce.cmu.edu/~gdrg/readings/2006/02/14/Goklany_1
60.pdf]
It has been sometimes argued that the extent to which economic growth
increases society’s (or another entity’s) capacity to reduce climate change
damages via adaptation or mitigation, this capacity would depend
considerably on the distribution of the determinants of human well being
(such as economic growth) between and within countries. For example, if
economic growth is concentrated on countries that are already wealthy, as
sometimes has been claimed to be the case in recent decades, then
today’s poorer countries’ ability to reduce future climate impacts (due to
higher adaptive capacity because of economic growth) could be seriously
overestimated. While there is some merit to this argument, it should be
noted that in the recent past, economic growth in some of the most
populous developing countries (e.g., China and India) has outstripped that
in developed countries. As a result, income inequalities have, for the world
population as a whole, shrunk around the world (Sala-i-Martin, 2007;
Bhalla, 2002), as have inequalities between developing and developed
countries since the 1950s in terms of determinants of human well-being. 6
More importantly, according to the IPCC scenarios, between 1990 and
2100 income growth in developing countries relative to developed
countries will be greater by a factor of 3.6 to 9.4 (IPCC, 2000: 301).
Secondly, an examination of Figures 1 and 2 indicates that the
dependence of virtually all determinants of human well-being on income is
highly non-linear (generally logarithmic) with their improvements occurring
much more rapidly at the lowest levels of income (Goklany, 2007a). Thus
even a small improvement in income for poor societies (or the poor within
a country) could enhance their adaptive capacity more than a larger
increase for richer societies (or the rich). Thirdly, over the long haul (say,
50 to 100 years), secular improvements in technology could dominate over
increases in income with respect to enhancing adaptive capacity,
particularly at low income levels (see Figure 3). The long term impact of
technological change is one reason for the remarkable declines—99
percent or greater—during the 20th century in mortality and morbidity rates
in the United States for various waterrelated diseases, e.g., typhoid,
paratyphoid, dysentery, malaria and various gastrointestinal diseases)
(Goklany, 2007b: 153; USBC, 1975: 77).
And Pro teams can argue inequality is trending downward.
Segerstrom 10 – Stocholm School of Economics professor [Paul, “Naomi
Klein and the Anti-Globalization Movement”, 623, http://www2.hhs.se/personal/segerstrom/naomiklein.pdf]
Much of what Naomi Klein writes about the marketing behavior of large
corporations is true. But I want to focus on her reason for being concerned.
According to Naomi Klein (NL, p.122), “over the last decade [the 1990s],
there has been a massive redistribution of the world’s resources, with
everyone except those in the very highest tier of the corporate
elite…getting less.” There appears to be a general consensus among antiglobalization activists that the world we live in is characterized by
disturbing increases in poverty and income inequality. But is this really the
case? Economists have devoted a lot of energy to measuring poverty and
income inequality in the world. I want to discuss at length the influential
paper “The World Distribution of Income: Falling Poverty
and…Convergence, Period” by Xavier Sala-i-Martin (2006), an economist
at Columbia University. Sala-i-Martin (2006) uses aggregate Gross
Domestic Product data and within-country income shares for the period
1970-2000 to assign a level of income to each person in the world. All
income data used are purchasing-power-parity-adjusted since people tend
to buy goods where they live and one wants to compare incomes across
people who live in different countries. Also all income levels are converted
to 1996 constant US dollars and are thus corrected for inflation. Sala-iMartin estimates a densit function for the world distribution of income. The
implications for poverty and income inequality are surprising. Sala-i-Martin
finds that the percentage of people in the world with incomes below $1 per
day (one commonly used measure of poverty) has fallen from 15.4% in
1970 to 5.7% in 2000 and the percentage of people in the world with
incomes below $2 per day (another commonly used measure of poverty)
has fallen from 29.6% in 1970 to 10.6% in 2000. The recent period of
globalization has been associated with a substantial decrease in the
fraction of the world population living in poverty (using either measure).
Indeed, the entire distribution of income in the world has shifted
significantly to the right (see Sala-i-Martin’s Figure 4). 5 Turning to income
inequality, Sala-i-Martin uses eight different popular indexes to measure
income inequality. All indexes show a reduction in global income inequality
between 1980 and 2000. Within-country income inequality has increased
slightly during the sample period but not enough to offset the substantial
reduction in across country disparities. 6 The reduction in global income
inequality is driven by China, where 1.2 billion people (20% of the world
population) have benefited from high economic growth rates since 1978. If
one removes China from the data, then global income inequality would be
roughly constant over time.
Failure in Africa. Some argue that the failure of (widespread) poverty reduction in
Africa proves that globalization does not reduce poverty. After all, it is the case that
poverty has not decline in Africa. But there are some good answers to this argument.
First, Pro teams can argue that instability in Africa, not globalization, is responsible
for poverty.
Anish Bharadwaj, 2014, International Max Planck Research School for
Competition and Innovation, Munich Centre for Innovation and
Entrepreneurship Research, Advances in Economics and Busines, 2(1):
42, p. 42-57
Those who are more dubious of global processes point out that in the
same decades, poverty has remained stubbornly high in sub-Saharan
Africa, as Chen and Ravalllion (2004) have estimated. During 1981-2001
the percentage of people living below the poverty line of $1.08 per day (at
1993 purchasing parity) increased in sub-Saharan Africa from about 42%
to about 46%.Abs But this may have little to do with globalization, and
more to do with unstable or failed political regimes, wars, and civil conflicts
which afflicted several countries in Africa; if anything, such instability only
reduced their extent of globalization,, as it scared off many foreign
investors and traders.
Second, Pro teams an argue that globalization hasn’t benefitted Africa because of
mismanagement, not because of any problem inherent in globalization.
Derrick Owusu-Kodu, April 7, 2014, Poverty and the Impacts of
Globalization on the African
Economy, http://www.africandynamo.com/2014/04/poverty-and-impacts-ofglobalization-on.html#mM4cowGoocBOQhUe.99 DOA: 1-2-1
In many ways, Globalization could have helped accelerate development
throughout the Continent, but conflicts, wars, corruption, greed, an
unstable political system, lack of competent human capital and
innovations, and cultural practices which hinder development continue to
stifle economic and social progress. These are the manifestations of the
overall trend of poor governance and mismanagement on the African
continent. The end results of this trend are an avalanche impeding the
Continent’s capacity to progress in it’s handling of the modern economic
landscape, and manipulate the impacts of globalization to the benefit of its
citizenry.
Third, a strong case can be made that that it is actually the fact that Africa’s markets
are closed that has hindered reductions in poverty. Integrating Africa into
globalization could benefit it substantially.
Washington Times, October 6, 2014, “Economic Globalization Boosts Asia,
bogs down US Middle
Class,”http://www.washingtontimes.com/news/2014/oct/6/economicglobalization-boosts-asia-bogs-down-us-mi/?page=all DOA: 1-2-14
Poor nations that have fallen further behind the rich nations are almost
uniformly those that have clung to state-directed and inward- oriented
economic policies. Sub-Saharan Africa has lagged behind the rest of the
world in economic growth in significant part because its markets remain
among the most closed in the world. Its governments have neglected
domestic infrastructure such as roads and have distorted their domestic
economies with subsidies, high taxes, and regulations. Granted, many
African nations must also bear the burden of civil and tribal strife, poor soil,
and inaccessible geography. But domestic economic policy must be
considered a key variable in explaining the region’s failure to develop.
Those African nations that have implemented more open, stable, and
market-friendly policies in the last decade—such as Uganda, Botswana,
and Mauritius—have achieved growth rates exceeding those of the
advanced nations.
Environment. As discussed earlier, some may argue that
globalization threatens the environment. There are a number
of answers to this.
First, unless the Con ties environmental decline to poverty, the argument is irrelevant
to determining the truth of the resolution.
Second, Pro teams can argue that economic evaluations are
important to long-term environmental sustainability.
Thompson 03 – Stanford natural resources professor [Barton, “What Good
is Economics”, 27 Environs Envtl. L. & Pol’y J. 175, p. 187-90
Even the environmental moralist who eschews any normative use of
economics may find economics valuable for other purposes. Indeed,
economics is indispensable in diagnosing why society currently does not
achieve the level of environmental protection desired by the
moralist. Those who turn their backs on economics and rely instead on
ethical intuition to diagnose environmental problems are likely to find
themselves doomed to failure. Economic theory suggests that flaws in
economic markets and institutions are often the cause of environmental
problems. Three concepts of market failure have proven particularly robust
in analyzing environmental problems. The first is the “tragedy of the
commons.” If a resource is open and free for multiple parties to use, the
parties will tend to over-utilize the resource, even to the point of its
destruction. Economists and others have used the tragedy of the commons
to explain such environmental problems as over-fishing, the over-drafting
of groundwater aquifers, the early and inept exhaustion of oil fields, and
high levels of population growth. The second, more general concept (of
which the tragedy of the commons actually is a specialized instance) is the
“negative externality.” n30 When parties do not bear the full cost to society
of environmental harms that they cause, they tend to under-invest in the
elimination or correction of the harm. Externalities help explain why
factories pollute, why landowners destroy ecologically valuable wetlands or
other forms of habitat, and why current generations consume high levels of
exhaustible resources. The final concept is the problem of “collective
action.” If political or market actions will benefit a large group of individuals
and it is impossible to exclude anyone from enjoying the benefits, each
individual will have an incentive to “free ride” on the actions of others rather
than acting themselves, reducing the possibility that anything will get done.
This explains why the private market does not provide us with more wildlife
refuges or aesthetic open space. Although these economic explanations
for environmental problems are not universal truths, accurate in all
settings, they do enjoy a robust applicability. Experimenters, for example,
have found that subjects in a wide array of countries succumb to the
tragedy of the commons. Smaller groups sometimes have been able to
overcome the tragedy of the commons and govern a resource in collective
wisdom. Yet this exception appears to be the result of institutional
characteristics peculiar to the group and resource that make it easier to
devise a local and informal regulatory system rather than the result of
cultural differences that undermine the economic precepts of the tragedy of
the commons. These economic explanations point to a vastly different
approach to solving environmental problems than a focus on
environmental ethics alone would suggest. To environmental moralists, the
difficulty is that the population does not understand the ethical importance
of protecting the environment. Although governmental regulation might be
necessary in the short run to force people to do what they do not yet
appreciate is proper, the long run answers are education and moral
change. A principal means of enlightening the citizenry is engaging them in
a discussion of environmental goals. Economic analysis, by contrast,
suggests that the problem lies in our economic institutions. The solution
under economic analysis is to give those who might harm the environment
the incentive to avoid the harm through the imposition of taxes or
regulatory fines or the awarding of environmentally beneficial subsidies.
The few studies that have tried to test the relative importance of
environmental precepts and of economics in predicting environmentally
relevant behavior suggest that economics trumps ethics. In one 1992
experiment designed to test whether subjects would yield to the tragedy of
the commons in a simulated fisheries common, the researchers looked to
see whether the environmental attitudes of individual subjects made any
difference in the subjects’ behavior. The researchers measured subjects’
environmental beliefs through various means. They administered
questionnaires designed to elicit environmental beliefs; they asked the
subjects how they would behave in various hypothetical scenarios (e.g., if
someone asked them to volunteer to pick up litter on the weekend); they
even tried to see how the subjects would react to real requests for
environmental help (e.g., by asking them to participate in a Saturday
recycling campaign). No matter how the researchers tried to measure the
environmental attitudes of the subjects, attitude failed to provide a
statistically significant explanation for participants’ behavior in the fishing
commons. Those who appeared to have strong environmental beliefs
behaved just as tragically as those who did not when fighting for the limited
stock of fish. In another study, researchers examined domestic consumers
of high amounts of electricity in Perth, Australia. After administering a
survey to determine whether the consumers believed they had a personal
and ethical duty to conserve energy, the researchers tried various methods
for changing the behavior of those who reported that people have a
conservation obligation. Informing these individuals of their high electricity
usage and even supplying them with conservation tips did not make a
statistically significant difference in their energy use. The only thing that led
these individuals to reduce their electricity consumption was a letter
reminding them of the earlier survey in which they had espoused a
conservation duty and emphasizing the inconsistency of that view with
their high electricity usage. In response to this letter, the subjects reduced
their energy use. Apparently shame can be a valuable catalyst in
converting ethical beliefs into action. But the effect may be short lived.
Within two weeks, the Perth subjects’ energy use had risen back to its
earlier levels. Ethical beliefs, in short, frequently fall victim to personal
convenience or cost considerations. Ethical views sometimes can make a
difference in how people behave. Examples include the role that ethics has
played in encouraging people to recycle or to eat dolphin-free tuna. But
the personal cost, if any, of recycling or of eating dolphin-free tuna is
exceptionally small. For most of the environmental dilemmas that face the
nation and the world today, the economic cost of changing behavior is far
more significant. And where costs are high, economics appears to trump
most peoples’ environmental views. Even if ethics played a more powerful
role, we do not know for certain how to create or strengthen environmental
norms. n38 In contrast, we do know how to change economic incentives.
Although environmental moralists should continue trying to promote
environmental ethics, economic analysis currently provides the strongest
tool for diagnosing and thus helping to resolve environmental problems.
The environmental moralist who ignores this tool in trying to improve the
environment is doomed to frustration.
Third, Pro teams can argue that the introduction of market
forces is critical to sustain the environment
Wager 11 – EDF economist [Gernot, But Will the Planet Notice? How
Smart Economics Can Save the World, pg 11-2]
The fundamental forces guiding the behavior of billions are much larger
than any one of us. It’s about changing our system, creating a new
business as usual. And to do that we need to think about what makes our
system run. In the end, it comes down to markets, and the rules of the
game that govern what we chase and how we chase it. Scientists can tell
us how bad it will get. Activists can make us pay attention to the ensuing
instabilities and make politicians take note. When the task comes to
formulating policy, only economists can help guide us out of this morass
and save the planet. In an earlier time with simpler problems,
environmentalists took direct action against the market’s brutal forces by
erecting roadblocks or chaining themselves to trees. That works if the
opposing force is a lumberjack with a chain saw. It might even work for an
entire industry when the task is to ban a particular chemical or scrub a
pollutant out of smokestacks. But that model breaks down when the
opposing force is ourselves: each and every one of us demanding that the
globalized market provide us with cheaper and better food, clothes, and
vacations. There is no blocking the full, collective desires of the billions
who are now part of the market economy and the billions more who want
to—and ought to—be part of it. The only solution is to guide all-powerful
market forces in the right direction and create incentives for each of us to
make choices that work for all of us. The guideposts we have today for
market forces evolved helter- skelter from a historical process that gave
almost no weight to the survival of the planet, largely because the survival
of the planet was not at stake. Now it is. Since we can’t live without market
forces, we need to guide them to help us keep the human adventure going
in workable ways, rather than continue on the present path right off the
edge of a cliff.
The Issue of “Protected Globalization”
The resolution doesn’t specify any specific “type” (for lack of a better word) of
globalization that the Pro needs to defend. This is significant because in some
countries where globalization has been especially effective in reducing (such as
China), globalization has reduced poverty. And there is strong evidence that if
countries essentially “regulate” (again, for lack of a better term) globalization
effectively so that the poor are protected that it will reduce poverty.
Raphael Kaplinsky, Professor of International Development, 2005,
Globalization, Poverty, and Inequality: Between a Rock and a Hard Place,
page number at end of card
This book focuses on the mechanisms whereby globalization contributes to
global poverty and inequality through the extension of global production
and trading networks. As we shall see, there is widespread recognition that
globalization may induce greater inequality. But the idea that it might cause
greater poverty runs against much of current conventional wisdom. This,
as we shall see, argues that inequality and poverty are caused not so
much by the workings of the global economy as by the failure to engage
positively with globalization. Kaplinsky, Raphael (2013-04-29).
Globalization, Poverty and Inequality: Between a Rock and a Hard Place
(Kindle Locations 662-666). Wiley. Kindle Edition.
Other authors concur.
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
The first part of the paper summarizes the channels and transmission mechanisms,
such as greater openness to trade and foreign investment, through which the
process of globalization could affect poverty in the developing world. Using a panel
data of 35 developing countries from 1990 to 2004 an empirical examination is
carried out of the impact of real and financial integration on the head count ratio and
poverty gap. Results suggest that, on an aggregate level, capital flows via FDI have
had an adverse effect and real trade-induced income growth had a favorable effect
on the incidence of poverty. On the other hand, a policy of excessive openness to
external trade without complementary support mechanisms was found to be
negatively related to the depth of poverty in developing countries.
China grew because it protected its industries from globalization
Dani Rodrik, Spring 2012, This article is adapted from the author’s
book The Globalization Paradox: Democracy and the World Economy,
Norton, 2011,America’s Quarterly, “Global Poverty Amid Plenty: Getting
Globalization Right,” http://americasquarterly.org/rodrik DOA: 1-1-15 Dani
Rodrik is Rafiq Hariri Professor of International Political Economy at the
John F. Kennedy School of Government at Harvard University.
China’s experience offers compelling evidence that globalization can be a
great boon for poor nations. Yet it also presents the strongest argument
against the reigning orthodoxy in globalization, which emphasizes financial
globalization and deep integration through the World Trade Organization
(WTO). China’s ability to shield itself from the global economy proved
critical to its efforts to build a modern industrial base, which would in turn
be leveraged through world markets.
Since 1978, income per capita in China has grown at an average rate of
8.3 percent per annum—a rate that implies a doubling of incomes every
nine years. Thanks to this rapid economic growth, between 1981 and 2008
the poverty rate in China (the percent of the population below the $1.25-aday poverty line) fell from 84 percent to 13 percent, much of it from
reducing rural poverty.5 This meant a whopping 662 million fewer Chinese
in extreme poverty, a number that accounts for virtually the entire drop in
global poverty over the same period.
During the same period, China transformed itself from near autarky to the
most feared competitor on world markets. That this happened in a country
with a complete lack of private property rights (until recently) and run by
the Communist Party only deepens the mystery.
China’s big break came when Deng Xiaoping and other post-Mao leaders
decided to trust markets instead of central planning. But their real genius
lay in their recognition that the market-supporting institutions they built,
most of which were sorely lacking at the time, would have to possess
distinctly Chinese characteristics.
China’s economy was predominantly rural in 1978. A Western-trained
economist would have recommended abolishing central planning and
removing all price controls. Yet without a central plan urban workers would
have been deprived of their cheap rations and the government of an
important source of revenue, resulting in masses of disgruntled workers in
the cities and the risk of hyperinflation.
The Chinese solution to this conundrum was to graft a market system on
top of the plan.
Communes were abolished and family farming restored, but land remained
state property. Obligatory grain deliveries at controlled prices were kept in
place, but once farmers had fulfilled their state quota they were now free to
sell their surplus at market-determined prices. This dual-track regime gave
farmers market-based incentives and yet did not deprive the state of
revenue nor deprive urban workers of cheap food.6 Agricultural productivity
rose sharply, setting off the first phase of China’s post-1978 growth.
Another challenge was how to provide a semblance of property rights
when the state remained the ultimate owner of all property. Privatization
would have been the conventional route, but it was ruled out by the
Chinese Communist Party’s ideology.
Once again, an innovation came to the rescue. Township and village
enterprises (TVEs) proved remarkably adept at stimulating domestic
private investment. They were owned not by private entities or the central
government, but by local governments (townships or villages). TVEs
produced virtually the full gamut of products, everything from consumer
goods to capital goods, and spearheaded Chinese economic growth from
the mid-1980s until the mid-1990s. The key to the success of TVEs was
the self-interest of local governments, which would reap substantial income
from their equity stake in the enterprises.
China’s strategy to open its economy to the world also diverged from
received theory. The Chinese leadership resisted the conventional advice
to remove trade barriers. Such an action would have forced many state
enterprises to close without doing much to stimulate new investments in
industrial activities. Employment and economic growth would have
suffered, threatening social stability.
The Chinese decided to experiment with alternative mechanisms that
would not create too much pressure on existing industrial structures. While
state trading monopolies were dismantled relatively early (starting in the
late 1970s), what took their place was a complex and highly restrictive set
of tariffs, nontariff barriers and licenses restricting imports. These were not
substantially relaxed until the early 1990s.
In particular, China relied on Special Economic Zones (SEZs) to generate
exports and attract foreign investment. Enterprises in these zones
operated under different rules than those that applied in the rest of the
country; they had access to better infrastructure and could import inputs
duty free. The SEZs generated incentives for export-oriented investments
without pulling the rug out from under state enterprises.
What fueled China’s growth, along with these institutional innovations, was
a dramatic productive transformation.
The Chinese economy latched on to advanced, high-productivity products
that no one would expect a poor, labor-abundant country to produce, let
alone export. By the end of the 1990s, China’s export portfolio resembled
that of a country with an income-per-capita level at least three times higher
than China’s.7
Foreign investors played a key role in the evolution of China’s industries.
They created the most productive firms, introduced new technology to the
economy, and became the drivers of the export boom. The SEZs, where
foreign producers could operate with good infrastructure and with a
minimum of hassles, deserve considerable credit.
But if China welcomed foreign companies, it always did so with the
objective of fostering domestic capabilities. It used a number of policies to
ensure that technology transfer would take place and that strong domestic
players would emerge. Early on, they relied predominantly on state-owned
national champions. Later, the government used a variety of incentives
and disincentives to foster joint ventures with domestic firms (as in mobile
phones and computers) and expand local content (as in autos). Cities and
provinces were given substantial freedoms to fashion their own policies of
stimulation and support, which led to the creation of industrial clusters in
Shanghai, Shenzhen, Hangzhou, and elsewhere.8
Many of these early policies would have run afoul of WTO rules that ban
export subsidies and prohibit discrimination in favor of domestic firms—if
China had been a member of the organization. Chinese policy makers
were not constrained by any external rules in their conduct of trade and
industrial policies and could act freely to promote industrialization.
By the time China did join the WTO, in 2001, it had had created a strong
industrial base, much of which did not need protection or nurturing. China
substantially reduced its tariffs in preparation for WTO membership,
bringing them down from the high levels of the early 1990s (averaging
around 40 percent) to single digits in 2001. Many other industrial policies
were also phased out.
However, China was not yet ready to let the push and pull of global
markets determine the fate of its industries. It began to rely increasingly on
a competitive exchange rate to effectively subsidize these industries. By
intervening in currency markets and keeping short-term capital flows out,
the government prevented its currency (renminbi) from appreciating, which
would have been the natural consequence of China’s rapid economic
growth.
Explicit industrial policies gave way to an implicit industrial policy
conducted by way of currency policy.
Asia’s economic experience violates stereotypes and yet offers something
for everyone. In effect, it acts as a reflecting pool for the biases of the
observer. If you think unleashing markets is the best way to foster
economic development, you will find plenty of evidence for that. If you think
markets need the firm, commanding hand of the government, well, there is
much evidence for that too.
In general, I think the resolution asks a simple factual question – On balance, does
economic globalization reduce poverty? Since it is a factual question, I don’t think
the Pro can defend a specific type of economic globalization (and that may smell too
much like a Plan for people to be comfortable), but the important point is that
globalization can be defended, even if not its worst form.