Foundation Briefs
Advanced Level February Brief
Resolved: On balance, economic globalization
benefits worldwide poverty reduction.
February 2015
Table of Contents
Table of Contents
Table of Contents .................................................................................................................................................... 1
Definitions............................................................................................................................................................. 12
Definition AMS ........................................................................................................................................ 12
Statistics Demonstrating Economic Globalization AMS .......................................................................... 12
Topic Analysis One............................................................................................................................................... 14
Topic Analysis Two .............................................................................................................................................. 23
Pro Evidence ......................................................................................................................................................... 33
Success in the Reduction of Poverty................................................................................................................. 34
Extraordinary Success in Global Poverty Reduction AMS ...................................................................... 34
Poverty Reduction in India, Columbia, Zambia, Mexico, and Ethiopia AMS ......................................... 35
Poverty Reduction Millennium Goals Achieved AMS ............................................................................ 35
Poverty Reduction Across all Regions AMS ............................................................................................ 36
Growth in Developing Countries Since Rise of Economic Globalization AMS ...................................... 36
Even the poorest in society are better off, Fj ............................................................................................ 37
Reversing Globalization will not help, Fj ................................................................................................. 38
Globalization Reduces Inflation ................................................................................................................... 39
Correlation between globalization increasing and inflation falling, Fj ..................................................... 39
Efficient Firms have Lower Prices, Fj ...................................................................................................... 39
Increasing output decreases inflation, Fj .................................................................................................. 40
This also applies to emerging economies, Fj ............................................................................................ 40
Globalization changes the goals of central banks, Fj ................................................................................ 41
Globalization has had a strong effect on reducing inflation, Fj ................................................................ 41
Domestic Prices Become Less Volatile, Fj ............................................................................................... 42
Globalization reduces inflation by reducing producer prices, Fj .............................................................. 42
Globalization reduces inflation by increasing labor productivity, Fj ....................................................... 42
Globalization has been especially important in reducing inflation in manufacturing, Fj ......................... 43
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Further globalization will continue to decrease inflation, Fj .................................................................... 43
Globalization reduced inflation in the United Kingdom, Fj ..................................................................... 43
Globalization reduced inflation in Europe, Fj........................................................................................... 43
Globalization reduced inflation in the United States, Fj ........................................................................... 44
Developing Countries Benefit from Global Economic Engagement ................................................................ 45
Poorer Countries Achieve Success through Global Economic Expansion AMS ..................................... 45
Developing Countries that Participate in Global Market Succeed AMS .................................................. 46
Global Trade Liberalization and the Developing Countries. PSM ........................................................... 47
The effect on Poverty with Agreement on Agricultural Global Trade. PSM ........................................... 48
Poverty and Social Analysis of Trade Agreements. PSM ........................................................................ 49
Case study: Mauritius and resource-scarce coastal Africa. DAT ............................................................. 50
Globalization Reduces Global Inequality Overall ............................................................................................ 51
Global Inequality Reduced AMS .............................................................................................................. 51
Income inequality Growth is an Exaggeration AMS ................................................................................ 51
No Overall Increase in Global Inequality AMS ....................................................................................... 52
Globalization increases equality of opportunity ........................................................................................... 54
The presence of multinational firms increases equality of opportunity. DAT ......................................... 54
Trade liberalization gives small businesses a competitive advantage against large ones. DAT .............. 56
Benefits of Economic Globalization for Developing Countries ....................................................................... 57
Globalization Improves Access to Necessary Materials AMS ................................................................. 57
The correlation between economic growth and globalization. DAT ........................................................ 58
Trade Liberalization in China. PSM ......................................................................................................... 59
Statistically linking trade with economic growth. DAT ........................................................................... 60
Examples of How Nations Benefit from Economic Globalization................................................................... 61
Nigeria is not a Victim of Economic Globalization AMS ........................................................................ 61
Nigeria Would Benefit from Further Economic Globalization AMS ....................................................... 62
Economic Globalization and its Impact on Poverty: Case Study Pakistan. PSM..................................... 62
Trade Liberalization and Poverty Reduction: Evidence from Indian States. PSM................................... 63
Trade Liberalization and Poverty in India. PSM ...................................................................................... 64
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Trade Liberalization and Poverty Reduction in Sub-Saharan Africa. PSM ............................................. 65
Trade Liberalization and Poverty Alleviation in Nigeria. PSM ............................................................... 66
Trade Liberalization in Ghana. PSM ........................................................................................................ 67
Trade Liberalization in Indian States. PSM .............................................................................................. 68
Poverty Alleviation in Nigeria with Trade Liberalization. PSM .............................................................. 69
Trade Liberalizing Financing in Ghana. PSM .......................................................................................... 70
Poverty Reduction in Least Developed Countries. PSM .......................................................................... 71
Benefits of Free Trade ...................................................................................................................................... 72
Key Benefits of Free Trade in Globalization AMS .................................................................................. 72
Free Trade Fosters Economic Freedom AMS .......................................................................................... 73
Sub-Saharan Africa Would Benefit from Greater Economic Freedom AMS .......................................... 74
Developing Countries Benefit from Freer Trade AMS ............................................................................ 75
Potential for Free Trade in Reducing Poverty AMS ................................................................................. 75
Trade between developing countries insulates their growth from global downturns. DAT ..................... 76
Developing Countries Integrate into Global Supply Chains AMS ........................................................... 77
Impact of Trade Liberalization on Food Security and Poverty. PSM....................................................... 78
Trading Up: Impact of Trade Liberalization on Poverty. PSM ................................................................ 79
Trade Liberalization in Developing Countries. PSM ............................................................................... 79
Trade Liberalization and Poverty: The Link. PSM ................................................................................... 80
International Trade and Poverty Alleviation. PSM................................................................................... 81
Multilateral Trade Liberalization and Trade Reduction. PSM ................................................................. 82
Trade liberalization and Poverty Reduction. PSM ................................................................................... 83
Trade Liberalization and the Poor. PSM................................................................................................... 84
Market Opportunities with Trade Liberalization. PSM ............................................................................ 85
Largest Gains from Trade Liberalization. PSM ........................................................................................ 86
Free Labor Laws Benefit Developing Countries .............................................................................................. 87
How Migration Benefits Developing Countries AMS ............................................................................. 87
Key to Capitalizing on Migration Benefits AMS ..................................................................................... 88
Technology Globalization Helps Developing Countries .................................................................................. 89
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New Technology Lowers Entry Barriers AMS ........................................................................................ 89
Small Business Growth is Crucial for Developing Countries AMS ......................................................... 90
Opportunities of Biotechnology AMS ...................................................................................................... 90
Growth Potential in Agriculture AMS ...................................................................................................... 91
New Technology Allows Agriculture in Dryer Areas AMS .................................................................... 92
Linking Globalization to Modern Farm Technology AMS ...................................................................... 92
New technology benefits skilled workers and local firms. DAT .............................................................. 93
The Impacts of Global Investment on Economic Growth ................................................................................ 94
Linking economic growth to poverty reduction. DAT ............................................................................. 94
Foreign direct investment has been a primary driver of economic growth. DAT .................................... 95
International investment as a means of job creation. DAT ....................................................................... 96
Globalization Reduces War .............................................................................................................................. 97
Economic interdependence makes war an unattractive option, Fj ............................................................ 97
Polachek and Seiglie study, Fj .................................................................................................................. 98
Economic connections are stronger than shared political ideologies, Fj .................................................. 98
Globalization Reduces Civil War ................................................................................................................. 99
Promoting Development, Fj ...................................................................................................................... 99
Reducing Income Inequality, Fj ................................................................................................................ 99
Reducing State Control Over The Economy, Fj ..................................................................................... 100
Increasing Communication And Information Flows, Fj ......................................................................... 100
Reducing Export of Primary Products, Fj ............................................................................................... 100
Increasing the Size of Security Forces, Fj .............................................................................................. 101
Generating Economic Benefits, Fj .......................................................................................................... 101
Con Evidence ...................................................................................................................................................... 102
Developed Countries Shape Trade Policy to their Own Advantage ............................................................... 103
Trade Policies are Dominated by Developed Countries AMS ............................................................... 103
Trade Liberalization and Evidence of Negative Effects on Poor. PSM ................................................. 103
International investment in developing countries favors large multinationals over locals. DAT .......... 104
International trade liberalization prescriptions cut safety nets in developing countries. DAT ............... 105
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Multinational companies often take advantage of poorer countries, Fj .................................................. 106
Economic Globalization Increases Inequality ................................................................................................ 107
Mind the Gap: Economic Globalization Widens the Global Inequality Gap AMS ................................ 107
Trade Deficits for Developing Countries Grow AMS ............................................................................ 107
The Critics Agree AMS .......................................................................................................................... 108
Wealth Generated by Economic Globalization Does Not Trickle Down AMS ..................................... 109
Economic growth in developing nations grows inequality, too. DAT ................................................... 109
Some stats on inequality, Fj .................................................................................................................... 110
The impact of globalization on inequality. DAT .................................................................................... 111
Linking Inequality and Hindrances to Poverty Reduction .......................................................................... 112
Developing countries cannot leverage economic growth from globalization effectively. DAT ............ 112
Trading Off the Poor. PSM ..................................................................................................................... 113
Trade Liberalization and Adversely Affects on Poverty. PSM .............................................................. 114
Liberalizing international finance cuts off fiscal choice for the poor. DAT ........................................... 114
Economic Globalization Reduces Security..................................................................................................... 116
Financial Uncertainty for Developing Countries AMS .......................................................................... 116
China is the chief thief of U.S. intellectual property FJ.......................................................................... 117
Chinese dumping hurts American businesses FJ .................................................................................... 118
China is clearly guilty of dumping FJ ..................................................................................................... 119
Economically Unhealthy Dependence AMS .......................................................................................... 120
Developing Countries Hurt Deepest by Global Economic Crises AMS ................................................ 121
Most developing countries are commodity-dependent, which fluctuate in the global market. DAT ..... 121
Problems with Financial Globalization for Developing Countries: Instability AMS ............................. 122
Case study: Sub-Saharan Africa is economically vulnerable to international markets. DAT ................ 122
Import reliance threw Sub-Saharan Africa into economic freefall. DAT ............................................... 123
Developing economies are the most susceptible to trade shocks. DAT ................................................. 124
Economic Globalization Hinders Other Necessary Means of Globalization ................................................. 125
Globalization of Labor Standards, Environmental Protection, Etc. Neglected AMS ............................. 125
Key Resources Damaged AMS .............................................................................................................. 126
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Misguided Intervention AMS ................................................................................................................. 127
One Size Fits All Approach Fails AMS .................................................................................................. 128
Environmental Problems with Economic Globalization AMS ............................................................... 129
Investment on a national level to leverage the global economy hurts the poor. DAT ............................ 130
Trade Liberalization is Not a Panacea for Poverty. PSM ....................................................................... 131
False Premises of Trade Liberalization. PSM......................................................................................... 132
Globalization has hindered education in Africa. DAT ........................................................................... 133
Examples of Developing Countries Hurt by Economic Globalization ........................................................... 134
Failure to Reduce Poverty in Nigeria AMS ............................................................................................ 134
Devastating Effects of Trade Liberalization in Zambia and Ghana AMS .............................................. 135
Trade Liberalization and Lagging Regions in Asia. PSM ...................................................................... 135
Globalization created instability in Thailand and Indonesia, Fj ............................................................. 136
Chinese Economic Involvement in Africa Hurts African Countries .......................................................... 137
Toxic Relationship AMS ........................................................................................................................ 137
Trade with China Hurts African Business AMS..................................................................................... 138
Chinese Hinder African Countries from Reaching Economic Potential AMS ....................................... 138
Dutch Disease ............................................................................................................................................. 140
Dutch Disease can appreciate the real exchange rate, Fj ........................................................................ 140
Commodity rich countries that trade extensively are often doomed, Fj ................................................. 141
Link between globalization and Dutch Disease, Fj ................................................................................ 142
Oil .......................................................................................................................................................... 143
Oil Exporting Countries are vulnerable to Dutch Disease, Fj ................................................................ 145
Oil Exporting Countries are already experiencing Dutch Disease, Fj .................................................... 145
Globalization Measures Hurt Developing Countries ...................................................................................... 146
Structural Adjustment Programs Hurt Developing Countries AMS....................................................... 146
Developing countries are increasingly capable of dealing with poverty locally. DAT .......................... 146
Reliance on global trade is a vulnerability for developing countries. DAT ........................................... 147
Developing countries cannot regain import tariff revenue. DAT ........................................................... 148
The influx of international money and power saps African nations’ governing ability. DAT ............... 149
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Globalization has fueled rampant migration in developing countries: Brazil case study. DAT............. 150
Export Oriented Agriculture Shift Creates Poverty ........................................................................................ 151
Export Oriented Agriculture Shift Hurts Developing Countries, Creates Poverty AMS ....................... 151
International investment has abandoned agriculture and, in turn, the rural poor. DAT ......................... 152
Case study: Ethiopia’s agricultural trade liberalization harmed export-oriented farmers. DAT ............ 153
Problems with Debt Relief .............................................................................................................................. 154
Charity or Debt Relief Fails to Reduce Poverty AMS ............................................................................ 154
Aid Backfires AMS................................................................................................................................. 154
Outsourcing and Inequality in Developing Nations ....................................................................................... 155
When foreign multinationals hire local labor, the poor do not see benefits. DAT ................................. 155
Globalization has unpaired high and low-skilled workers in developing countries. DAT ..................... 156
Low-skilled workers are excluded from the global economy. DAT ...................................................... 157
Developing countries outside Asia have missed the boat on benefitting from globalization. DAT ....... 157
Globalization Increases the Likelihood of Civil War ..................................................................................... 159
Promoting Underdevelopment, Fj ........................................................................................................... 159
Raising Income Inequality, Fj ................................................................................................................. 159
Reducing State Control of The Economy, Fj .......................................................................................... 160
Increasing Communication and Information Flows, Fj .......................................................................... 160
Promoting Export of Primary Products, Fj ............................................................................................. 161
Stimulating Alliances Between Rebels and Organized Crime, Fj .......................................................... 161
Generating Unequal Economic Benefits, Fj ........................................................................................... 161
Pro Counters........................................................................................................................................................ 162
African Businesses Not Dependent on Aid .................................................................................................... 163
African Businesses Not Dependent on the Eurozone AMS.................................................................... 163
The problem with how Income inequality Studies Measure Income ............................................................. 164
Income Inequality is Decreasing Overall AMS ...................................................................................... 164
Studies Fail to Account for Geographic Differences AMS .................................................................... 165
World Income Inequality Stabilized AMS ............................................................................................. 165
Importance of Seeing the Big Picture AMS ........................................................................................... 167
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China Isn’t Responsible for Global Poverty Reduction.................................................................................. 168
While China’s growth accounted for heavy global growth, other regions mirrored it. DAT ................. 168
Looking forward, China will be a nonfactor in global poverty reduction. DAT .................................... 169
Foreign Direct Investment (FDI) Benefits Developing Countries.................................................................. 170
Increased FDI Benefits Developing Countries AMS ............................................................................. 170
FDI can step in where local institutions fail. DAT ................................................................................. 171
FDI doesn’t increase inequality over the long term. DAT...................................................................... 172
FDI is key to technology globalization (see corresponding Pro Evidence topic). DAT ......................... 173
Economic Globalization is Beneficial in the Long Term ............................................................................... 174
Indirect Impacts of Financial Globalization AMS .................................................................................. 174
Globalization not to blame for Africa’s current economic situation, Fj ................................................. 175
Dutch Disease Is Not Impactful .................................................................................................................. 176
Dutch Disease rarely happens, Fj............................................................................................................ 176
Globalization Not to Blame for Poverty ......................................................................................................... 177
Too Many Other Factors to Blame Globalization AMS ......................................................................... 177
Domestic institutions bear the blame for globalization’s failures, Fj ..................................................... 178
Not all nations are set up to benefit from globalization. DAT................................................................ 179
While frequent, increasing poverty is still an exception to the rule. DAT ............................................. 180
One explanation for Africa’s economic lag: financial outflow. DAT .................................................... 181
The poverty impact of capital flight in Africa. DAT .............................................................................. 181
In many African nations, stagnation is due to misallocated internal resources. DAT ............................ 182
Globalization needs to be coupled with sensible domestic policy. DAT ............................................... 183
Globalization Does Not Promote Economic Inequality ................................................................................. 184
There is no empirical causative link between globalization and inequality. DAT ................................. 184
A summary of findings on inequality. DAT ........................................................................................... 184
Trade Liberalization Doesn’t Decrease States’ Revenue ............................................................................... 185
Case study: Sub-Saharan African nations make more tax revenue after trade liberalization. DAT ....... 185
Globalization and Environmental Protection .................................................................................................. 186
Globalization has not led to any environmental opportunism. DAT ...................................................... 186
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Con Counters ...................................................................................................................................................... 187
Figures Showing Poverty Reduction are Inaccurate ....................................................................................... 188
Reduction in Poverty can be Only Attributed to China’s Economic Growth AMS ............................... 188
Problems with Surveys of Income and Expenditure AMS ..................................................................... 189
Problems with Poverty Line Calculation AMS ...................................................................................... 190
A major factor is how many people, annually, approach the poverty line. DAT ................................... 191
Global poverty reduction in the past has been deceptively easy. DAT .................................................. 191
Case study: village-level studies show no progress on poverty. DAT ................................................... 193
Economic data on globalization’s effects makes showing causal relationships impossible. DAT ........ 194
Chinese and Indian poverty reductions may not have been fuelled by globalization. DAT .................. 195
Agriculture is better at reducing poverty, Fj ........................................................................................... 196
Globalization does not reduce inflation ...................................................................................................... 197
Commodity Prices have increased due to globalization, Fj .................................................................... 197
Globalization does not reduce inflation in the long term, Fj .................................................................. 197
Commodities will have increased inflation, Fj ....................................................................................... 197
Oil prices have increased due to globalization, Fj .................................................................................. 198
Studies on globalization are not reliable, Fj............................................................................................ 198
Disadvantages of Free Trade .......................................................................................................................... 199
The Problems with Free Trade AMS ...................................................................................................... 199
How Free Trade Hurts Developing Countries AMS............................................................................... 200
The primary benefit of free trade is for companies requiring high-skill labor. DAT ............................. 201
Free trade treaties can force countries into human rights violations. DAT ............................................ 202
Implementing free trade responsibly has been thus far voluntary and unsuccessful. DAT .................... 203
Economic benefits of trade are not guaranteed and depend on what is being traded. DAT ................... 204
Global Inequality Is a Deceptive Measurement .............................................................................................. 205
The world has become more unequal, not less, as globalization has sped up. DAT .............................. 205
In Brazil, trade liberalization decreased inequality by lowering skilled wages. DAT ........................... 206
Globalization Doesn’t Reduce Poverty........................................................................................................... 207
Poverty numbers are misleading, Fj........................................................................................................ 207
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Rising Food Prices mean more hungry people, Fj .................................................................................. 207
East Asian countries skew the statistics, Fj ............................................................................................ 207
The number of poor countries is increasing, Fj ...................................................................................... 208
Globalization has not helped Sub-Saharan countries, Fj ........................................................................ 208
Globalization creates more climate change, Fj ....................................................................................... 208
Methodology flaws in pro-globalization studies. DAT .......................................................................... 209
Case study in sub-Saharan Africa: Recent empirical data and justification of findings. DAT .............. 210
The benefits of free trade don’t reach the generally poorest nations (sub-Saharan Africa). DAT ......... 211
Globalization Slows Technological Progress ................................................................................................. 212
Schumpeter’s Theory AMS .................................................................................................................... 212
Economic Globalization’s Impact on Progress AMS ............................................................................. 212
Domestic Resources Can Eradicate Poverty ................................................................................................... 213
Case study: African nations have internal funding for substantial anti-poverty measures. DAT ........... 213
China’s poverty reduction was not wholly dependent upon globalization, Fj ........................................ 213
Response to Technological Globalization ...................................................................................................... 215
Technological globalization drives up inequality in developing countries. DAT .................................. 215
Foreign Direct Investment Is Not A Guaranteed Success .............................................................................. 216
There is still no empirical way to validate the use of FDI. DAT ............................................................ 216
Globalization doesn’t exist in a vacuum; local policies often negate gains. DAT ................................. 217
Cases ................................................................................................................................................................... 218
Pro Case .......................................................................................................................................................... 219
Introduction: ................................................................................................................................................ 219
Contention One: Economic growth leads to poverty reduction. ................................................................. 219
Contention Two: Developing Countries Benefit from Freer Trade. ........................................................... 220
Contention Three: Examples of success in developing countries. .............................................................. 220
Con Case ......................................................................................................................................................... 222
Introduction: ................................................................................................................................................ 222
Contention One: Globalization reduces equality of income ....................................................................... 222
Contention Two: Globalization reduces equality of economic opportunity ............................................... 223
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Contention Three: Without income and opportunity, poverty worsens ...................................................... 223
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Definitions
Definitions
Definition AMS
Shangquan, Gao. “Economic Globalization: Trends, Risks, and Risk Prevention.” 2000.
United Nations.
http://www.un.org/en/development/desa/policy/cdp/cdp_background_papers/bp200
0_1.pdf Professor Gao Shangquan, born in September 1929 in Jiading - Shanghai, is
one of China's most prominent economists, a key figure in thinking-thanking
economic reforms in China. He is a senior research fellow, professor and former
vice-minister of the State Commission for Restructuring the Economic Systems, the
central agency that played an essential role in setting up and carrying out economic
reform policy. He is also appointed member of the United Nations Committee for
Development Policy and consultant for the World Bank.
Economic globalization refers to the increasing interdependence of world economies as a result of the growing scale
of cross-border trade of commodities and services, flow of international capital and wide and rapid spread of
technologies. It reflects the continuing expansion and mutual integration of market frontiers, and is an irreversible
trend for the economic development in the whole world at the turn of the millennium. The rapid growing
significance of information in all types of productive activities and marketization are the two major driving forces
for economic globalization. In other words, the fast globalization of the world’s economies in recent years is largely
based on the rapid development of science and technologies, has resulted from the environment in which market
economic system has been fast spreading throughout the world, and has developed on the basis of increasing crossborder division of labor that has been penetrating down to the level of production chains within enterprises of
different countries.
Statistics Demonstrating Economic Globalization AMS
Shangquan, Gao. “Economic Globalization: Trends, Risks, and Risk Prevention.” 2000.
United Nations.
http://www.un.org/en/development/desa/policy/cdp/cdp_background_papers/bp200
0_1.pdf Professor Gao Shangquan, born in September 1929 in Jiading - Shanghai, is
one of China's most prominent economists, a key figure in thinking-thanking
economic reforms in China. He is a senior research fellow, professor and former
vice-minister of the State Commission for Restructuring the Economic Systems, the
central agency that played an essential role in setting up and carrying out economic
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Definitions
reform policy. He is also appointed member of the United Nations Committee for
Development Policy and consultant for the World Bank.
The advancement of science and technologies has greatly reduced the cost of transportation and communication,
making economic globalization possible. Today’s ocean shipping cost is only a half of that in the year 1930, the
current airfreight 1/6, and telecommunication cost 1%. The price level of computers in 1990 was only about 1/125 of
that in 1960, and this price level in 1998 reduced again by about 80%. This kind of ‘time and space compression
effect’ of technological advancement greatly reduced the cost of international trade and investment, thus making it
possible to organize and coordinate global production. For example, Ford’s Lyman car is designed in Germany, its
gearing system produced in Korea, pump in USA, and engine in Australia. It is exactly the technological
advancement that has made this type of global production possible.
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Topic Analysis One
Topic Analysis One
History
Trade has been an integral part of human society for centuries. By the 20th century most towns were influenced
by foreign markets to some extent. The world was revolutionized by advances in ship and rail transportation
which accelerated this economic globalization. In fact, over 60 million people immigrated mainly to the
Americas between 1850 and 1912. To contrast, during the 1880s, immigration added 0.5 per cent annually to
the population of the U.S. and Canada.
World War One disrupted this Industrial globalization while most countries constructed strictly protectionist
economic policies which slowed economic growth quickly. Countries introduced immigration caps and further
offset the effects of economic globalization.
During this time period migration dropped off significantly and did not recover until mid-20th century.
In the 1970s governments began to re-emphasize trade and renege on their protectionist policies. Globalization
expanded rapidly with new forms of technology and continues to rapidly grow today.
New World Trade Organization frameworks encouraged participant nations to reduce all tariff and non-tariff
trade barriers. As more governments shifted their economies to market-based planning, businesses began to
exploit new global opportunities offered by the rapid technology growth of the 20th century. Larger
corporations took advantage of economic globalization by migrating more labor-intensive production to areas
with lower labor costs.
Since the 1930s the costs of ocean shipping have fallen by nearly 50%, airfreight by a staggering 85%, and
telecommunications by an unforeseen 99% worldwide.
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Topic Analysis One
This is also facilitating trade in goods, enlarging trade in services and has moved capital flows to a new and
higher plane.
Areas of Globalization
The World Bank defines “financial globalization” as: “global linkages through cross-border financial flows, has
become increasingly relevant for emerging markets as they integrate financially with the rest of the world.” Teams
are free to decide which aspects of financial globalization are most relevant. Most sources include free trade, free
labor, and the spread of technology as areas of significant financial integration on a global scale. This brief provides
evidence of the consequences of changing dynamics in each of these three areas.
Free Trade Laws
Free trade laws became a big issue in the United States with the industrial revolution of the 20th century.
However, it wasn’t until 1946 that international standards for trade were established. In 1946 the Bretton Woods
System was put into effect. The system provided an international structure that was intended to prevent
depressions in the future. The Bretton Woods System had rules for national trade barriers and provisions to limit
the protectionist policies many believed were at fault for the outbreak of war.
One year later, 23 countries agreed to the General Agreement on Tariffs and Trade which laid out more
international standards for trade between the 23 member nations.
In 1947, 23 countries agree to the General Agreement on Tariffs and Trade to rationalize trade among the
nations.
The map below shows participation in the World Trade Organization: dually represented with the European
Union,
Members,
Members,
Observer, ongoing accession,
Non-member, negotiations pending,
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Observer,
Non-member:
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Topic Analysis One
The European Economic Community contained standards for a specific set of European nations and was set into
effect in 1958. The European Free Trade Association followed two years later.
The International Organization for Standardization set out four different decrees on recommendations for
standardized containerization. Together these four mandates: R-668, R-790, R-1161, and R-1897, defined the
required terminology, dimensions, markings, and fittings for freight containers used in international trade.
While this mandate may seem odd, it was a crucial sign of the growing importance of international trade.
In 1971 the Zangger Committee, or the Nuclear Exporters Committee, was created to advise of the definition of
nuclear goods in enforcement of the Nuclear Non-Proliferation Treaty (NPT). The group currently has 38
member nations and meets to provide informal guidance on the regulation of nuclear materials. The
Committee’s decisions are not legally binding for its members. The nuclear industry is relevant almost solely
for developed countries with access to nuclear materials. The regulation of nuclear proliferation is relevant to
the economic causes and effects of military spending in the age of globalization. Some economists fear that
developing countries will resort to the developing of nuclear weapons or other military expansion to maintain
power in the face of new global economic regulations.
The Nuclear Suppliers Group (NSG) was created in 1974 to moderate all international trade in nuclear goods
after the explosion of a nuclear device by a non-nuclear weapon State. The group was formed in response to an
Indian nuclear test in May of 1974. It was meant to further limit the export of nuclear equipment and materials.
As of 2014, the NSG had some 48 member countries.
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Topic Analysis One
In 1973, OPEC caused waves by raising the Saudi light crude oil export price and set an Embargo on oil exports
to nations allied with Israel during the Yom Kippur War. This shock caused large trade imbalances as countries
dependent on the Middle East for oil suffered from high demand for crude oil.
In the 1970s and 1980s the Bretton Woods system broke down altogether. This setback combined with two new
oil-price shocks and Latin America’s debt crisis tested the strength of globalization through the 1980s. Many
nations adopted more protectionist policies in efforts to expand their own industries.
In January of 1994 the North America Free Trade Agreement (NAFTA) went into effect. This agreement
between Canada, the United States, and Mexico is one of the 20th century’s most vital agreements for the
regulation of financial globalization. The agreement remains controversial. Some economists claim that the pact
generated economic growth for all three countries. On the other hand, others point to the trade deficits incurred
by the United States as a result of ties to Mexico and downward pressure on United States wages.
In January of the next year the World Trade Organization was created to further regulate international trade and
mandate most favored nation trading status between all signatory nations. The World Trade Organization will
be a focus for many debates on this topic, as possibly the largest global institution for the liberalization of trade
and expansion of financial globalization.
Today any significant WTO agreements have been stalled as a result of the conflict between protectionism of
agricultural sectors and free trade of industrial goods. Developed countries generally seek to retain protectionist
policies on their own agricultural sectors. On the other hand developing countries desire fairer trade in these
sectors because agriculture is a strength for these nations. This conflict prevented any progress on WTO
negotiations since the Doha Development Round. As a result, many countries have favored bilateral free trade
agreements.
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In January of 2002 twelve countries of the European Union officially launched the Euro Zone (the economic
European Union), which then became the second most used currency in the world.
Free Labor
After World War One ended, the beginning of the regulation of international labor was laid out in the Treaty of
Versailles. The Versailles treaty contained the principle that “labor is not a commodity,” and because “peace
can be established only if it is based on social justice,” the International Labour Organization was created to
coordinate all regulations of international labor law. Member nations of the ILO were permitted to adopt and
ratify conventions and new mandates on international labor by writing these rules into their domestic laws on
labor.
The Hours of Work Convention held in 1919 first set forth the maximum of a 48 hour week and since been
ratified by 52 out of 185 member states. The United Kingdom has still not ratified the convention. The ILO
currently holds 8 conventions as core principles. These eight require freedom to join a union, bargain and take
action, the abolition of forced labor, the abolition of child labor before the end of compulsory school, and forbid
any discrimination by work places. All member states are compelled to follow these 8 core conventions even if
the nation did not ratify the convention in particular. The ILO gathers evidence and reports on member state
labor practices to ensure the following of these eight rules. Each year a global report on these core standards is
released to report on the organization’s overall progress in international labor.
The ILOs tools for enforcing its 8 core principles remain weak. As a result, many nations favor the
establishment of incorporating these labor standards into the World Trade Organization’s regulations, which has
more useful mechanisms for imposing sanctions.
The WTO rules are aimed at reducing barriers to free trade between its 157 member states. Unlike the ILO all
WTO rules are contravened and member states secure judgments by Dispute Settlement procedures. These
member states can then retaliate through trade sanctions if a trade partner is not effectively following WTO
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rules. Critics of the ILO have recommended a social clause to be included in WTO rules to allow the imposition
of sanctions for breaches of human rights in respect to international labor standards. This would allow WTO
member states to retaliate against another member state found in violation of ILO rules.
Opponents of this approach argue that integration could undermine labor rights, as many workforces are
necessarily harmed by the imposition of sanctions, but these sanctions would not guarantee labor reform. These
opponents also claim that this integration could violate the 1996 Singapore Ministerial Declaration which
established that the “comparative advantage of countries, particularly low-age developing countries, must in no
way be put into question.” Many developing countries employ low wages and poor working conditions which
serve as a comparative advantage to boost their exports and further labor regulation could put this advantage
into question. While the WTO has not adapted any labor standards, many nations employ bilateral agreements
and several countries give preference to countries that respect core labor rights, like the EU Tariff Preference
Regulation.
Technology
Technology has accelerated at a breakneck pace since the beginning of the Industrial Revolution. Today the
world feels these changes most in computerization. It is estimated today that by 2010 an average computer will
have 10 million times the processing power of a similar computer available in 1975-- a staggering achievement.
Since the launch of the world wide web in 1989, the internet has reached a global audience of 50 million and
Internet traffic continues to double every 100 days. In comparison, it took radios 37 years to reach such a large
audience and television required 15 years to garner this much global attention. These achievements are
considered a central part of globalization.
Historically inventions like steamships and refrigerators have shocked global markets. Railroad expansion and
the telegraph invention made communication/transportation easier and also pushed out more goods. The internet
allows information exchange in the blink of an eye.
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Regions of the World
The debate on financial globalization is at least partly dependent upon the region in question. While opening up free
trade is almost definitely beneficial for economic superpowers like the United States and China, many economists
believe this is detrimental for developing countries.
The majority of the world’s impoverished rely upon the agriculture industry. Many economists believe that it would
be healthiest for developing countries with large agricultural sectors to impose protectionist policies and avoid
importing too much from developed countries.
United States’ Role in Globalization
The United States underwrote the International Monetary Fund and helped establish the Bretton Woods System
to fix exchange rates and reduce global protectionist policies. During the 1970s and 1980s the United States
grew fearful of Japan’s rapidly expanding economy and became more protectionist.
After the fall of the Berlin Wall in 1989 and subsequent economic depression hit Japan, the United States
resumed its status as a leader in financial globalization.
Today the United States continues to adapt more protectionist policies. Americans today are more interested in
expanding the United States economy and increasingly fearful of financial obligations to foreign countries. In
2008 the United States exited the Doha trade talks because representatives felt the United States wasn’t getting
enough leverage for its economic sacrifices. Since then Congress continues to refuse to expand the International
Monetary Fund resources and many Americans are calling for pressure on sanction China for violating free
trade principles.
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In a recent poll the Pew Research Center found that in 23 of 39 countries the majority of respondents believed
that China had replaced or would replace the United States as the world’s economic superpower--a change that
would have significant implications for financial globalization policies.
How Globalization affects Developing vs. Developed Countries
Some economists argue that although financial globalization has numerous benefits for developed countries, global
economic integration can hurt emerging arguments in developing nations. This is likely to be an important argument
for Con teams in this debate. In fact, this is an issue that has occupied economists for decades.
Pro teams can argue that free trade is good for all producing nations involved. If each country specializes in the
production of the goods where each particular country has the lowest opportunity cost, they can gain an advantage in
these areas. Reducing barriers to free trade and encouraging economic globalization makes this theoretically
possible.
On the other hand, developing nations will find it much harder to gain a comparative advantage with fledgling
industries. Con teams can argue that discouraging financial globalization allows developing countries to protect their
infant industries and create domestic jobs rather than relying on the cheaper imports from more developed nations.
Furthermore, developing countries generally have an advantage in the production of primary products like
agriculture. Relying on the production of only these goods can hurt a developing country because these markets are
traditionally reliant on uncontrollable factors like the weather. This could lead to economics problems and a failure
to reduce poverty.
Decide which angle you want to use to attack this subject on both sides of the debate. This brief provides evidence
for each of the arguments mentioned above.
General Advice
1. Understand and be prepared for arguments involving different forms of financial globalization. This brief
provides evidence on all relevant arguments to the growing integration of our world’s economic systems.
2. Know the distinction between the effects of globalization on a world superpower and the effects on a
developing country.
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3. Similarly, know the difference between a positive financial consequence for the elite of a country and a
positive consequence for the nation’s impoverished citizens.
4. Become familiar with well-known studies on this issue so that you can rebuff opposing teams that use these
studies.
5. Statistics are important—but make sure to come up for air and explain the logic behind numerical evidence
to every judge.
Good luck as always 
--Amanda Sopkin
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Topic Analysis Two
Economics: Finding and Dissecting the Facts
If you’ve ever needed an excuse to give understanding economics a shot, this is it. Arguably, globalization and
poverty reduction have been the primary focus of economics research for the better part of the last half century. This
means that teams are at liberty to argue any rhetoric they please, and can go as far into left field doing as they fit;
there likely will be legitimate economic evidence to support them. Preponderance of evidence is, of course a separate
issue.
With that in mind, teams will need to cast research nets relatively widely to prepare for a range of opposing
arguments which, by relative PF standards, will be correspondingly diverse. Given the glut of evidence available on
the issue, this can be daunting from two angles: getting primed on the issues, and collecting the evidentiary resources
to deal with all the rhetoric available.
Covering the first point (primers), a great place to start—apart from this brief, of course—is the IMF (International
Monetary Fund) and the World Bank. Given that both organizations are somewhat accountable for prescribing
economic measures on a global scale. The primers and studies from each source are amongst the most
comprehensive without delving into excess economic jargon. The World Bank’s large commissioned studies are
especially valuable; most rigorous economics papers on globalization will typically reference them foundationally.
As for rigorous economic analysis and data, UNU-WIDER’s “Impact of Globalization on the World’s Poor” project
is a great resource to get a jump-start on deeper research. The project is comprised of nearly 60 independent papers,
authored by leading economists from educational and economic institutions around the world. Each paper is an
individual PDF hyperlinked through the project’s main page, and there are both case studies from across the globe
and general thematic papers available. A multitude of cuts in this brief are taken from this resource, but given the
sheer volume of economic data and analysis available through the project, we have just scratched the surface.
In general, reading economic papers does not have to be intimidating. The abstracts are typically available without
even opening the main papers, so it’s easy to skim. I generally will read the abstract and conclusion before going any
further. The Overview of Literature sections in academic papers are also a great resource not only for further
evidence, but for still-viable economic analysis. The methodology section, for the purposes of in-round debate, is
typically non-essential and math-heavy enough to warrant little time.
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Most high-level economic studies incorporate the same lexicon of economic terminology. I’ll spend the rest of this
analysis breaking down these terms to familiarize them; taking complex pieces of evidence and translating them into
something meaningful for a lay judge can be more crucial than data itself.
Foreign Direct Investment (FDI)
In the traditional sense, globalization is not an action. There is no concrete directive associated with globalization—
the term is a sum collective of a host of economic functions. Two primary components of what we collectively
consider “globalization” are: 1) trade liberalization, and 2) foreign direct investment.
The first of these terms is relatively self-explanatory: trade liberalization involves breaking down the barriers to
trade. This can include anything from free trade agreements to more localized trade agreements on an industry-wide
basis to unilateral reductions in import/export tariffs. You’ll find ample evidence on various forms of trade
liberalization and its impacts throughout this brief. While we pay equal credence to FDI, it is a less intuitive term
which deserves some further explanation before dealing with high-level economics evidence concerning it.
Silvio Contessi and Ariel Weinberger of the Federal Reserve Bank of St. Louis Review offer one of the most succinct
definitions of FDI:
The most widely accepted definition of FDI is known as “the IMF/OECD benchmark definition” because it was
provided by a joint workforce of these two international organizations with the objective of providing standards to
national statistical offices for compiling FDI statistics. The gist of the definition is that FDI is an international
venture in which an investor residing in the home economy acquires a long-term “influence” in the management of
an affiliate firm in the host economy. According to the definition, the existence of such long-term influence should
be assumed when voting shares or rights controlled by the multinational firm amount to at least 10 percent of total
voting shares of rights of the foreign firm.
Aggregate FDI flows are the sum of equity capital, reinvested earnings, and other direct investment capital; hence,
aggregate FDI flows and stocks include all financial transfers aimed at financing of new investments, plus retained
earnings of affiliates, internal loans, and financing of cross-border mergers and acquisitions.
To simplify further, FDI is some combination of money and management power flowing across borders. In practice,
FDI is implemented in three different forms (basic definitions taken from the Financial Times’ Lexicon definition of
FDI).
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Horizontal FDI: A company does the same activities abroad as it does domestically (I’ll be referring to “domestic”
markets as a company’s original market or center of operations). If a company has operations in multiple countries,
this is typically horizontal FDI (e.g. Lenovo manufactures computers in China and North Carolina. Same operation,
different zip code).
Vertical FDI: A company adds operations abroad to get closer to either its market (Forward) or its resources
(Backward). In the United States, for instance, Tesla sells cars directly, while every other manufacturer relies on
dealerships. If every manufacturer bought out their dealerships and took control, as Tesla currently operates, this
would be an instance of vertical FDI.
Conglomerate: A company expands operations to a new field, and does so abroad. This is the least common and
applicable to the debate.
Horizontal and vertical FDI are sometimes what the term “outsourcing” refers to: if a company invests in permanent
operations abroad (assembling tech products, for instance), this isn’t just outsourcing—it’s FDI. If the work is
simply contracted out to local corporations (Chinese company Foxconn manufactures phones for Apple, formerly
Nokia, and a handful of other companies), this is not FDI. While both lumped into “globalization,” FDI is different
in that it requires far more direct investment (hence the term) from a company into long-lasting operation in a
market.
This is an important distinction for teams to be intuitive with, as it can swing globalization-poverty linkages. For
instance, there is ample evidence for the Pro that foreign companies pay better wages in developing countries than
local businesses, thus creating skill premiums and driving up livelihoods for local populations. However, this is the
result of FDI—if a company directly invests itself in the operation of a plant or storefront in a developing country,
this has a positive impact on poverty. However, if a company simply contracts out labor to a local firm, this is
outsourcing. While there is still foreign money flooding into a high-poverty market, the absence of the foreign
company’s managerial practices or wage structure ensures that wages stay stagnant. The main point—that foreign
investment drives up wages and creates a skill premium (and further incentive for locals to pursue an education)—
can’t have an impact for the Pro if the Pro cannot distinguish between outsourcing and FDI.
This, or course, is just one instance of a litany of cases where familiarity with FDI can be important. Fundamentally,
teams should get comfortable with it for research purposes, and familiarity with FDI is integral to simply being able
to explain globalization to a lay judge in a manner that’s constructive to advocacies.
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Gini Coefficient
The Gini coefficient (alternate names: Gini index, Gini ratio) is a measure of economic inequality in a given
population. The scale runs from 0 (all the wealth is spread perfectly evenly between everyone) and 1 (one person
controls all the wealth). This term is important because it is typically the first number that comes up in any
discussion about income inequality; given the material available for this resolution, it’s more likely than not that
income inequality will come in most rounds. The Gini coefficient is helpful in two ways: 1) It is easily the most
succinct way to demonstrate economic inequality, and 2) It is the easiest economic term to work with in context of a
debate term: it’s simple to explain and great for quickly comparing two different nations (something teams will be
doing plenty of) without wasting too much objectionable rhetoric.
Here’s how it works: the Gini coefficient is definable purely as the area A in the above graphic (the gray space). The
horizontal (x) axis represents percentages of the populations, as arranged in order of increasing wealth. There are two
functions graphed above: the Line of Equality and the Lorenz Curve. The Lorenz curve describes income
distribution in some arbitrary population; the Line of Equality (this isn’t a technical term; I’m using capital letters to
correspond to the graphic). So, going halfway across the x-axis, we end up at 50% of the population. Everything to
the right of that point represents the wealthiest half of the population; everything to the left represents the poorest.
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Kind of like how percentile grades on state exams work, the point on both the Lorenz and Equality curves
corresponding to 50% represents how much wealth is possessed by everyone to the left of that point. In this example,
then, that point would represent the share of wealth held by the poorest half of the population. This is why, for the
Equality line, the point corresponding to 50% is exactly halfway up; the poorest half controls half the wealth, since
everyone controls the same amount of wealth. For any economic system, equality increases as a function of how
close the Lorenz curve is to the line of equality.
This graphic helps to picture, functionally, what an economic distribution in a given country looks like with a given
coefficient. A coefficient of 0 is just a line. A coefficient of 1 is the entire area under the Line of Equality (gray plus
blue). Using those two reference points, it’s possible to get a decent idea of what any other coefficient value should
look like.
So, how does this term impact debates? For starters, it can be used as a direct precursor. One of the primary facets
for growth in developing countries is to sustain high rates over long periods. This is one of several reasons for global
concern over China’s slowing growth rate. One of the primary, and often overlooked, prerequisites for economic
growth is stability in a more literal sense—is a nation’s society stable enough to support entrepreneurship, day-today life, etc.? Conveniently enough, high Gini values—typically over 40—have been correlated with greater levels
of social instability and potential revolution. It’s a simple enough connection for teams (like Pro) to make in round.
Instances like what I’ve detailed in the previous paragraph explain why it’s important for teams to familiarize
themselves with the mechanisms and definition of the Gini coefficient. Additionally Con teams will likely find it
helpful to have case studies on hand which contradict the traditional correlation of high Gini values to instability and
economic stagnation.
One of the best examples of this is Namibia; despite having the world’s highest index, it is one of the stablest
countries in its regions—violence and instability pale in comparison to its lower-indexed neighbors like Nigeria.
This reason for this is the nation’s relative reliance on subsistence farming, a striking instance of poverty and
instability failing to line up.
Kuznets Curve
Like the Gini coefficient, the Kuznetz curve is a relatively simple way to visually demonstrate complex economic
concepts. Unlike the Gini coefficient, the Kuznets curve works over time and is a great rebuttal tool for teams on
both sides; the Kuznets curve is a great way to help avoid costly fights over inequality while also succinctly
defending economic advocacies to lay judges.
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The Kuznets curve is one of the most common graphical and analytical tools to discuss nations’ economic growth
over time. It is usually brought up in a comparative sense—economic literature often discusses economic growth of a
nation in relation to a Kuznets curve as a means of seeing if growth is “on track.”
The Kuznets curve is based on a Cold-War era theory proposed by economist Simon Kuznets. The curve itself is
plotted as economic inequality (any measurement can be used; Gini coefficient is a popular one) against economic
development (typically income or GDP per capita; again, the choice of variables isn’t integral here). The curve, quite
simply, is an upside-down U.
Of course, no real country’s curve looks like this; we’ll look at real-world curves and applications further below.
Assuming constant growth (which typically happens for many developing countries), the Kuznets curve is also a
representation of inequality against time. The Kuznets curve represents an ideal model of constant real-world
growth. The economic framework is one which assumes progressions of urbanization, industrialization, and financial
development as time and economic growth progress. Moving left to right, the curve assumes that inequality grows as
unskilled labor moves to urban centers, the wealthy take advantage of new investment opportunities, and economies
move toward industrialization—away from agriculture. Following peak industrialization, we get a theoretical
decrease in equality as economies shift away from industrialization to service industries, and the welfare state grows.
So, why care about the Kuznets curve in context of this PF topic? Put simply, it’s a great way to visualize and
contextualize economic growth and inequality. Take a look at the back half of the last paragraph: the graph is
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Topic Analysis Two
representative of the impact of economic principles like urbanization and industrialization. These are also the
demonstrable impacts of globalization; they describe, in a broad sense, the economic scenario unfolding in China
and Southeast Asia for the past three decades as foreign investment has flooded in. China’s government has been
notoriously cagey about inequality figures. The following graphic, prepared by Wenjie Zhang of the University of
Texas Inequality Project using data from 1987 to 2012, is likely the best representation of inequality against
economic growth in China.
The blue, red, and purple lines graph overall, interprovincial, and intersectoral inequality, respectively, in the
Chinese economy; the blue (overall) curve is the most applicable here. Theil’s T is the Theil index, which (like the
Gini coefficient) puts a numerical figure on inequality.
Looking at China’s economic growth, the nation managed steady double-digit economic growth rates throughout the
period covered here, so we can readily compare this to the Kuznets curve. In fact, China’s inequality pattern strongly
correlates with the front 75% of a Kuznets curve. If we look at real-world factors at play, China has seen strong,
consistent influxes of FDI (foreign direct investment, leading to a contemporary boom in industry. As this
millennium has worn on, we’ve seen a new wave of entrepreneurship and financial investment within China, along
with some FDI shifting to China’s neighbors, where labor prices are relatively lower. This economic diversification
has seen an accompanying drop in inequality which appears sustained.
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In the Western world, the picture is a little hairier. The problem is that data and analysis typically goes back to the
early 20th century; given that one of the most rabid periods of industrialization and urbanization occurred in the late
19th century, we’re left staring at the back half of the Kuznets curve, assuming predicted behavior. The following
graphic was prepared by Swedish economists Jesper Roine and Daniel Waldenström in their paper “The Evolution of
Top Incomes in an Egalitarian Society,” as cited by Allan H. Meltzer of the Wall Street Journal.
Up until around 1985, this looks like the back half of our Kuznets curve, until inequality starts rising again. It would
be too simplistic to pin this graph on the previously discussed economic principles of the Kuznets curve; the authors
attribute the decline in inequality to the emergence of the welfare state (i.e. government-backed income
redistribution), while the more contemporary uptick is credited to the emergence of global labor forces, which
suppressed wages for the general workforce while the top 1% of earners (lawyers, surgeons, etc.) continued to
increase earnings due to their unique values in the economy.
The Kuznets curve, and an understanding of inequality-time relationships across the world, can be a great asset for
teams regardless of side or how much they wish to emphasize inequality. Between the theoretical Kuznets curve and
the Chinese/Western examples, teams on both sides have enough material to make economically valid rebuttals
against inequality points in a succinct way. For Pro teams, this can be used as part of an advocacy to demonstrate
how seemingly rampant and increasing inflation in the developing world shouldn’t be negatively impactful over the
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Topic Analysis Two
long term, while Con teams can use real-world divergence from the “upside-down U” of established theory to
demonstrate theoretical economic impacts without straying into complicated rhetoric or needless extra jargon.
Further Terms Explained
Inclusive Growth
Also referred to as pro-poor development, though there are some subtle differences. Defined as rapid economic
growth categorized by growth across a multitude of sectors and inclusive of nations’ labor forces. This term in itself
is not too useful or common, but fundamentally, inclusive growth is what Pro teams want to demonstrate is
happening worldwide. By establishing the tenets of inclusive growth, teams get a clear and easily-attainable
framework for their rhetoric. Showing globalization’s links to poverty reduction is onerous; showing how
globalization contributes to economic growth, multi-sector growth in particular, and opens up opportunities for large
pieces of the labor force is a more discrete set of objectives.
Poverty threshold
In more simple terms, the poverty line. For teams leaning heavily on economic data, any framework needs a concrete
figure to utilize. On a global scale, $1.25/day is a helpful number. This is the United Nations’ limit for poverty, and
the number against which most economic papers will base their evaluations of poverty, given that the UN
Millennium Development Goals are a baseline by which economists measure the success of poverty reduction efforts
(see below).
United Nations Development Program (UNDP)
The UNDP is the UN’s branch devoted to global poverty reduction. The UNDP has set Millennium Development
Goals, which have been the guidelines by which global economic measures are generally implemented and
measured. The Millennium Development Goals—there are eight total— of note for this topic are one (eradicate
extreme poverty and hunger) and eight (develop a global partnership for development). These goals are particularly
relevant because the UNDP calls for them to be met by the end of this year—it’s currently a good time for
evaluations of global progress, and studies will likely reference the UNDP’s goals as benchmarks for economic
performance. The eradication goal—halving global poverty by the end of this year—has technically been met.
Dutch-disease
This term is currently a staple of economic growth analysis, though it originally described the woes of the Dutch
economy in the 1970s. It was originally coined by The Economist, a publication which has some invaluable analysis
pieces for the current topic (several of which are cut throughout this brief). The term is defined as problems caused
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Topic Analysis Two
by soaring commodity exports. Papers on this subject are great for teams looking for both historical and
contemporary case studies of globalization’s side effects (and their prevention); given that poor, developing
countries have been seizing on commodity exports as a crucial revenue stream, analyses centered around Dutchdisease can be useful predictors of the harms and benefits of contemporary trends in globalization.
General Advice
Remember your audience. This is a meaty enough topic that, while being adequately prepared shouldn’t be a
monumental task, over-preparedness or hitting a wall shouldn’t come up. Combine this with what I said at the top of
the topic analysis: you’ll likely have the evidence to support your rhetoric, regardless of which unorthodox direction
it takes. Even with a glut of evidence, it has no weight without great rhetoric. Economic terminology, when used
sparingly and effectively at the top of a round, is a great way to create concrete frameworks.
Use what you know. Despite the weight and complexity of evidence on this topic, the conclusions from your own
intuition from basic data will often support real-world findings. That, and great rhetoric, can be enough to win
rounds. If you don’t fully understand a piece of data or analysis, neither will your judge.
Have fun with it. This topic is sizable in scope, which means it’s also full of opportunities for your rhetorical
ingenuity. And best of luck!
-
Daniel Tsvankin
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Pro Evidence
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Pro:
Success in the Reduction of Poverty
Extraordinary Success in Global Poverty Reduction AMS
Yale University. “With Little Notice, Globalization Reduced Poverty.” July 5, 2011.
http://yaleglobal.yale.edu/content/little-notice-globalization-reduced-poverty Yale
University is a private Ivy League research university in New Haven, Connecticut.
Founded in 1701 as the "Collegiate School" by a group of Congregationalist
ministers and chartered by the Colony of Connecticut, the university is the thirdoldest institution of higher education in the United States. The University's global
research is widely-regarded all over the world.
It is customary to bemoan the intractability of global poverty and the lack of progress against the Millennium
Development Goals. But the stunning fact is that, gone unnoticed, the goal to halve global poverty was probably
reached three years ago.
We are in the midst of the fastest period of poverty reduction the world has ever seen. The global poverty rate, which
stood at 25 percent in 2005, is ticking downwards at one to two percentage points a year, lifting around 70 million
people – the population of Turkey or Thailand – out of destitution annually. Advances in human progress on such a
scale are unprecedented, yet remain almost universally unacknowledged.
Pro teams can open with some statistics on poverty reduction over the last 50 years to show the
extraordinary progress world leaders have made.
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Pro:
Poverty Reduction in India, Columbia, Zambia, Mexico, and Ethiopia AMS
National Bureau of Economic Research. “Globalization and Poverty.” 2014.
http://www.nber.org/digest/mar07/w12347.html The National Bureau of Economic
Research (NBER) is an American private nonprofit research organization
"committed to undertaking and disseminating unbiased economic research among
public policymakers, business professionals, and the academic community." The
NBER is well known for providing start and end dates for recessions in the United
States. The NBER is the largest economics research organization in the United
States. Many of the American winners of the Nobel Memorial Prize in Economic
Sciences were NBER Research Associates.
Another is that the poor are more likely to share in the gains from globalization when workers enjoy maximum
mobility, especially from contracting economic sectors into expanding sectors (India and Colombia). Gains likewise
arise when poor farmers have access to credit and technical know-how (Zambia), when poor farmers have such
social safety nets as income support (Mexico) and when food aid is well targeted (Ethiopia).
The evidence strongly suggests that export growth and incoming foreign investment have reduced poverty
everywhere from Mexico to India to Poland.
Poverty Reduction Millennium Goals Achieved AMS
Yale University. “With Little Notice, Globalization Reduced Poverty.” July 5, 2011.
http://yaleglobal.yale.edu/content/little-notice-globalization-reduced-poverty Yale
University is a private Ivy League research university in New Haven, Connecticut.
Founded in 1701 as the "Collegiate School" by a group of Congregationalist
ministers and chartered by the Colony of Connecticut, the university is the thirdoldest institution of higher education in the United States. The University's global
research is widely-regarded all over the world.
By combining the most recent country survey data of household consumption with the latest figures on private
consumption growth, we generated global poverty estimates from 2005 up to the present day. Poverty reduction
accelerated in the early 2000s at a rate that has been sustained throughout the decade, even during the dark recesses
of the financial crisis. Today, we estimate that there are approximately 820 million people living on less than
$1.25 a day. This means that the prime target of the Millennium Development Goals – to halve the rate of
global poverty by 2015 from its 1990 level – was probably achieved around three years ago. Whereas it took 25
years to reduce poverty by half a billion people up to 2005, the same feat was likely achieved in the six years
between then and now. Never before have so many people been lifted out of poverty over such a brief period of time.
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Pro:
Poverty Reduction Across all Regions AMS
Yale University. “With Little Notice, Globalization Reduced Poverty.” July 5, 2011.
http://yaleglobal.yale.edu/content/little-notice-globalization-reduced-poverty Yale
University is a private Ivy League research university in New Haven, Connecticut.
Founded in 1701 as the "Collegiate School" by a group of Congregationalist
ministers and chartered by the Colony of Connecticut, the university is the thirdoldest institution of higher education in the United States. The University's global
research is widely-regarded all over the world.
Not only is poverty falling rapidly, it’s falling across all regions and most countries. 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.
Growth in Developing Countries Since Rise of Economic Globalization AMS
Dollar, David, Kraay, Aart. "Trade, Growth, and Poverty". Finance and Development.
International Monetary Fund. Retrieved 6 June 2011. The International Monetary
Fund (IMF) is an international organization "of 188 countries, working to foster
global monetary cooperation, secure financial stability, facilitate international trade,
promote high employment and sustainable economic growth, and reduce poverty
around the world.
Per capita GDP growth in the post-1980 globalizers accelerated from 1.4 percent a year in the 1960s and 2.9 percent
a year in the 1970s to 3.5 percent in the 1980s and 5.0 percent in the 1990s. This acceleration in growth is even more
remarkable given that the rich countries saw steady declines in growth from a high of 4.7 percent in the 1960s to 2.2
percent in the 1990s. Also, the nonglobalizing developing countries did much worse than the globalizers, with the
former's annual growth rates falling from highs of 3.3 percent during the 1970s to only 1.4 percent during the 1990s.
This rapid growth among the globalizers is not simply due to the strong performances of China and India in the
1980s and 1990s—18 out of the 24 globalizers experienced increases in growth, many of them quite substantial.
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Even the poorest in society are better off, Fj
Bardhan, Pranab. “Does Globalization Help or Hurt the World’s Poor?” Berkeley
University Website. 2006.
Meanwhile in poor Asian economies like Bangladesh, Vietnam or Cambodia large numbers of women now have
work in the garment export factories at wages that are low by world standards but are much higher than what they
would have earned in alternative occupations. Of course, their work conditions may be considered as those of
‘sweatshops’ against which there is a lot of opposition among rich country consumers. But those who
complain about the exploitation of young women in the garment factories of transnational companies have to
appreciate the relative improvement in the conditions and status of these women (say, in Bangladesh)
compared to the alternatives otherwise available to them. (In their opposition to the garment sweatshops the
campus radicals of the US are joined by the mullahs of Bangladesh who do not want young women to work
outside the household).
To take a typical example, an Oxfam Report quotes an interview with Rahana Chaudhuri, a 23-year old mother of
three children working in the export processing zone producing garments in Bangladesh:
“This job is hard-- and we are not treated fairly. The managers do not respect us women. But life is much harder for
those working outside. Back in my village, I would have less money. Outside of the factories, people selling things
in the street or carrying bricks on building sites earn less than we do. There are few other options. Of course I want
better conditions. But for me this job means that my children will have enough to eat, and that their lives can
improve.”
A 2001 survey of 1322 women workers in Dhaka shows that the average monthly income of workers in garment
export factories was nearly 86 per cent above that for other wage workers living in the same slum neighborhoods.
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Reversing Globalization will not help, Fj
Bardhan, Pranab. “Does Globalization Help or Hurt the World’s Poor?” Berkeley
University Website. 2006.
Of course, one should support efforts to improve the appalling working conditions in the sweatshops (and certainly
fight against the totally indefensible cases of forced labor or hazardous or unsafe work conditions), but one should
also face up to the severely limited existing opportunities for the poor and the possible unintended consequences of
‘fair trade’ policies advocated in rich countries which may otherwise end up punishing the victims. Similar
arguments apply to the case of child labor in poor countries. Banning imports of products using their labor will not
send the children to schools, but often to inferior occupations. To give an example of unintended consequences, let
us cite the case of a bill that was brought in the US Senate in 1993 supported by good-hearted liberal senators to ban
imports of products using child labor. It was not passed subsequently, but almost immediately after the introduction
of the bill the garment industry in Bangladesh dismissed an estimated 50 thousand children it formerly employed.
UNICEF and others subsequently investigated what had happened to these children. It was found that (with the
concerted effort of some education NGO’s) about 10 thousand children did go back to school, but the rest went to
much inferior occupations, including stone breaking and child prostitution. Clearly, a much better policy than
banning imports is to help funding scholarships which make the poor parents afford to send their children to school.
Such programs like Food for Education or scholarships for girls have been successful in Bangladesh.
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Globalization Reduces Inflation
Inflation hurts the poor by increasing prices and thus making it harder for them to purchase necessary
items. Globalization helps to reduce inflation, and thus helps out the poor
Correlation between globalization increasing and inflation falling, Fj
Schwerhoff, Gregor and Sy, Mouhamadou. “How Globalization Helped Decreasing
Inflation” EconoMonitor. August 6, 2013.
From 1990 to present, tariff rates around the world have declined continuously in a worldwide push to liberalize
trade. As a result, trade has surged. The share of imports and exports in GDP increased from a global average of
38% in 1990 to 54% in 2005. While the causal link between tariff rates and trade is straightforward, there has
been another and perhaps more surprising development. In the same period inflation fell from an average of
26% to a mere 4%, a trend called “Global Disinflation”.
Efficient Firms have Lower Prices, Fj
Schwerhoff, Gregor and Sy, Mouhamadou. “How Globalization Helped Decreasing
Inflation” EconoMonitor. August 6, 2013.
In order to understand the mechanism linking these two observations we can resort to trade theory. Trade and
inflation are linked through the effect of trade on productivity. International trade increases competition and thus
gives an advantage to efficient firms. The theoretical understanding of the selection of the most efficient firms has
been pioneered by Melitz (2003).
Based on the Melitz model, Schwerhoff and Sy (2013) build a model which describes how decreasing tariff rates
increase the openness to trade and how this affects inflation. The increased competition benefits the most efficient
firms. Efficient firms have on average lower prices than inefficient ones, so that prices increase more slowly
when increasing trade forces the least efficient firms out of the market.
Independently from changes in trade openness, firms innovate and improve their productivity. This increase in
productivity reduces the price of goods relative to wages. Increases in openness reinforce this process by eliminating
the least efficient firms and allowing the efficient ones to replace them.
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Increasing output decreases inflation, Fj
Schwerhoff, Gregor and Sy, Mouhamadou. “How Globalization Helped Decreasing
Inflation” EconoMonitor. August 6, 2013.
Changes in productivity affect relative prices. This means for example that increases in productivity reduce the cost
of goods compared to the average wage (the price for labor). Inflation, however, is a monetary variable; it describes
the development of the level of prices. An increase in both wages and good prices can leave the relative price
unchanged.
So how does a change in productivity link to inflation? Friedman (1970) writes “Inflation is always and everywhere
a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of
money than in output.” Inflation is thus largely in the hands of central banks since they control the quantity of
money. Globalization, however, increases the efficiency of the economy, which allows firms to produce more
output. If the central bank does not increase the quantity of money in response to this additional growth in output,
inflation decreases.
This is why, according to Rogoff (2003), the universal nature of the fall in inflation seen in Figure 2 “invites us to
open our minds to the possibility that other factors [than monetary policy] have also been significant”. Even
countries where central banks were not in a strong position to fight inflation, it has fallen. But while not all central
banks are in a position to effectively fight inflation, all countries are affected by the increase in trade.
This also applies to emerging economies, Fj
Helbling, Thomas and Sommer, Martin. “How Has Globalization Affected Inflation”
International Monetary Fund. April 2005.
The declines in inflation and inflation volatility in the major emerging market economies have lagged the declines in
industrial countries. High inflation remained a problem in many major emerging market economies, notably in
Latin America, until the early 1990s. Since then, however, progress in stabilizing inflation at single-digit levels
has been remarkable. In the emerging market economies of Asia, inflation typically was close to levels
observed in the industrial countries.
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Globalization changes the goals of central banks, Fj
Helbling, Thomas and Sommer, Martin. “How Has Globalization Affected Inflation”
International Monetary Fund. April 2005.
Policy incentives. Determined monetary policy efforts aimed at reaching and maintaining low inflation have been a
major factor in the global decline in inflation and inflation volatility during the 1980s and 1990s documented earlier.
These efforts have reflected a number of factors. Policymakers have learned from the mistakes of the 1970s.
Financial deepening, improved fiscal policies, and smaller disturbances have also played a role. Globalization may
have played a subtle role in the strengthened conduct of monetary policy by changing the incentives of policymakers
(e.g., Rogoff, 2003). In particular, globalization may reduce their ability to temporarily stimulate output (e.g.,
Romer, 1993) and/or may increase the costs of imprudent macroeconomic policies through the adverse
response of international capital flows (e.g., Fischer, 1997; or Tytell and Wei, 2004). Central banks in
industrial countries are unlikely to lower their inflation targets further despite continued globalization. This is
because of concerns about the adverse consequences of targets that are too close to zero at times of weak
aggregate demand conditions.
Globalization has had a strong effect on reducing inflation, Fj
Helbling, Thomas and Sommer, Martin. “How Has Globalization Affected Inflation”
International Monetary Fund. April 2005.
How much has globalization contributed to the decline of inflation in emerging market economies? To answer this
question, IMF staff estimated an econometric model that links the likelihood of good inflation performance—defined
as annual inflation below 10 percent—to the factors discussed above. Specifically, the model specification includes
trade openness, inflation in advanced economies, the depth of the domestic financial sector, and the fiscal balance. In
addition, the model also controls for monetary policy credibility and conduct—as measured by central bank
independence––and the exchange rate regime (see table). The results suggest that more open economies tend to
experience lower inflation rates, even after accounting for the other inflation determinants. Coefficient estimates
vary across specifications, but, on average, a country whose trade-to-GDP ratio is 25 percentage points higher
than in another country is over 10 percentage points more likely to achieve single-digit inflation. Moreover,
since average openness in the sample increased from approximately 30 to 60 percent over the past four
decades, globalization has increased the probability of low inflation by about 10 percent in the whole group of
emerging markets.
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Domestic Prices Become Less Volatile, Fj
Helbling, Thomas and Sommer, Martin. “How Has Globalization Affected Inflation”
International Monetary Fund. April 2005.
How might globalization influence the sensitivity of prices to domestic economic conditions? With the growing
share of international trade, prices of many items that are produced or consumed at home are increasingly
determined by foreign demand and supply factors. Similarly, stronger foreign competition may reduce the pricing
power of domestic corporations, limiting their ability to raise prices during booms. Consequently, prices become less
sensitive to the domestic cycle, and the business-cycle volatility of inflation decreases.
See, for example, Kohn (2005). Razin and Loungani (2005) point out that financial integration weakens the link
between output and domestic demand by allowing for greater variation in net exports. This can also reduce the
consumer price response to domestic output fluctuations.
Globalization reduces inflation by reducing producer prices, Fj
Helbling, Thomas and Sommer, Martin. “How Has Globalization Affected Inflation”
International Monetary Fund. April 2005.
The results show that changes in the import ratio and changes in relative producer prices are negatively and
significantly related. According to the central estimates for the manufacturing sector, a 1 percent increase in
the import ratio reduces the relative producer price by about 0.1 percent. The results also suggest that the effect
tends to be the same for manufacturing and business services sectors, as simple tests for a differential impact yield
insignificant results.
Globalization reduces inflation by increasing labor productivity, Fj
Helbling, Thomas and Sommer, Martin. “How Has Globalization Affected Inflation”
International Monetary Fund. April 2005.
Changes in labor productivity also have a significant impact on changes in relative producer prices, with a 1 percent
increase in labor productivity also reducing relative producer prices by about 0.l percent.
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Globalization has been especially important in reducing inflation in manufacturing, Fj
Helbling, Thomas and Sommer, Martin. “How Has Globalization Affected Inflation”
International Monetary Fund. April 2005.
The impact of globalization in the manufacturing sectors in most countries has increased in recent years. While
openness explained only one-quarter of the decline in relative prices of manufacturing over the period 1987–94, it
accounted for about 40 percent of the decline over the more recent period. This acceleration of globalization was
visible at all levels of technological intensity, but more so in low-skill than high-skill activities.
Further globalization will continue to decrease inflation, Fj
Helbling, Thomas and Sommer, Martin. “How Has Globalization Affected Inflation”
International Monetary Fund. April 2005.
Finally, if trade integration in business services sectors were to reach the levels currently seen in manufacturing—
which would mean that the average import ratio in business services would quadruple- the relative producer prices
for these services would, on average, decline by slightly less than 20 percent. This clearly illustrates the substantial
impact that further trade integration in services could have.
Globalization reduced inflation in the United Kingdom, Fj
Bowen, Alex and Mayhew, Karen. “Globalisation, import prices and inflation: how
reliable are the ‘tailwinds’?” Bank of England. 2008.
Using this approach, Nickell (2005) found that switching to cheaper imports had reduced UK-weighted world export
price inflation by around half a percentage point per year between 2000 and 2004. Mac Coille (2008) estimated a
similar impact on UK import price inflation: between 2000 and 2006, the increasing share of UK imports
from ‘low-cost’ economies (including the new EU member states and China) reduced annual import price
inflation for manufactured goods in the United Kingdom by an average of 0.7 percentage points. The
‘switching’ effect — buying a greater proportion of imports from ‘low-cost’ economies — was larger than the
‘relative inflation’ effect — the impact of lower inflation in the ‘low-cost’ economies. Indeed, the ‘relative inflation’
contribution increased import price inflation in 2003–06.
Globalization reduced inflation in Europe, Fj
Bowen, Alex and Mayhew, Karen. “Globalisation, import prices and inflation: how
reliable are the ‘tailwinds’?” Bank of England. 2008.
The ECB (2006) carried out a similar exercise for the euro area and found that the downward impact on euro-area
import price inflation was around 2 percentage points per year on average between 1996 and 2005.
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Globalization reduced inflation in the United States, Fj
Bowen, Alex and Mayhew, Karen. “Globalisation, import prices and inflation: how
reliable are the ‘tailwinds’?” Bank of England. 2008.
Turning to the impact of import price changes on domestic inflation in general, Pain et al (2006) calculated that
imports from emerging economies (primarily China) reduced US inflation, measured using the domestic demand
deflator, by 0.1 percentage points per year between 1996 and 2005. For the euro area, there was little effect on
inflation from 1996 to 2000, but between 2001 and 2005 the estimated downward impact on inflation averaged 0.3
percentage points per year.
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Developing Countries Benefit from Global Economic
Engagement
Poorer Countries Achieve Success through Global Economic Expansion AMS
Yale University. “With Little Notice, Globalization Reduced Poverty.” July 5, 2011.
http://yaleglobal.yale.edu/content/little-notice-globalization-reduced-poverty Yale
University is a private Ivy League research university in New Haven, Connecticut.
Founded in 1701 as the "Collegiate School" by a group of Congregationalist
ministers and chartered by the Colony of Connecticut, the university is the thirdoldest institution of higher education in the United States. The University's global
research is widely-regarded all over the world.
How and why sustained high economic growth in developing countries took hold are questions likely to be debated
by economic historians for many decades. Already one can point to a number of probable sources emerging or
accelerating around the turn of the century: an investment boom triggered by rising commodity prices; high growth
spillovers originating from large open emerging economies that utilize cross-border supply chains; diversification
into novel export markets from cut flowers to call centers; spread of new technologies, in particular rapid adoption of
cell phones; increased public and private investment in infrastructure; the cessation of a number of conflicts and
improved political stability; and the abandonment of inferior growth strategies such as import substitution for a focus
on macroeconomic health and improved competitiveness.
These factors are manifestations of a set of broader trends – the rise of globalization, the spread of capitalism and the
improving quality of economic governance – which together have enabled the developing world to begin converging
on advanced economy incomes after centuries of divergence. The poor countries that display the greatest success
today are those that are engaging with the global economy, allowing market prices to balance supply and
demand and to allocate scarce resources, and pursuing sensible and strategic economic policies to spur
investment, trade and job creation. It’s this potent combination that sets the current period apart from a history of
insipid growth and intractable poverty.
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Developing Countries that Participate in Global Market Succeed AMS
Prasad, E., Rogoff, K., Kose, M., & Wei, S. “Financial Globalization: Beyond the Blame
Game.” International Monetary Fund. March 2007. Web. 5 Jan 2015.
http://www.imf.org/external/pubs/ft/fandd/2007/03/kose.htm The International
Monetary Fund (IMF) is an international organization "of 188 countries, working to
foster global monetary cooperation, secure financial stability, facilitate international
trade, promote high employment and sustainable economic growth, and reduce
poverty around the world.
Emerging market economies, the group of developing countries that have actively participated in financial
globalization, have clearly registered better growth outcomes, on average, than those countries that have not
participated. Yet the majority of studies using cross-country growth regressions to analyze the relationship between
growth and financial openness have been unable to show that capital account liberalization produces measurable
growth benefits. One reason may be traced to the difficulty of measuring financial openness. For example, widely
used measures of capital controls (restrictions on capital account transactions) fail to capture how effectively
countries enforce those controls and do not always reflect the actual degree of an economy's integration with
international capital markets. In recent years, considerable progress has been made on developing better measures of
capital controls and better data on flows and stocks of international assets and liabilities. Studies that are based on
these improved measures of financial integration are beginning to find evidence of positive growth effects of
financial integration.
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This analysis explains some of the key issues in measuring the effects of globalization and delineates why
participating in world markets is ultimately good for developing countries.
Global Trade Liberalization and the Developing Countries. PSM
IMF Staff, . "Global Trade Liberalization and the Developing Countries." . International
Monetary Fund. Nov 2001. Web. 2 Jan 2015.
<https://www.imf.org/external/np/exr/ib/2001/110801.htm>.
Recent decades have seen rapid growth of the world economy. This growth has been driven in part by the even faster
rise in international trade. The growth in trade is in turn the result of both technological developments and concerted
efforts to reduce trade barriers. Some developing countries have opened their own economies to take full
advantage of the opportunities for economic development through trade, but many have not. Remaining trade
barriers in industrial countries are concentrated in the agricultural products and labor-intensive manufactures in
which developing countries have a comparative advantage. Further trade liberalization in these areas
particularly, by both industrial and developing countries, would help the poorest escape from extreme
poverty while also benefiting the industrial countries themselves.
I. International Trade and the World Economy
Integration into the world economy has proven a powerful means for countries to promote economic growth,
development, and poverty reduction. Over the past 20 years, the growth of world trade has averaged 6 percent per
year, twice as fast as world output. But trade has been an engine of growth for much longer. Since 1947, when
the General Agreement on Tariffs and Trade (GATT) was created, the world trading system has benefited
from eight rounds of multilateral trade liberalization, as well as from unilateral and regional liberalization.
Indeed, the last of these eight rounds (the so-called "Uruguay Round" completed in 1994) led to the establishment of
the World Trade Organization to help administer the growing body of multilateral trade agreements.
The resulting integration of the world economy has raised living standards around the world. Most developing
countries have shared in this prosperity; in some, incomes have risen dramatically. As a group, developing countries
have become much more important in world trade—they now account for one-third of world trade, up from about a
quarter in the early 1970s. Many developing countries have substantially increased their exports of manufactures and
services relative to traditional commodity exports: manufactures have risen to 80 percent of developing country
exports. Moreover, trade between developing countries has grown rapidly, with 40 percent of their exports now
going to other developing countries.
However, the progress of integration has been uneven in recent decades. Progress has been very impressive for a
number of developing countries in Asia and, to a lesser extent, in Latin America. These countries have become
successful because they chose to participate in global trade, helping them to attract the bulk of foreign direct
investment in developing countries. This is true of China and India since they embraced trade liberalization and
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other market-oriented reforms, and also of higher-income countries in Asia—like Korea and Singapore—that
were themselves poor up to the 1970s.
But progress has been less rapid for many other countries, particularly in Africa and the Middle East. The poorest
countries have seen their share of world trade decline substantially, and without lowering their own barriers to trade,
they risk further marginalization. About 75 developing and transition economies, including virtually all of the least
developed countries, fit this description. In contrast to the successful integrators, they depend disproportionately on
production and exports of traditional commodities. The reasons for their marginalization are complex, including
deep-seated structural problems, weak policy frameworks and institutions, and protection at home and
abroad.
The effect on Poverty with Agreement on Agricultural Global Trade. PSM
Pemberton , C. "Quantifiable impact on poverty in Trinidad And Tobago of the Uruguay
Round Agreement On Agriculture.." . NCBI, 27 Sept 2006. Web. 3 Jan 2015.
<http://www.ncbi.nlm.nih.gov/pubmed/17542109>.
The agreement on agriculture and the World Trade Organization were major outcomes of the 1986-1994 Uruguay
Round (UR) negotiations within the General Agreement on Tariffs and Trade (GATT). The measures under the UR
were predicted to increase poverty in developing countries, a serious cause for concern since poverty alleviation is
a major goal of developing countries. Thus this paper simulated the impact on poverty of the UR for a net
food importing country, Trinidad and Tobago.
The results showed a positive elasticity between poverty and the prices of SIFCs. The study also predicted that the
average projected increase in price levels of the SIFCs of less than 9% by the year 2000 would cause an increase
in poverty in Trinidad and Tobago of less than 4%.
There has been, in fact, a small decline in poverty in Trinidad and Tobago since 1996. The prices of major
agricultural exports from the United States have also been falling since 1995. Thus, so far the UR has had no
perceptible effects in increasing the prices of food exports from the United States. Also, so far the UR has had no
perceptible effect on the poverty level in Trinidad and Tobago.
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Poverty and Social Analysis of Trade Agreements. PSM
McGill, Eugenia . "POVERTY AND SOCIAL ANALYSIS OF TRADE AGREEMENTS:
A MORE COHERENT APPROACH?." . Boston College. Web. 3 Jan 2015.
<http://www.bc.edu/content/dam/files/schools/law/lawreviews/journals/bciclr/27_2/0
7_TXT.htm>.
The collapse of trade negotiations in Cancun in September 2003 shook confidence in both the Doha Development
Agenda and the commitments of industrialized countries and international economic institutions to pursue
“coherent” trade and development policies. This Article critically examines the dual commitments of development
institutions, especially the World Bank, to trade liberalization and poverty reduction, and the challenges to
achieving “policy coherence” through trade “mainstreaming,” “capacity building,” and “impact
assessments.” In particular, the Article considers the feasibility of adapting existing tools for poverty and
social analysis to assess trade policies and agreements. The Article uses gender as one possible lens through
which to analyze the potential impacts of trade policies on vulnerable groups in developing countries. While
recognizing their limitations, the Article supports the development of practical tools for poverty and social analysis
for use by government trade offices and other ministries, development institutions, research institutes, and civil
society groups in developing countries. However, for these tools to be useful, developing countries must have the
“policy space” to choose the trade policy options that best support their poverty reduction strategies and
broad development goals.
Following the collapse of trade negotiations in Cancun, uncertainties remain about the direction of the Doha
Development Agenda and the type of support that development banks and agencies will provide to developing
countries to engage effectively in this process. In light of international and national commitments to meaningful
poverty reduction, it is increasingly important for any new trade commitment to be examined carefully from a
poverty and social perspective, including considerations of gender and other key social categories. It is also
important to encourage the development of a variety of diagnostic tools for this type of analysis for use not only by
government trade offices and development institutions, but also by other government ministries, research institutes,
universities, and civil society groups. The use of these tools by various stakeholders can lead to a fuller and more
balanced understanding of the trade commitments under consideration and may inspire greater public confidence in
the international trading system, particularly for developing countries. However, for these tools to be useful,
developing countries must also have the flexibility to choose the trade policy options that best support their poverty
reduction strategies and broad development goals.
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Case study: Mauritius and resource-scarce coastal Africa. DAT
Collier, Paul. “Poverty Reduction in Africa.” Centre for the Study of African Economics.
University of Oxford. n.d. Web. 4 January 2015.
http://users.ox.ac.uk/~econpco/research/pdfs/PovertyReductionInAfrica.pdf Sir
Paul Collier is Professor of Economics and Public Policy in the Blavatnik School of
Government at the University of Oxford.
I now turn to the resource-scarce, coastal economies. These are the category that globally has had the fastest growth,
but in which African performance has been least encouraging. It might be argued that none of Africa’s economies
are truly resource-scarce since even those without valuable natural resources have large endowments of land relative
to population and so have a comparative advantage in agriculture (Wood and Mayer, 2001). However, Africa’s
exceptionally rapid population growth is changing even this advantage. Countries such as Kenya and Senegal face
sufficient pressure on land that continuation in their traditional specialization will condemn them to slow growth,
with agricultural technical progress offset by diminishing returns to labor. The only African country to succeed in
this category has been Mauritius which followed the Asian pattern in transforming itself through exports of
manufactures from an impoverished sugar economy into an upper-middle income country and by far Africa’s
richest economy.
Whereas in resource-rich countries the state has to be large, in the coastal, resourcescarce economies the state need
not be central to development. The core growth process in these economies is to break into global markets for some
labour-intensive product. This is fundamentally a matter for the private sector. The state may, as in parts of East
Asia, actively help in this process, but it is by no means necessary. Indeed, the essential aspect of government
behaviour is that it should not actively inhibit the emergence of a new export sector by burdensome regulation,
taxation, or predation. Prior to 1980 manufacturing and services were concentrated in the OECD economies, locked
in partly by trade restrictions but mainly by economies of agglomeration. The concept of economies of
agglomeration is that when many firms in the same activity are clustered in the same city their costs of production
are lower. For example, because there is a large pool of skilled labour and suppliers of inputs, individual firms do not
need to hoard skilled labour or carry high inventories. Around 1980 a combination of trade liberalization and the
widening gap in labour costs between the OECD and developing countries began to make it profitable for industry to
relocate to low-income countries. This process is explosive: as firms relocate agglomeration economies build up in
the new location and make it progressively more competitive.
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Globalization Reduces Global Inequality Overall
Global Inequality Reduced AMS
Birdsall, Nancy. “Asymmetric Globalization: Outcomes versus Opportunities.” September
2001.
http://www.bc.edu/bc_org/avp/cas/isp/inequality/Asymmetric_Globalization.pdf
Nancy Birdsall is a Senior Associate and Director of the Economic Reform Project
at the Carnegie Endowment for International Peace. She was Executive Vice
President of the Inter-American Development from 1993 until 1998.
In a recent paper, two economists at the World Bank report that the top third of developing countries in terms of
increases in trade to GDP in the last two decades grew faster in the 1980s and 19980s (3.5% and 5%) than in the
1960s and 1970s--faster than the developed countries as a group, and faster than the other two-thirds of
developing countries with lower increases in trade/GDP ratios. Besides India and China, the "globalizing" group
includes Bangladesh, Brazil, Malaysia, Mexico, the Philippines, Thailand and Vietnam. Even though income
inequality within some of these countries failed to decline or even increased (China especially), their
average growth brought their populations as a whole closer to the income of the rich countries, reducing
world inequality.
Pro teams should stress that while large spurts of growth tend to cause income inequality, overall the
world has reduced inequality to a large extent.
Income inequality Growth is an Exaggeration AMS
Birdsall, Nancy. “Asymmetric Globalization: Outcomes versus Opportunities.” September
2001.
http://www.bc.edu/bc_org/avp/cas/isp/inequality/Asymmetric_Globalization.pdf
Nancy Birdsall is a Senior Associate and Director of the Economic Reform Project
at the Carnegie Endowment for International Peace. She was Executive Vice
President of the Inter-American Development from 1993 until 1998.
[I]t would be an exaggeration to say that rising inequality within countries has been the norm, or to associate it
specifically with increasing global integration. In most countries, income inequality has simply not changed. In a few
industrialized, including Japan, Canada, and Italy, income inequality has declined. The same has been true for a few
developing countries, including Bangladesh, Ghana, and the Philippines.
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No Overall Increase in Global Inequality AMS
Dollar, David, Kraay, Aart. "Trade, Growth, and Poverty". Finance and Development.
International Monetary Fund. Retrieved 6 June 2011. The International Monetary
Fund (IMF) is an international organization "of 188 countries, working to foster
global monetary cooperation, secure financial stability, facilitate international trade,
promote high employment and sustainable economic growth, and reduce poverty
around the world.
Although the growth benefits of trade are increasingly recognized, many analysts are legitimately concerned about
the effects of trade liberalization on income distribution. In our research, however, we document that the growth
benefits of increased trade are, on average, widely shared—we have found no evidence of a systematic
tendency for inequality to increase when international trade increases (see Dollar and Kraay, 2001a). Chart 2
illustrates this point by plotting changes in a measure of inequality (the Gini coefficient, which ranges from 0
to 100, with a higher coefficient indicating greater inequality) on the vertical axis, and changes in trade
volumes on the horizontal axis. This figure reflects the experiences of more than 100 developed and developing
countries, with changes in trade and changes in inequality measured over periods of at least five years in order to
capture the medium-to-long-run relationship between trade and inequality.
Chart 2 exhibits a striking absence of any simple correlation between changes in trade and changes in
inequality. In our other research, we have examined the validity of this simple result in several dimensions. We
considered a wide variety of measures of openness, including direct measures of trade policy and international
capital flows, as well as trade volumes themselves. We also searched for nonlinearities in this relationship, allowing
for the possibility that the effects of trade on inequality are different in rich and poor countries and in countries with
different factor endowments. The conclusion that emerges from this—that there is little evidence of a systematic
tendency for inequality to either increase or decrease with increased trade—is consistent with the simple evidence
presented in Chart 2.
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This study can be used to destroy arguments exaggerating the rise of global inequality.
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Globalization increases equality of opportunity
The presence of multinational firms increases equality of opportunity. DAT
Aguayo-Tellez, Ernesto et al. “Globalization and Formal Sector Migration in Brazil.”
United Nations University. March 2008. Web. 5 January 2015.
http://www.wider.unu.edu/publications/working-papers/researchpapers/2008/en_GB/rp2008-22/
The author is Economics faculty at the Universidad Autónoma de Nuevo León.
Table 5 shows that workers in foreign owned establishments are more educated on average than workers in their
domestic establishment counterparts. Almost 20 per cent of workers at a foreign owned establishment are
college graduates, while only 10 per cent of workers at domestic establishments have a college degree.
Workers at foreign owned establishments are on average one-half year younger and less likely to be female
than workers at domestic establishments. Workers in exporting establishments are also younger and more likely
male than workers in non-exporting establishments. However, workers in exporting establishments are on average
less educated. Fifty-eight per cent of exporting-establishment workers have only a primary school education. Wage
differentials between current employment and expected future employment are a widely documented determinant of
migration. Exporters and foreign owned establishments typically pay higher wages, partly because of more skilled
workforces (see Table 5) and partly because of rm- fixed effects in compensation (Menezes-Filho, Muendler, and
Ramey forthcoming).
Beyond differences in spot wages, expected wage profiles provide incentives for job changes and migration. In
Figure 3, we graph the average log wage for workers over years of tenure at the establishment, by establishment
type. The tenure-wage profile for foreign owned establishments is considerably steeper than the tenure-wage
profile for domestic owned establishments, while there appears to be only a small difference between the
tenure wage paths for exporting and non-exporting establishments. In fact, based on evidence from linear
prediction, an additional year of tenure at a non-exporting establishment is associated with 2.1 per cent higher wages,
while an additional year at an exporting establishment relates to 2.9 per cent higher wages. Meanwhile, an additional
year of tenure at a multinational enterprise predicts a wage increase by more than double the amount at a domesticowned establishment (4.5 per cent as compared to 2.1 per cent).
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Pro:
There are two kinds of economic equality at play: equality of income, and equality of opportunity. Pro
teams can argue that, by virtue of superior wage structures, multinational companies offer substantially
superior opportunities, particularly for those wishing to leverage higher educations to alleviate poverty.
The above study looks at Brazilian economic data.
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Trade liberalization gives small businesses a competitive advantage against large ones. DAT
Bardhan, Pranab. “Globalization and Rural Poverty.” United Nations University. June
2005. Web. 5 January 2015. http://www.wider.unu.edu/publications/workingpapers/research-papers/2005/en_GB/rp2005-30/
The author is Economics faculty at the University of California at Berkeley.
Small farms or firms that are not severely handicapped by the credit and other constraints are sometimes more
productive than their larger counterparts, and are also sometimes more successful in export markets. Small
producers are often heavily involved in exports (for example, coffee producers of Uganda, rice growers in
Vietnam, shrimp farmers in coastal Bangladesh or India, garment producers in Bangladesh or Cambodia).
But in exports the major hurdle they face is often due to not more globalization but less. Developed country
protectionism and subsidization of farm and food products and simple manufactures (like textiles and clothing)
severely restrict their export prospects for poor countries.6 By estimates of the World Bank, based on the widely
used GATP (Global Trade Analysis Project) model, the total income losses incurred by developing countries on
account of rich-country trade barriers on textiles and apparel amount to about US$24 billion. Taking tariffs and
tariff-equivalent of subsidies in agriculture, Cline (2004) estimates that the overall protection in agriculture is about
20 per cent for US, 46 per cent7 for EU, 52 per cent for Canada, and 82 per cent for Japan. The annual loss to
developing countries from agricultural tariffs and subsidies in rich countries is estimated from a static CGE
model and the GATP trade and protection database by Cline (2004) to be about US$45 billion (and much
higher if dynamic effects are taken into account).
The export market allows small businesses in every sector to leverage efficiency into greater sales, while
also bolstering bottom lines against “crowding out” by larger competitors in the local marketplace. Pro
teams can thus link the openness of the global market (e.g. the extent of trade liberalization) to growth
opportunities for businesses, which is critical for economic growth and poverty reduction.
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Pro:
Benefits of Economic Globalization for Developing
Countries
Globalization Improves Access to Necessary Materials AMS
Mohr, Angie. “The Effects of Economic Globalization on Developing Countries.” 2014.
http://smallbusiness.chron.com/effects-economic-globalization-developing-countries3906.html Angie Mohr is a syndicated finance columnist who has been writing
professionally since 1987. She is a chartered accountant, certified management
accountant and certified public accountant with a Bachelor of Arts in economics
from Wilfrid Laurier University.
Increased Standard of Living
Economic globalization gives governments of developing nations access to foreign lending. When these funds are
used on infrastructure including roads, health care, education, and social services, the standard of living in the
country increases. If the money is used only selectively, however, not all citizens will participate in the benefits.
Access to New Markets
Globalization leads to freer trade between countries. This is one of its largest benefits to developing nations.
Homegrown industries see trade barriers fall and have access to a much wider international market. The growth this
generates allows companies to develop new technologies and produce new products and services.
Beyond providing statistics to demonstrate poverty reduction, pro teams should delineate WHY
economic globalization helps developing countries. This source provides succinct explanations for the key
factors of globalization that allow for greater economic expansion.
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Pro:
The correlation between economic growth and globalization. DAT
“Not Always With Us.” The Economist. 1 June 2013. Web. 4 January 2015.
http://www.economist.com/news/briefing/21578643-world-has-astonishing-chancetake-billion-people-out-extreme-poverty-2030-not
The Economist is an English-language weekly newspaper owned by The Economist Newspaper Ltd and
edited in offices in London.
In 1990-2010 the driving force behind the reduction of worldwide poverty was growth. Over the past decade,
developing countries have boosted their GDP about 6% a year—1.5 points more than in 1960-90. This happened
despite the worst worldwide economic crisis since the 1930s. The three regions with the largest numbers of poor
people all registered strong gains in GDP after the recession: at 8% a year in East Asia; 7% in South Asia;
5% in Africa. As a rough guide, every 1% increase in GDP per head reduces poverty by around 1.7%.
For Pro teams, it’s easier to show the links between globalization and economic growth than globalization
and concrete instances of poverty reduction (though this is very doable; see the previous card).
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Pro:
Trade Liberalization in China. PSM
Huang, Jikun. "Agricultural trade liberalization and poverty in China." 2007. China
Economic Review. Web. 3 Jan 2015.
<http://igsnrr.cas.cn/xwzx/jxlwtj/200801/W020090715581051433495.pdf>.
Our study also shows that as some prices rise and others fall, WTO is encouraging farmers to adjust their agricultural
production structure toward more comparative advantage products. In this respect, trade liberalization is pushing the
economy to be more efficient. Although in response to the overall rise in food prices, consumers decrease their
consumption, with the increased incomes that accompany the shift of farmers to more profitable agricultural
products, most of the farming sector likely will be better off (although we do not measure the indirect rise in
consumption due to the income effects of higher agricultural profits).
We also demonstrate that although the absolute effects of trade liberalization will not be very large (and, indeed, will
be positive), policy makers should be concerned about the poverty and equity effects. We show this through
several of our findings. First, according to the analysis although, on average, farmers at national level will
benefit from WTO, it does not hold for all provinces. Average farmers in many less developed provinces in
western and northern parts of China will not gain from trade liberalization. The main reason is that the farmers in
eastern and southern provinces produce more exportable products, unlike their counterparts in the rest of China. The
net impacts on agricultural production of average farmers in several western and northern provinces indeed
are negative. Instead of halting all liberalization, we believe the main policy implication is that policy makers
need to target those that are being hurt the most with assistance programs and by eliminating the constraints
that are keeping them from shifting into more competitive crops. Second, it also is important to target
regionally when thinking about the effects on the poor. While in the nation as a whole, the average poor person
will benefit, not all of the poor in each region will gain from trade liberalization. We find that the poor in many
provinces in western and northern provinces lose in both agricultural production and consumption.
In the final analysis, of course, it has to be remembered that the impact on agriculture, is only part of the story.
Although we do not analyze the non-farm impacts, trade liberalization is expected to also affect the access of
households to non-farm employment and the wages they earn for being in the off-farm market. In general, China will
gain a lot from trade liberalization.
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Pro:
Statistically linking trade with economic growth. DAT
Fosu, Augustin Kwasi and Andrew Mold. “Gains from Trade: Implications for Labour
Market Adjustment and Poverty Reduction in Africa.” United Nations University.
October 2007. Web. http://www.wider.unu.edu/publications/workingpapers/research-papers/2007/en_GB/rp2007-65/
Augustin Kwasi Fosu is deputy director of UNU-WIDER, UNU’s Finland research center.
The general consensus in the trade literature is that both trade policy openness and a faster expansion of trade are
positively correlated with growth, even after controlling for a variety of other growth determinants.5 For example, a
measure of trade openness used by Sachs and Warner (1997) shows that it ‘generated the greatest impact among
their baseline model variables’ (Fosu, 2001: 286). Indeed, Sachs and Warner (1997) estimated that had sub-Saharan
Africa adopted the level of East Asian-type openness, its growth would have been 2.4 percentage points more. This
is three times the 0.8 per cent mean annual per capita GDP growth for sub-Saharan Africa over the 1965-90 sample
period’ (ibid., p. 286). With respect to the implications for the poor, Dollar and Kraay (2001) argue that developing
countries that have become more open (including China and India), have grown faster, and have reduced their level
of poverty more than the less-open group of countries. The evidence seems persuasive as well with respect to the
impact of trade expansion on growth in Africa. For example, Fosu (1990a) and Lussier (1993) find a positive impact
of exports, and Savvides (1995) reports positive effects of both exports and imports. Reviewing the evidence, Fosu
(2001) concludes that the export effect for Africa could be considerable.
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Examples of How Nations Benefit from Economic
Globalization
Nigeria is not a Victim of Economic Globalization AMS
Applied Economics and International Development: University of Santiago de
Compostela.“Analyzing the Impact of Glaoblization on Economic Development in
Developing Economies: An Application of Error Correction Modeling (ECM) to
Nigeria). University of Santiago de Compostela. 2006.
http://www.usc.es/economet/journals1/aeid/aeid6314.pdf The University of Santiago
de Compostela - USC is a public university located in the city of Santiago de
Compostela, Galicia, Spain. In 2009, the University received the accreditation of
Campus of International Excellence by the Ministry of Education (Spain),
recognising USC as one of the most prestigious universities in Spain.
The study examined the effect of globalization on economic growth in Nigeria between 1986 and 2003.
Given the extent of trade openness, the study showed that the Nigerian economy is gaining from
globalization. The study also confirmed that the economy is yet to gain from its policy of financial
integration. The problem is not that the country is excluded from the global market but, in most cases,
that it is not fully included in it. The worst hit by this ugly situation are the Nigerian poor people with peasant
and impoverished majority in the midst of extremely few wealthy and corrupt individuals. Most of the poor
practice subsistence farming which excludes them from global integration. The oil sector of the economy
remains the dominant sector in the international transaction and create deprive majority of Nigeria from
enjoying the benefit of trade openness.
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Nigeria Would Benefit from Further Economic Globalization AMS
Applied Economics and International Development: University of Santiago de
Compostela.“Analyzing the Impact of Glaoblization on Economic Development in
Developing Economies: An Application of Error Correction Modeling (ECM) to
Nigeria). University of Santiago de Compostela. 2006.
http://www.usc.es/economet/journals1/aeid/aeid6314.pdf The University of Santiago
de Compostela - USC is a public university located in the city of Santiago de
Compostela, Galicia, Spain. In 2009, the University received the accreditation of
Campus of International Excellence by the Ministry of Education (Spain),
recognising USC as one of the most prestigious universities in Spain.
Globalization has generated great wealth for Nigeria and could be used to massively reduce poverty and in turn to
reduce global poverty and inequality. Globalization has helped increase investment and create wealth in Nigeria but
it must be harnessed better to help the poor and most marginalized people improve the lives of their citizens.
Perhaps, the impetus of globalization lies in proper democracy and transparent market economies. It is observed that
Nigeria needs to fully integrate her economy and deregulate all sectors in order to fully enjoy the benefits of
globalization. This will take some time but any backsliding in the present economic reform will not produce good
result for the entire economy.
Economic Globalization and its Impact on Poverty: Case Study Pakistan. PSM
Hameed , Abid. "Economic Globalization and its Impact on Poverty and Inequality:
Evidence From Pakistan ." . Ecosecretariat. Web. 3 Jan 2015.
<http://www.ecosecretariat.org/ftproot/Publications/Journal/1/Article_TDB.pdf>.
In short, globalization is a contested concept. However, in general it is considered to be beneficial for the growth
of economy. But there are also many adverse effects of globalization on growth in many developing countries. It
increases poverty and worsens the income distribution. On the other hand, positive impacts of globalization have
been witnessed in East Asian Countries. These countries integrated with the world economy within a carefully
planned framework that was consistent with resource endowment, and as a result economic rewards were shared
by the poor in the long-run. It seems that the extent of benefits reaped from economic globalization in any economy
depend upon domestic macroeconomic policies, market structure, initial condition of economy, quality of institution
and degree of political stability. Lastly, it is contended that if Pakistan wants to reap maximum benefit from fruits
of economic globalization, it needs to be accompanied with adoption of pro-poor growth policies which
emphasize investment in human development and provide a structure for social safety nets for the poor.
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Trade Liberalization and Poverty Reduction: Evidence from Indian States. PSM
Cain, J. Salcedo. "Trade Liberalization and Poverty Reduction: New Evidence from
Indian States." . Columbia University, n.d. Web. 3 Jan 2015.
<http://academiccommons.columbia.edu/catalog/ac:136630>.
As is widely acknowledged, the incidence of poverty in India has declined steadily over the last several decades.
What is debated, however, is the pace at which poverty has declined and its relationship with India's economic
reforms. In particular, a key concern among policymakers and researchers alike is that trade liberalization
undertaken in the early 1990s may have slowed the progress made in reducing poverty. In this paper, we update our
previous econometric analysis on the links between trade liberalization and poverty reduction in India. By
incorporating measures of poverty based on the 2004-05 consumer expenditure survey carried out by India's
National Sample Survey Organisation, we are able to sidestep the controversy-ridden poverty measures based
on the 1999-2000 survey. Our new results are in line with the earlier ones in Hasan, Mitra and Ural (2007): States,
and regions within states, that were more exposed to trade liberalization on account of their employment structures
did not experience slower reduction in poverty; on the contrary, to the extent that we find a statistically significant
relationship between trade liberalization and poverty reduction, the evidence points to faster poverty reduction in
states and regions experiencing greater increases in exposure to trade. Moreover, this relationship is typically
stronger in states with more flexible labor regulations, better quality transportation infrastructure, and more
developed financial systems.
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Trade Liberalization and Poverty in India. PSM
Kis-Katos, Krisztina . "Poverty, Labour Markets and Trade Liberalization in Indonesia."
. Institute for the Study of Labor (IZA), n.d. Web. 3 Jan 2015.
<http://ftp.iza.org/dp7645.pdf>.
The identification strategy relies on combining information on initial regional labour and product market structure
with the exogenous tariff reduction schedule over three-year intervals. The results are robust to specification and
controlling for initial conditions in labour market structure, and placebo tests show no evidence that confounding
trends are affecting the estimates. Our results suggest that trade liberalization has contributed partially to poverty
reduction in Indonesia by increasing incomes for the poorest segment of the population. While we do not see
substantial effects on the poverty head count, we do find that tariff reductions led to a statistically significant
reduction of the depth and severity of poverty.
The driving mechanism behind these effects seems to be increasing firm competitiveness as a direct result of
reductions in import tariffs on intermediate goods; whereas we see no evidence of displacement effects from
increased foreign competition due to reductions in import tariffs on final outputs. Increased firm competitiveness in
turn induced a further formalization of the labour force, job formation and wage increases for low- and medium
skilled labour. These experiences with trade liberalization add caution to the current policy debate in light of the
recent surge in protectionist tendencies in Indonesian trade and economic policies (Nehru 2013).
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Trade Liberalization and Poverty Reduction in Sub-Saharan Africa. PSM
Tupy, Marian. "Trade Liberalization and Poverty Reduction in Sub-Saharan Africa." .
CATO Institute, 6 Dec 2005. Web. 3 Jan 2015.
<http://www.cato.org/publications/policy-analysis/trade-liberalization-povertyreduction-subsaharan-africa-0>.
Despite recent setbacks, the Doha round of negotiations on trade liberalization continues. Much of the world’s media
and many nongovernmental organizations continue to focus on protectionism in the developed world and the
negative effect that protectionism has on the economic development of poor countries. To be sure, developedworld protectionism harms some producers in the developing world as well as consumers in the developed
world. If the developed world were to adopt free trade, the world would benefit.
But trade liberalization in the developed world as a cure for world poverty is often overemphasized. Simply
abandoning developed-world protectionism would not substantially change the lives of the people in the poorest
parts of the developing world. That is particularly true of sub-Saharan Africa (SSA), where the main causes of
impoverishment are internal. SSA is not poor because of lack of access to world markets. SSA is poor because
of political instability and because of a lack of policies and institutions, such as private property rights, that
are necessary for the market economy to flourish.
Moreover, SSA continues to be one of the most protectionist regions in the world. While the rich countries
reduced their average applied tariffs by 84 percent between 1983 and 2003, SSA countries reduced theirs by only 20
percent. According to the most recent data, nontariff protection in the poorest countries of SSA is four times greater
than nontariff protection in rich countries. Strikingly, trade liberalization within SSA could increase intra-SSA trade
by 54 percent and account for over 36 percent of all the welfare gains that SSA stands to receive as a result of global
trade liberalization.
It is hypocritical for African leaders to call for greater access to global markets while rejecting trade openness at
home. It is also self-defeating, because domestic protectionism contributes to perpetuating African poverty. Research
shows that countries with the greatest freedom to trade tend to grow faster than countries that restrict trading. SSA
governments have complete control over the reduction of their own trade barriers. If they are truly serious about
the benefits of trade liberalization, they can immediately free trade relations among SSA countries and with
the rest of the world. They should do so regardless of what the developed world does.
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Trade Liberalization and Poverty Alleviation in Nigeria. PSM
Yusuf, Muhammad. "Trade Liberalization Economic Growth and Poverty Reduction in
Nigeria." . International Journal of Business and Management. Web. 3 Jan 2015.
<http://www.academia.edu/3192534/Trade_Liberalization_Economic_Growth_and_
Poverty_Reduction_in_Nigeria>.
Until recently there was a common understanding that trade liberalization is the engine of growth (Shahbaz 2012).
However, this idea has been contested; debates in this perspective try to point out that the nexus relationship between
growth and liberalization of trade is not in question, but whether trade liberalization, actually translate economic
growth into sustainable development and poverty reduction (Wackier, 2011). This may not be unconnected to the
increasing occurrences of increase in the level of poverty, and the marginalization, and going concomitantly with
trade liberalization regime in most Sub-Saharan Africa (Adhockery, 2011).The state of concern is precisely, how
such underdeveloped countries structure their exports and import, because, a country with diversified export based
benefit from trade liberalization, on the contrary, countries with high marginal propensity to import suffer from
deterioration of their balance of payment and worsening poverty (Wackier, 2011). This paper raise very crucial
questions, on the ongoing debate, on how country like Nigeria with little non-oil to export and experiencing high
marginal propensity to import, deteriorating product prices and balance of payment difficulties, benefit from trade
liberalization and ensure poverty reduction? The objective of this study is determined whether trade liberalization
can improve growth and ensure poverty reduction.
This paper differ significantly from the previous studies by attempting to integrate poverty into the trade
liberalization and economic growth studies, since some of the methodological problems with previous attempt in this
dimension is the missing variables such as poverty which may influence the possible linkages mediating between
liberalization of trade and growth performance of the Nigerian economy. Even those who attempted to address these
problems end up with difficulty of proxy selection to adequately measure trade liberalization, while some of the
studies suffer from concept vagueness (Adhockery, 2011). Other reasons may be due to overreliance on crosssectional data analysis without being context specific. Following the introduction which constitutes section one, of
the paper the remaining section is structure in the following ways, section two, and analyzed trade liberalization
policies in Nigeria. Section three constitutes theoretical as well as empirical literature review. While section four
includes presentation and analysis of the data and finally section five includes discussions and conclusion of the
study.
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Trade Liberalization in Ghana. PSM
Quarterly, Peter. "The Impact of Trade Liberalization on Poverty in Ghana." . N.p.. Web.
3 Jan 2015.
<http://www.academia.edu/922551/The_Impact_of_Trade_Liberalization_on_Pover
ty_in_Ghana>.
Studies have shown that free trade is better than no trade and therefore trade liberalization will significantly improve export
earnings and enhance economic growth. Many countries especially those of South-East Asia have attained significant growth
rates which are partly attributed to their trade policies. Evidence from countries such as India and China also show that economic growth
has led to significant declines in poverty levels. Many African countries including Ghana have liberalized their trade regimes by
reducing trade barriers and encouraged export processing companies. Although trade liberalization has benefited some
countries, the same cannot be said of many African countries, including Ghana; a situation attributed to the fact that trade
reform tends to generate both winners and losers. Hence, the impact of trade-led growth on poverty reduction may not necessarily
be unambiguous. The lack of general consensus on the influence of growth on poverty level in Ghana has prompted the following
question: To what extent has trade liberalization affected economic growth in Ghana? Using CGEmodelling technique, the study
investigates the trade-growth nexus and its implications for poverty reduction in Ghana
The study principally investigates the effect of trade liberalization on poverty in Ghana using the Ghana living
Standards Survey Data and other complementary datasets. It finds that elimination of trade related import and export
taxes could reduce the incidence, depth, and severity of poverty in low-income countries. The paper suggests that
although trade liberalization can lead to poverty reduction, over-liberalization can be harmful to local producers
since already established foreign products out-compete local manufacturers. Secondly, liberalization should
ensure that no dumping of products occur; the situation where developed countries subsidize products, particularly
agricultural products which are sold on developing countries’ markets should be discouraged.
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Pro:
Trade Liberalization in Indian States. PSM
Topalova, Petia. "Trade Liberalization, Poverty and Inequality: Evidence from Indian
Districts." . IDEAS. Web. 3 Jan 2015.
<https://ideas.repec.org/h/nbr/nberch/0110.html>.
Although it is commonly believed that trade liberalization results in higher GDP, little is known about its effects on
poverty and inequality. This paper uses the sharp trade liberalization in India in 1991, spurred to a large extent by
external factors, to measure the causal impact of trade liberalization on poverty and inequality in districts in India.
Variation in pre-liberalization industrial composition across districts in India and the variation in the degree of
liberalization across industries allow for a difference-in-difference approach, establishing whether certain areas
benefited more from, or bore a disproportionate share of the burden of liberalization. In rural districts where
industries more exposed to liberalization were concentrated, poverty incidence and depth decreased by less as a
result of trade liberalization, a setback of about 15 percent of India's progress in poverty reduction over the 1990s.
The results are robust to pre-reform trends, convergence and time-varying effects of initial district-specific
characteristics. Inequality was unaffected in the sample of all Indian states in both urban and rural areas. The
findings are related to the extremely limited mobility of factors across regions and industries in India. The findings,
consistent with a specific factors model of trade, suggest that to minimize the social costs of inequality, additional
policies may be needed to redistribute some of the gains of liberalization from winners to those who do not benefit as
much.
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Poverty Alleviation in Nigeria with Trade Liberalization. PSM
Fidelis, Aiya. "Trade Liberalization and Poverty Reduction in Nigeria: A study of selected
Communities in Edo State." . Journal of Economics and Sustainable Development,
n.d. Web. 3 Jan 2015.
<http://www.iiste.org/Journals/index.php/JEDS/article/view/13125>.
Trade liberalization is a global public policy intended to stimulates growth incentives that could be translated
into poverty reduction. The growing economy of the developing Nations contend with this fact, as they grow
sluggishly under the weight of trade liberalization without growth, and where growth exist it has not been
translated to poverty reduction inspite of government efforts in poverty reduction practice in Nigeria.
This study investigated the influnce of trade liberalization on poverty reduction programmes in Nigeria while
focusing on Edo state. To achieve this, primary and secondary data were utilized. With simple random
sampling, nine(9) Local Governments were selected across the three senatorial districts in the state. Through
multi stage sampling, 1,350 respondents were selected across 27 communities and they were adminstered
questionnaires on the core subject areas. Questionnaire served as the research instrument used in this study.
The collected data were analysed by simple percentage and chi-square statistical instrument. In the analysis, it
was revealed that trade liberalization hinders the followings: the growth of infant industries, skill acquisition, selfreliance due to increase inflow of foreign products and self-employment which are the core objectives of poverty
alleviation programmes in Edo state, Nigeria. On the aggregate, the study revealed that trade liberalization
has limiting effects on the performance of poverty alleviation programmes in the study areas in Edo state in
particular and Nigeria in general. Against this background, the following recommendations among others were
adopted, that: small scale industries should be protected; safe net should be provided for the poor against the
harsh effects of trade liberalization; provision of better and modern infrastructure to stimulate growth; etc.
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Pro:
Trade Liberalizing Financing in Ghana. PSM
Bhasin , Vijay. "Trade Liberalization Financing and its Impact on Poverty and Income
Distribution in Ghana." . African Economic Research Consortium, n.d. Web. 3 Jan
2015. <http://aercafrica.org/index.php/publications/view_document/231-tradeliberalization-financing-and-its-impact-on-poverty-and-income-distribution-inghana>.
Ghana has adopted a Growth and Poverty Reduction Strategy that emphasizes increased focus on poverty reduction
in the design and implementation of its policies. This study uses a CGE model, social accounting matrix and data
from the 1999 Ghana Living Standards Survey 4 to examine the impact of unilateral partial trade liberalization both
in isolation and combined with foreign capital inflows and value-added tax on the poverty and income distributions
of various categories of households. Those included were agricultural households, public sector employees, private
sector employees, nonfarm self-employed workers and non-working persons. The study found that eliminating traderelated import and export tariffs on agricultural goods and import tariffs on industrial goods in isolation, combined
with foreign capital inflows and combined with VAT reduces the incidence, depth and severity of poverty of all
categories of households, with the exception of the incidence of poverty of public sector employees and the nonworking group when import tariffs on industrial goods are eliminated in isolation. On the other hand, elimination of
trade-related export tariffs on industrial goods in isolation and combined with foreign capital inflows increases the
incidence, depth and severity of poverty of all categories of households, with the exception of the incidence of
poverty of the non-working group. Moreover, elimination of trade-related export tariffs on industrial goods
combined with VAT reduces the incidence, depth and severity of poverty of all categories of households. Income
distributions of the private sector employees and the non-working group were found to improve to a larger extent
when trade liberalization in isolation is considered. For agricultural households, on the other hand, the income
distribution improves to a larger extent when trade liberalization is combined with foreign capital inflows and VAT.
Results also indicate that financing of unilateral partial sector-wise trade liberalization through domestic resources
(VAT) could have a greater impact on poverty alleviation and improvement in the income distributions of
households than the foreign resources (foreign capital inflows).
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Pro:
Poverty Reduction in Least Developed Countries. PSM
Matsumura,, Atsuko. "Agricultural Trade Liberalization and Human Rights : Economic
Analysis for Poverty Reduction in LDCs—A Survey." . Forum on Public Policy.
Web. 3 Jan 2015.
<http://forumonpublicpolicy.com/summer08papers/archivesummer08/matsumura.p
df>.
In this paper, the possible economic solutions for reducing poverty in LDCs are considered from the points of view
of agricultural trade reforms, by surveying the economic analyses about agricultural trade both theoretically and
empirically. We confirmed that the agriculture is still important sector in LDCs, as the industrial structure has not
developed enough for their economies to be relied on manufacturing products and services, especially in the LDCs in
Africa. Consequently, the agricultural trade reforms through multilateral trade negotiations are presently
indispensable for the development of LDCs. We examined if trade liberalization of developed countries is gainful or
not for the LDCs very carefully, from many points of view. We confirmed that the export revenue in LDCs would
increase by agricultural trade liberalization in developed countries, from the results of some empirical analyses.
Further liberalization by eliminating tariff escalations and increasing and reforming international agricultural aids
from developed countries could accelerate development in LDCs by increasing agricultural productivity and
promoting processing of their export products to make higher valued added in LDCs. In the absence of a Doha
Development Round agreement, it seems that developing countries and even LDCs would need to use bilateral or
regional trade agreements to promote trade reforms, which are less efficient and more costly than further global
reform.
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Pro:
Benefits of Free Trade
Key Benefits of Free Trade in Globalization AMS
Bondreaux, Donald J. “The Benefits of Free Trade: Addressing Key Myths.” November 5,
2013. http://mercatus.org/publication/benefits-free-trade-addressing-key-myths
Donald J. Boudreaux is a senior fellow with the F.A. Hayek Program for Advanced
Study in Philosophy, Politics, and Economics at the Mercatus Center at George
Mason University, a Mercatus Center Board Member, and a professor of economics
and former economics-department chair at George Mason University.
Free trade increases prosperity for Americans—and the citizens of all participating nations—by allowing consumers
to buy more, better-quality products at lower costs. It drives economic growth, enhanced efficiency, increased
innovation, and the greater fairness that accompanies a rules-based system. These benefits increase as overall trade—
exports and imports—increases.

Free trade increases access to higher-quality, lower-priced goods. Cheaper imports, particularly from
countries such as China and Mexico, have eased inflationary pressure in the United States. Prices are held
down by more than two percent for every one-percent share in the market by imports from low-income
countries like China.

Free trade means more growth. At least half of US imports are not consumer goods; they are inputs for
US-based producers, according to economists from the Bureau of Economic Analysis. Freeing trade reduces
imported-input costs, thus reducing businesses’ production costs and promoting economic growth.

Free trade improves efficiency and innovation. Over time, free trade works with other market processes to
shift workers and resources to more productive uses, allowing more efficient industries to thrive. The result
is higher wages, investment in such things as infrastructure, and a more dynamic economy that continues to
create new jobs and opportunities.

Free trade drives competitiveness. Free trade does require American businesses and workers to adapt to the
shifting demands of the worldwide marketplace. But these adjustments are critical to remaining competitive,
and competition is what fuels long-term growth.

Free trade promotes fairness. When everyone follows the same rules-based system, there is less
opportunity for cronyism, or the ability of participating nations to skew trade advantages toward favored
parties. In the absence of such a system, bigger and better-connected industries can more easily acquire
unfair advantages, such as tax and regulatory loopholes, which shield them from competition.
More than just providing statistics on the global reduction of poverty, good Pro Teams will explain why
economic globalization boosts developing countries. This piece breaks down some of the advantages of a
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February 2015
key part of economic globalization—free trade. The piece uses evidence from how free trade has
benefitted the United States in particular.
Pro:
Free Trade Fosters Economic Freedom AMS
Froning, Dennis. “The Benefits of Free Trade: A Guide for Policymakers.” 2000.
http://www.heritage.org/research/reports/2000/08/the-benefits-of-free-trade-aguide-for-policymakers The Heritage Institute for Policy Studies an independent,
nonprofit, nonpartisan research center which aims to inform and influence public
policy and practice through field-based research, informed analysis and innovative
solutions in the form of reports, policy briefs and public debates.
As the foregoing discussion shows, the ability to trade freely increases opportunity, choices, and standards of living.
Countries with the freest economies today generally have adopted a capitalist model of economic development,
remaining open to international trade and investment. These countries include the United Kingdom and many of its
former colonies and dominions: Hong Kong, Singapore, New Zealand, the United States, Australia, and Canada.
Chile, which benefits from a diverse European heritage, likewise demonstrates that basing economic policies on a
capitalist free-market model brings good results in that region as well.
Heritage's analysis of the 161 countries covered in the Index of Economic Freedom, published annually with The
Wall Street Journal , indicates that free trade policies can foster development and raise the level of economic
freedom. Every day in the marketplaces of free countries, individuals make choices and exercise direct control over
their own lives. As economic growth occurs, note World Bank economists David Dollar and Aart Kraay, the poorest
people can benefit just as much as--and in some cases more than--the wealthy. With a sound infrastructure based on
economic freedom, assured property rights, a fair and independent judiciary, the free flow of capital, and a fair
system of low taxation, poor countries can create an environment that is friendly to trade and inviting to foreign
investors.
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Pro:
Sub-Saharan Africa Would Benefit from Greater Economic Freedom AMS
Froning, Dennis. “The Benefits of Free Trade: A Guide for Policymakers.” 2000.
http://www.heritage.org/research/reports/2000/08/the-benefits-of-free-trade-aguide-for-policymakers The Heritage Institute for Policy Studies an independent,
nonprofit, nonpartisan research center which aims to inform and influence public
policy and practice through field-based research, informed analysis and innovative
solutions in the form of reports, policy briefs and public debates.
As a whole, sub-Saharan Africa remains the most economically unfree and poorest area in the world; but as
the Index analysis shows, its poverty is not the result of insufficient levels of foreign aid: On a per capita basis,
many sub-Saharan African countries receive the world's highest levels of economic assistance. Rather, the main
causes of poverty in sub-Saharan Africa are the lack of economic freedom embodied in self-imposed policies, and
systemic and rampant corruption.
In fact, corruption is a cancer on the most legitimate efforts to promote economic development in many of these
countries. While this is hardly a problem unique to Africa or developing nations, it is all the more damaging to them.
The outlook for this region is not hopeless, however: Mauritius, which received the highest Index ranking in the
region, has had some success in adopting free-market practices. Compared with other countries in its region, it merits
relatively favorable scores in black market activity and regulation.
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Pro:
Developing Countries Benefit from Freer Trade AMS
Mukherjee, Aruni. “Free trade and Developing Countries: Beneficial or Detrimental?”
2004. http://www.ivarta.com/columns/OL_040319.htm Aruni Mukherjee studies
History and Politics at the University of Warwick in England. He has a wide array
of interests ranging from politics to economics to international relations and sports,
with a special focus on India.
Czech Republic, Poland and South Africa have emerged as competitors for an estimated $356 billion worth of jobs,
and western companies are now switching to Eastern Europe due to closeness in terms of distance than India. One
could argue, though, that increased free trade leads to enhancing competition and greater efficiency for the
companies and a good deal for the consumers of the country. For instance, Nepalese and Pakistani competition has
led to Indian textile exports to the US to fall in the last financial year, yet the Indian companies could boost their
sales by tapping the European market. Similarly, opening up Jamaican markets to American milk imports has led to
overrunning of domestic companies yet enabled the consumers to get a cheaper product. The incidents which have
been pointed out by left wing critics as monopolistic behaviour by MNCs are likely to become rarer due to the
rapidly increasing number of competitors and owing to a high price elasticity of demand of their products in most
developing countries.
Thus, we see that in general reduction in trading barriers has indeed helped developing countries attract investment
and improve growth prospects, and in some cases, even expand their own corporate sector. However, it can be
argued that free trade, in its current form, has been harmful for developing nations in cases where the developed
world has actually refused to follow the norms of free trade.
Potential for Free Trade in Reducing Poverty AMS
Byers, Stephen. “I was Wrong. Free Market Trade Policies Hurt the Poor.” The
Guardian. May 19, 2003.
http://www.theguardian.com/politics/2003/may/19/globalisation.politics Stephen
John Byers is a British Labour Party politician who was the Member of Parliament
(MP) for North Tyneside from 1997 to 2010.
No one should doubt the hugely significant role that international trade could play in tackling poverty. In terms of
income, trade has the potential to be far more important than aid or debt relief for developing countries. For
example, an increase in Africa's share of world exports by just 1% could generate around £43bn - five times
the total amount of aid received by African countries.
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Pro:
Trade between developing countries insulates their growth from global downturns. DAT
“Not Always With Us.” The Economist. 1 June 2013. Web. 4 January 2015.
http://www.economist.com/news/briefing/21578643-world-has-astonishing-chancetake-billion-people-out-extreme-poverty-2030-not
The Economist is an English-language weekly newspaper owned by The Economist Newspaper Ltd and
edited in offices in London.
To keep poverty reduction going, growth would have to be maintained at something like its current rate. Most
forecasters do expect that to happen, though problems in Europe could spill over and damage the global economy.
Such long-range forecasts are inevitably unreliable but two broad trends make an optimistic account somewhat
plausible. One is that fast-growing developing countries are trading more with each other, making them more
resilient than they used to be to shocks from the rich world. The other trend is that the two parts of the world
with the largest numbers of poor people, India and Africa, are seeing an expansion of their working-age
populations relative to the numbers of dependent children and old people. Even so, countries potentially face a
problem of diminishing returns which could make progress at the second stage slower than at the first.
There is no sign so far that returns are in fact diminishing. The poverty rate has fallen at a robust one percentage
point a year over the past 30 years—and there has been no tailing off since 2005. But diminishing returns could
occur for two reasons. When poverty within a country falls to very low levels, the few remaining poor are the hardest
to reach. And, globally, as more people in countries such as China become middle class, poverty will become
concentrated in fragile or failing states which have seen little poverty reduction to date.
Free trade allows for the for more aggressive development of regional trading economies, which are
separate and not entirely reliant on the global economy.
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Pro:
Developing Countries Integrate into Global Supply Chains AMS
Yusuf, Shahid. “Globalization and the Challenge for Developing Countries.” June 2001.
The World Bank. Web. 5 Jan 2015.
http://elibrary.worldbank.org/doi/pdf/10.1596/1813-9450-2618 The World Bank is a
United Nations international financial institution that provides loans to developing
countries for capital programs. The World Bank is a component of the World Bank
Group, and a member of the United Nations Development Group.
Greater openness will also help firms in developing countries to become a part of the international production
networks and supply chains that are the main conduits of trade. Already two thirds of all trade is either within
transnational corporations (TNCs) or associated with TNCs through arms-length transactions (UN 1999). Global
supply chains organizing production and trade are of two forms: there are producer driven commodity chains run by
TNCs in industries subject to entry barriers arising from capital intensity, technology or propreitary information.
Here association usually results from equity investment by the TNC. Buyer driven commodity chains (BDCC) allow
firms in developing countries greater freedom of entry. These are chains managed by large retailers, name brand
marketers and trading companies that place orders with local producers and supply the design, specifications and in
some cases the material as well. BDCCs are entrenched in labor intensive consumer goods and to break into markets
for toys, household goods and footwear for example, firms in developing countries must link with these chains.
Whether or not one considers free trade a good thing, much of the world already operates through global
supply chains. Developing countries must enter these existing networks to succeed in global trade
markets today.
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Pro:
Impact of Trade Liberalization on Food Security and Poverty. PSM
Johh, Madeley. "The Impact of Trade Liberalisation on Food Security and Poverty." .
Institute for Agriculture and Trade Policy. Web. 3 Jan 2015.
<http://www.iatp.org/files/Impact_of_Trade_Liberalisation_on_Food_Securit.htm>.
This survey covers 27 case studies and experiences of the effects of trade liberalisation, (the removal or
reduction of barriers to international trade in goods and services), on food security and poverty. Some run to several
pages, others are much shorter. On the key question of what trade liberalisation has done to people who are already
food insecure, their evidence appears remarkably consistent. The common and overriding message can be summed
up in a sentence from Hezron Nyangito's study of Kenya - "liberalised trade, including WTO trade agreements,
benefits only the rich while the majority of the poor do not benefit but are instead made more vulnerable to
food insecurity."
Cheap imports The majority of people in developing countries belong to farming families. Most farmers are smallscale, with at best a few hectares of land and sometimes much less. The problems for these farmers caused by cheap
imports, made possible by trade liberalisation, comes across in most of the case studies. Cheap imports are coming
from both developed countries (especially the US and the EU) and also from developing countries (imports of sugar
into the Philippines from Thailand, for example)
Competition from cheap imports is putting farmers in developing countries out of business. Such imports are coming
both through commercial channels and through dumping - food sold below the cost of production to dispose of
surpluses, and usually cheaper than commercial imports and more damaging. Michael Lumor's study of Ghana, (in
case study number 1), is just one of many in this survey which shows how food imports have demoralised smallscale farmers. Having produced maize, rice, soybeans, rabbits, sheep and goats, the farmers cannot obtain economic
prices for them, even in village markets. Their produce cannot compete with cheaper imports. Domestic food
production is at risk as the agricultural sector is placed in jeopardy.
The studies show that liberalisation has led to an increase in the prices of farm inputs, causing huge problems for
small farmers. Forced to pay more for their inputs, they are often receiving less for their produce when they come to
sell. The study of edible oils in India reveals this common problem of farmers paying more for their inputs but
receiving less for their crop. In economic terms, trade liberalisation appears to have worsened the terms of trade
between outputs and inputs.
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Pro:
Trading Up: Impact of Trade Liberalization on Poverty. PSM
Winters, L Alan. "Trading Up: The Impact of Trade Liberalization on Poverty." . World
Politics Review, 14 May 2013. Web. 3 Jan 2015.
<http://www.worldpoliticsreview.com/articles/12949/trading-up-the-impact-oftrade-liberalization-on-poverty>.
Does international trade liberalization reduce poverty? The question is an important and relevant one. It was high on
the agenda in the late-1990s—think of the Seattle riots against the World Trade Organization (WTO) in
1999—and after a decade or so of quiescence it is starting to worry policymakers again. Fortunately, it permits a
fairly definite answer, one that surprises many people. While there clearly are exceptions, the answer is “in the
long run and on average, almost always, yes, trade liberalization reduces poverty.” The terms “long run” and
“average” are not weasel words, but they do mask a lot of heterogeneity. The variance encompassed by those
terms is the subject of this article.
Trade Liberalization in Developing Countries. PSM
Hertel, Thomas. ""Trade Liberalization and the Structure of Poverty in Developing
Countries" ." . Purdue University, 04 03 2003. Web. 3 Jan 2015.
“Globalization increases poverty” is a common assertion made by critics of globalization. The proliferation of lowwage jobs and higher food prices are some of the arguments brought forward in support of this argument. One of the
hallmarks of globalization is the systematic dismantling of barriers to trade. Advocates of trade liberalization –
particularly industrialized country agriculture reform – argue that the ensuing rise in world prices for agriculture
products will boost rural incomes, thereby reducing poverty in the poorest countries, where the bulk of world
poverty resides. Who is right? The goal of this paper is take a systematic look at the structure of poverty across a
range of developing countries in Africa, Asia and Latin America, and explore how national poverty rates in some of
the poorest countries in the world are likely to be affected by global trade liberalization.
Our analysis of the structure of poverty is based on national household surveys from 14 developing countries. While
we consider both spending and earnings effects of trade liberalization, it is argued that the earnings effects will
generally be the dominant factor. This is particularly true in the short run for households that are highly specialized
in their earnings patterns. Consider the case of a self-employed farm household. Assuming that trade liberalization
results in higher farm prices, we expect the short run effect on the returns to family labor and land to be positive, and
somewhat larger in percentage terms (the so-called “magnification effect”). Furthermore, if this household is not
employed off-farm, then the farm profitability effect translates directly into an income effect, and this is likely to be
sufficient to lift some of the farm households out of poverty. Of course this same effect can work in reverse, with
commodity price declines increasing poverty. This makes specialized households highly vulnerable to trade policy
shocks.
In addition to agriculture-specialized households, we focus on self-employed non-agriculture specialized households,
households specialized in wage labor and those relying on transfer payments for 95% or more of their income.
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Pro:
Trade Liberalization and Poverty: The Link. PSM
Winters, L Alan. "Trade Liberalisation and Poverty: What are the Links?." . The World
Economy, 17 Dec 2002. Web. 3 Jan 2015.
<http://onlinelibrary.wiley.com/doi/10.1111/1467-9701.00495/abstract>.
This paper asks whether a developing country's own trade liberalisation could translate into increased poverty, and
what information would be required to identify whether it will do so. It plots the channels through which such effects
might operate, identifying the static effects via four broad groups of institutions – households, distribution
channels, factor markets and government – and the dynamic issues of volatility, long–term economic growth, and
short–term adjustment stresses. An increase in the price of something a household sells (labour, good, service)
increases its welfare. Thus, the paper first explores the likely effects of trade liberalisation on the prices of goods and
services, taking into account the distribution sector. Also critical is whether trade reform creates or destroys
markets. Trade reform is also likely to affects factor prices – of which the wages of the unskilled is the most
important for poverty purposes. If reform boosts the demand for labour–intensive products, it boosts the
demand for labour and wages and/or employment will increase. However, not all developing countries are
relatively abundant in unskilled labour and trade can boost demand for semi–skilled rather than unskilled,
labour. Hence poverty alleviation is not guaranteed. Trade reform can affect tariff revenue, but much less
frequently and adversely than is popularly imagined. Even if it does, it is a political decision, not a law of nature, that
the poor should suffer the resulting new taxes or cuts in government expenditure. Opening up the economy can
reduce risk and variability because world markets are usually more stable than domestic ones. But sometimes it will
increase them because stabilisation schemes are undermined or because residents switch to riskier activities. The
non–poor can generally tide themselves over adjustment shocks from a liberalisation, so public policy should focus
on whether the initially poor and near temporary, setbacks. The key to sustained poverty alleviation is economic
growth. There is little reason to fear that growth will not boost the incomes of the poor. Similarly, while the
argument that openness stimulates long–run growth has still not been completely proven, there is every
presumption that it will.
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Pro:
International Trade and Poverty Alleviation. PSM
Bannister, Geoffrey. "International Trade and Poverty Alleviation." . International
Monetary Fund, n.d. Web. 3 Jan 2015.
<http://www.imf.org/external/pubs/ft/fandd/2001/12/banniste.htm>.
Sequencing and credibility. Although the broad-based liberalization advocated above can bring considerable
benefits, it may be necessary to sequence liberalization at different speeds across sectors to ameliorate the costs of
adjustment. This may be true for sectors or markets where liberalization has a very large effect on prices or where
adjustment is likely to be very difficult and to take a long time. In addition, trade reform may be phased in
gradually if people need more time to adjust to the new policy environment. For example, under the North
American Free Trade Agreement (NAFTA), the maize sector was liberalized over a much longer period than
other sectors because of the importance of maize farming for Mexico's rural poor. An important condition for
implementing long adjustment periods for liberalizing sensitive sectors, however, is the credible commitment of the
government to trade reform, often enhanced by its entering into international agreements (either regional or
multilateral).
Social safety nets. Even the best-designed trade reform will create winners and losers. In order to mitigate the
possible adverse effects of transitory, short-term adjustment costs on the poor, developing countries need to have
well-functioning social safety nets to ease the tension between implementing trade reforms and alleviating
poverty. They also need to quantify the budgetary costs of offsetting some of these adverse effects—this can be
done in the context of the participatory process of the poverty reduction strategy papers for countries that
have IMF- and World Bank-supported programs. Given the substantial long-term benefits of trade reforms, the
absence of appropriate safety-net policies should not unduly delay trade liberalization, because the sequencing and
phasing of reforms can be designed to mitigate the transitional costs for the poor.
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Pro:
Multilateral Trade Liberalization and Trade Reduction. PSM
Hertel, Thomas. "Multilateral Trade Liberalization and Poverty Reduction." . CiteSeerX,
n.d. Web. 3 Jan 2015.
<http://citeseerx.ist.psu.edu/viewdoc/summary?doi=10.1.1.196.6349>.
Poverty reduction is an increasingly important consideration in the determination of multilateral trade policies.
However, the analytical procedures used to assess the impacts of multilateral trade liberalization on poverty are
rudimentary, at best. Most poverty studies have focused on single countries where a large amount of household
survey data is available. When it comes to multi-country, or global trade liberalization analyses, most studies are
forced to focus only on average, or per capita effects. This severely limits their capacity to address the poverty
question. In this paper, we extend the typical multi-country trade analysis in a direction that permits us to assess the
likely impacts of trade liberalization on the incidence of poverty. The approach builds on currently available, multicountry data sources, including: the International Comparisons Project (ICP) database on per capita consumption
(Kravis, Heston, and Summers 1982), the Deninger and Squire income distribution data set (Deninger and Squire
1996), and the Global Trade Analysis Project (GTAP) database (McDougall et al.). Furthermore, the proposed
approach is flexible enough to incorporate improved, country-specific databases, where available. The ideal
approach to analyzing the implications of multilateral trade liberalization for poverty would incorporate a highly
disaggregate set of households into a multi-region general equilibrium model, which could then be used for policy
simulations. We are, however, a long way from this ideal analytical environment. Therefore, the present analysis is
conducted in two, fully separate components. First, we simulate a global model to determine regional price changes
owing to the policy experiment. Then we utilize a second model to conduct the detailed household incidence,
thereafter drawing out the implications for poverty.
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Pro:
Trade liberalization and Poverty Reduction. PSM
Conway, Tim. "Trade Liberalization and Poverty Reduction." . Overseas Development
Institute, n.d. Web. 3 Jan 2015. <http://www.odi.org/sites/odi.org.uk/files/odiassets/publications-opinion-files/3075.pdf>.
Agricultural prices and the livelihoods of the poor: first principles Agriculture is at a global level and in the majority
of developing countries the most important of economic sectors with regard to the livelihoods of the poor. Changes
in the prices of agricultural products affect the wellbeing of the poor directly through both income and consumption
channels, and indirectly through effects on the variability of income and the level of government revenues. Given
that the bulk of global protection (in the form of both trade barriers and producer subsidies) occurs in respect to
agriculture, the price movements that might occur through trade liberalisation, and the implications for the
livelihoods of the poor, are particularly
significant in this sector. Income effects. Although urbanisation is changing the balance, the majority of the
world’s poor are still to be found in rural areas. The majority of these are either directly engaged in agriculture (as
owner-cultivators, tenants, sharecroppers, agricultural labourers or a combination of these) or are engaged in
activities (e.g. processing and trading agricultural products) that are dependent upon the prices that can be
obtained from the sale of crops and the predictability of these prices. In low income countries, 68% of the labour
force worked in agriculture in 1998 (DFID 2003, Agricultural and Fisheries, p. 1).
The centrality of agricultural income for poverty reduction is due not only to the proportion of the population
engaged in agriculture, but also to the disproportionate concentration of poverty in this sector. In national
poverty profiles, those living in rural areas and employed in agriculture almost always experience more prevalent
and more severe poverty than urban and non-agricultural groups: that is, agricultural producers and rural
populations suffer higher poverty headcounts, more extreme poverty gaps, and worse social development
indicators.
Any increase in the prices that farmers in the developing world can obtain for their agricultural products thus raises
the p.c. incomes of farming households and can be expected to benefit these groups. Although the links are complex
(see below), increased returns to agriculture may well benefit not only farmers but also agricultural labourers and
those involved in processing and marketing agricultural produce.
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Pro:
Trade Liberalization and the Poor. PSM
Mathur, Somesh. "Trade Liberalization and the Poor: A Framework for Poverty
Reduction Policies With Special Reference to Some Asian Countries including
India." . N.p.. Web. 3 Jan 2015. <http://www.kdi.re.kr/upload/7293/21.pdf>.
There is unambiguous empirical evidence from economies around the globe and for some of the Asian economies
included in our sample that trade openness promotes economic growth. Raising economic growth in a sustained
manner reduces poverty. However, most of the poor in the developing economies are in the agricultural sector,
therefore raising growth in the agricultural sector is essential ingredient for making the reform process successful.
Further, for cross section of fourteen Asian economies included in our study no significant relationship could be
found between changes in inequality and poverty, and inequality of incomes with economic growth rates and trade
openness .As there is no convincing evidence that economic growth per se could lower income and wealth
inequalities. Policies like fully government funded public and social services with land reforms may be the key for
promoting distribution of incomes in the countries.
The paper gives a framework of the various effects of a trade policy reform on the poor in the short and long run. A
policy package of tariff reduction and currency depreciation should make it easier for the factors of production in
importable sector in the short run and during the transition period, and should dampen the resistance to the
reform. The impact of trade reform on the poor in the short run will critically depend on their location in
terms of consumption and production.
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Pro:
Market Opportunities with Trade Liberalization. PSM
McGuire, Greg. "TRADE IN SERVICES – MARKET ACCESS OPPORTUNITIES AND
THE BENEFITS OF LIBERALIZATION FOR DEVELOPING ECONOMIES." .
United Nations, n.d. Web. 3 Jan 2015.
<http://unctad.org/en/Docs/itcdtab20_en.pdf>.
The service sector is the most important sector for most developing economies. It is the largest contributor to gross
domestic product, production and employment. Since it is such an important sector, developing economies need to
identify their comparative advantage in services and potential export markets. Developing economies have a
comparative advantage in labour services. They have an abundance of low and semi-skilled labour that is a major
input into tourism, construction and transport services. New potential export opportunities are also emerging in
communications and computer services. However, the export of many of these services is limited by many
restrictions on the temporary movement of labour imposed by their trading partners through domestic regulation.
Developing economies can improve their export revenues by specifically identifying these restrictions and, where a
movement of labour is required, promote the benefits to potential export markets of services trade liberalization.
Developing economies are projected to be better off by US$ 130 billion from services trade liberalization. Consistent
with similar modelling exercises for trade in goods, while there are some benefits from improving market access to
foreign markets, most of the benefits come for liberalizing one’s own market. As developing economies remove their
restrictions, their service sectors develop, primarily funded by foreign direct investment, and they become major
exporter sof services. The main restrictions on service suppliers that are preventing developing economies from
realizing these benefits are limits on foreign direct investment, stringent licensing requirements and restrictions on
expanding operations.
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Largest Gains from Trade Liberalization. PSM
Hanson, Gordon. N.p., 13 May 2009. Web. 3 Jan 2015.
<http://rodrik.typepad.com/dani_rodriks_weblog/2009/05/where-are-the-largestgains-from-trade-liberalization.html>.
Consider some obvious initiatives. On narrow economic efficiency grounds, the reform that would generate
the biggest bang for the buck by far is the relaxation of visa restrictions that prevent unskilled workers from poor
nations from being employed in the U.S. This is because the magnitude of the barrier in question here (measured by
the wedge between earnings of otherwise similar low skill workers here and in poor countries) is bigger than
in any other area of international commerce. But the trouble is that the likely distributional impact is also
very adverse. So we can generate the efficiency gains only at the expense of making domestic unskilled
workers worse off. Considerations 1 and 3 clash.
How about further trade liberalization in the conventional areas of manufactures? The problem here is that the
barriers are already extremely low (in the low single digits), and the efficiency gains to be had are correspondingly
small.
How about outsourcing? Outsourcing of low-skilled labor is on the whole bad for income distribution, while
out-sourcing of high-skilled labor may run against consideration 2, the need to keep sectors that are the likely
depositories of technological externalities at home.
So where does this leave us? I can think of two areas of liberalization where existing barriers are high and do not
face the objections that I have considered so far.
First, agriculture. Subsidies and other trade-distorting measures are rampant in agriculture, especially in crops like
cotton and sugar. It is hard to argue that these activities generate externalities or that their contraction would be
bad for income distribution as a whole. So this is clearly an area of priority. (Note that I am not considering
the impacts on other countries, which is not my focus here. The positive impacts abroad are typically vastly
exaggerated, but the domestic benefits are not in question.)
Second, visa restrictions on highly-skilled foreign workers. The barriers here are large, since we know the visa
quotas bind severely. Allowing more foreign scientists and engineers in will reduce incentives to outsource
technologically-advanced operations abroad, and will help expand sectors that are likely to generate positive
spillovers. The distributional effects are unlikely to be adverse, as it is the top of the labor market that will be
affected.
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Free Labor Laws Benefit Developing Countries
How Migration Benefits Developing Countries AMS
Yusuf, Shahid. “Globalization and the Challenge for Developing Countries.” June 2001.
The World Bank. Web. 5 Jan 2015.
http://elibrary.worldbank.org/doi/pdf/10.1596/1813-9450-2618 The World Bank is a
United Nations international financial institution that provides loans to developing
countries for capital programs. The World Bank is a component of the World Bank
Group, and a member of the United Nations Development Group.
Migration is advantageous for developing countries in several respects. First and foremost, migrants send back
remittances amounting to $75 billion, far in excess of the $52 billion of overseas development assistance (ODA).
This eases foreign exchange constraints on growth, and a sizable part of the flow goes to the poorer families which
helps to reduce the skewness in household consumption. Second, the opportunity to work in the industrialized
countries is a valuable source of skills and experience. For those with high-order technical skills, interaction with
leading researchers in the competitive environments of the industrialized countries, enhances productivity and
innovativeness. About 38 per cent of the work force in Silicon Valley is of Indian origin. What starts out as “brain
drain” – a worry and concern for governments34 - can be turned into “brain gain”,35 accompanied by financial
resources, if developing countries pursue openness and integration with the international economy. The reflux of
highly trained scientist-entrepreneurs to Korea, Taiwan (China), China, India and other South-east Asian countries is
largely the result of business-friendly institution building and outward orientation. There are signs that the positive –
sum aspects of migration are being recognized by western countries who are relaxing restrictions on immigrants with
desirable skills even as the political mood against lower skilled workers remains inflexible.
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Key to Capitalizing on Migration Benefits AMS
Yusuf, Shahid. “Globalization and the Challenge for Developing Countries.” June 2001.
The World Bank. Web. 5 Jan 2015.
http://elibrary.worldbank.org/doi/pdf/10.1596/1813-9450-2618 The World Bank is a
United Nations international financial institution that provides loans to developing
countries for capital programs. The World Bank is a component of the World Bank
Group, and a member of the United Nations Development Group.
Other regions, such as Sub Saharan Africa (SSA), have drawn much less on their human resources in the
industrialized countries. Some 30,000 Africans with doctoral degrees and 250,000 with advanced technical
qualifications work in Western Europe and North America. This is a large pool of talent many with business
connections and access to capital which could stimulate progress in SSA. But Asian experience shows that a
diaspora can become a potent instrument for development only after countries are prepared to open their
economies, lower the barriers to trade and capital flows and begin enforcing legal and commercial rules
critical to a dynamic economy. Networking among the highly skilled members of overseas communities also
influences their capacity and willingness to contribute to their countries of origin. Absent these steps, the
opportunities appear meagre and the risks excessive.
For many developing countries [globalization] is highly advantageous. But to fully exploit the longer term benefits
from migration and the growth of diasporas, countries must not only participate in the making of international
institutions to manage and facilitate labor mobility but they also need to see migration as part of a larger process of
opening and integrating their economies. This is how dynamic gains can be more fully realized, to complement the
flow of remittances. In fact, such action might also be necessary to provide leverage in arriving at global rules
covering migrants which are viewed as fair by all parties.
This piece reinforces the idea that globalization is already taking place—and developing countries will
fare best by integrating into existing global markets. Better working conditions have lured away talent in
Sub Saharan Africa for decade. It is only by opening themselves up to globalization can this migration be
reversed.
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Technology Globalization Helps Developing Countries
New Technology Lowers Entry Barriers AMS
Yusuf, Shahid. “Globalization and the Challenge for Developing Countries.” June 2001.
The World Bank. Web. 5 Jan 2015.
http://elibrary.worldbank.org/doi/pdf/10.1596/1813-9450-2618 The World Bank is a
United Nations international financial institution that provides loans to developing
countries for capital programs. The World Bank is a component of the World Bank
Group, and a member of the United Nations Development Group.
Perhaps the decisive difference between the first and the current stage of globalization is the linkage afforded by
computerization, coupled with the worldwide web.
For the majority of developing countries the initial impact of the Internet will be on trade, information, and
technology transfer. For a small but increasing number it is the prime mover behind the massive increase in financial
transactions the flow of capital. This section concentrates on the trade and industrial effects of greater connectedness
with the technological dimension dealt with in the section which follows. For existing and potential producers in
developing economies, the Internet can become a cheap and convenient source of information on market demand, a
mechanism for securing contracts, for servicing clients, for purchasing items and for increasing the efficiency of the
sales and payment process. It is reducing transactions costs, the expenditure on inventories and warehousing, and
opening the door to entirely new products many of which could be delivered online.
Most importantly for developing countries, the Internet lowers the entry barriers for small and medium sized firms
which often have difficulty competing against larger established international producers. “One of the hallmarks of
electronics commerce is that by drastically reducing transaction and search costs, it reduces the distance between
buyer and seller, enabling business to target very small niches, develop individual customer profiles and essentially
provide the means of marketing on a one-on-one basis” (OECD 1999, p.20).
Pro teams should definitely use arguments on the advancement of global technology to their advantage.
There is little evidence to contradict the gains of new technology.
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Small Business Growth is Crucial for Developing Countries AMS
Yusuf, Shahid. “Globalization and the Challenge for Developing Countries.” June 2001.
The World Bank. Web. 5 Jan 2015.
http://elibrary.worldbank.org/doi/pdf/10.1596/1813-9450-2618 The World Bank is a
United Nations international financial institution that provides loans to developing
countries for capital programs. The World Bank is a component of the World Bank
Group, and a member of the United Nations Development Group.
Future growth and employment in developing countries is mainly dependent upon small and medium
enterprises (SME) and services, although agriculture will remain dominant in some regions. Their success depends
on combining enterpreneurship with innovativeness, entering relatively younger industries, from participating in a
web of cooperative alliances, the synergy derived form their links with large firms and, because of globalization,
their widening role on the international trading arena (Acs 1999). For the SMEs and service industries such as
data processing and software, the Internet is multiplying market possibilities manifold. The rapid expansion of
software providers in India, the Philippines and Brazil is directly correlated with the demands generated by
computerization. Similarly better market access has been a major stimulus for SMEs in several countries in Eastern
Europe, India, China and South-east Asia.
Opportunities of Biotechnology AMS
Yusuf, Shahid. “Globalization and the Challenge for Developing Countries.” June 2001.
The World Bank. Web. 5 Jan 2015.
http://elibrary.worldbank.org/doi/pdf/10.1596/1813-9450-2618 The World Bank is a
United Nations international financial institution that provides loans to developing
countries for capital programs. The World Bank is a component of the World Bank
Group, and a member of the United Nations Development Group.
First, the advances in genetic and transgenic technology has made it possible to engineer crops to cope with a wide
range of environments. Plants are being bred to achieve better yields and to withstand, water stress, salinity, and high
temperatures and to resist some of the common diseases and pests. Monsanto has been selling bollworm resistant
cotton to China since 1998. Transgenic technology has also enhanced responsiveness to fertilizer while lessening a
plant’s vulnerability to certain pesticides. Most recently the inserting of specific genes into food grains such as rice
has enhanced their vitamin A content. Although the spread of genetically modified crops has aroused justifiable
concerns, better regulation, greater care in the setting of appropriate standards for each type of bio-engineered
component of a crop, appropriate labeling of foods, a deeper understanding of the technology, the closer
involvement of developing countries in the setting of standards and a sharing of the research, can put to rest many of
the fears. Producers and consumers worldwide stand to derive enormous gains from the technological change
sweeping through agriculture, especially the least developed countries which are often the ones most subject to water
scarcity, soil degradation, pest outbreaks and climatic pressures.
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The average per hectare yield of staples in SSA is well under a ton and yields of potatoes and maize are the lowest in
the world. It is 1.75 in South Asia and 4 in east Asia. In all three regions, growth in yields is either stagnant or is
rising more slowly than in the past. Bio-technology offers a way forward that can be a potent source for growth,
distributional gains, and nutritional improvement in developing countries which gear themselves to harness this
technology.
New biotechnology allowing crops to be grown more easily and in harsher environments is incredibly
promising for the agriculture markets of developing countries.
Growth Potential in Agriculture AMS
Yusuf, Shahid. “Globalization and the Challenge for Developing Countries.” June 2001.
The World Bank. Web. 5 Jan 2015.
http://elibrary.worldbank.org/doi/pdf/10.1596/1813-9450-2618 The World Bank is a
United Nations international financial institution that provides loans to developing
countries for capital programs. The World Bank is a component of the World Bank
Group, and a member of the United Nations Development Group.
Between 1994 and 1998, the area devoted to transgenic crops worldwide grew from 4 million to 70 million hectares.
In the U.S., 500 genetically modified plant varieties are available and 28 percent of the maize, soybean and cotton
grown is genetically modified. GM varieties have also made large inroads in the area under corn and tomatoes.
About 300,000 hectares of land in China were under transgenic varieties in 1999 and it is expected that half of
all crops grown by 2010 will be GM strains including a substantial volume of rice and corn.
But so far, only a tiny fraction of land in SSA is under genetically altered strains. SSA is fifteen years behind the
technological level of east Asia in 1994 and technology flows to the region are small because of differences in
climatic zones and the complexity as well as the heterogeneity of cropping systems compared to the industrialized
countries, where pure stands of corn or wheat are the rule. Thus more domestic research is necessary to push the
region to a higher technological level and to pull-in foreign technology which could then trigger a round of
spillover effects.
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New Technology Allows Agriculture in Dryer Areas AMS
Yusuf, Shahid. “Globalization and the Challenge for Developing Countries.” June 2001.
The World Bank. Web. 5 Jan 2015.
http://elibrary.worldbank.org/doi/pdf/10.1596/1813-9450-2618 The World Bank is a
United Nations international financial institution that provides loans to developing
countries for capital programs. The World Bank is a component of the World Bank
Group, and a member of the United Nations Development Group.
Local research and modern communications can improve farming practices and technological assimilation in middle
and lower middle income countries starting with the larger, commercialized farms. One is to prevent the loss of
fertilizer through leaching volatilization and denitrification, by ensuring that the right kind of fertilizer is applied at
the appropriate time in measured amounts. Another is through optimal application of water using more capital
intensive, pressurized systems e.g. drip irrigation and lateral lines etc, that permit better regulation of timing and
quantity. With two thirds of African countries and many others in the Middle-East affected by water security,
the efficient pricing, conservation and use of water will be a matter of urgency.
If biotechnology is useful in developed countries, this technology could prove to be vital the survival of
the agriculture industries in countries with less than ideal growing conditions.
Linking Globalization to Modern Farm Technology AMS
Yusuf, Shahid. “Globalization and the Challenge for Developing Countries.” June 2001.
The World Bank. Web. 5 Jan 2015.
http://elibrary.worldbank.org/doi/pdf/10.1596/1813-9450-2618 The World Bank is a
United Nations international financial institution that provides loans to developing
countries for capital programs. The World Bank is a component of the World Bank
Group, and a member of the United Nations Development Group.
The modernization of farming is increasingly inseparable from globalization because wide and integrated markets
provide the incentives to specialize and raise efficiency (Thompson and Cowan 2000). They can also change the
perspective on food security and permit a superior allocation of resources. Globalization of the agro-food system is
proceeding rapidly because of advances in molecular biology which are extending the range of many crops and
allowing buyers to source from multiple regions. Food processing and preservation technology is facilitating
handling and shipment. In addition, FDI has spawned agro-industrial enterprises comparable in scale and
standardization to manufacturing entities. For example, the Japanese have invested heavily in Thai agriculture,
starting in the 1970s and processed foods account for a third of manufactured exports from Thailand (McMichael
2000).
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New technology benefits skilled workers and local firms. DAT
Lee, Eddy, and Marco Vivarelli. “The Social Impact of Globalization in the Developing
Countries.” Institute for the Study of Labor. January 2006. Web. 4 January 2015.
http://ftp.iza.org/dp1925.pdf The Institute for the Study of Labor (IZA) in Bonn is a
local and virtual international research center and a place of communication
between science, politics and business.
If we think about FDI as a vehicle of new technologies, in addition to the direct effect, there are different channels
through which skilled-biased innovation spill over from foreign to local firms: the demonstration effect (local firms
adopt new technologies through imitation and reverse engineering, see Piva, 2003); the vertical spillovers (backward
and forward linkages lead to intra and inter-industry technology upgrading: see Saggi, 1999); labour turnover and
spin-offs (workers trained in foreign owned firms may transfer important know-how to local firms by switching
employers or by startingup their own business, see Kinoshita, 2000); and the competition effect (technology
upgrading in local firms becomes necessary because of competitive pressures from foreign firms, see Bayoumi et al.,
1999).
More than other imports, imports of capital goods, - embodying technological innovations - are important both
because of the role they play in contributing to capital upgrading and more generally to economic growth of DCs
(Xu and Wang, 2000; Eaton and Kortum, 2001; Mazumdar, 2001), and because they originate the so-called
“skillenhancing trade”, (see Robbins, 1996 and 2002; Barba Navaretti et al., 1998; Berman and Machin, 2000 and
2004; Vivarelli, 2004). In fact, even without necessarily assuming that developed countries transfer their
“best” technologies to the DCs, it is quite reasonable to expect that transferred technologies are relatively
skill-intensive, i.e. more skill-intensive than those in use domestically before trade and FDI liberalization. If
such is the case, openness – via technology – should imply a counter-effect to the SS theorem prediction,
namely an increase in the demand for skilled labour, an increase in wage dispersion and so an increase in
income inequality.
DCs are developing countries. The traditional theorem behind globalization is that outside investment
spurs the mobilization of unskilled labor. This card shows that through the growth of technology in
developing countries, local high-skill labor forces are also utilized, driving up wages on the higher end of
the income spectrum (thus contributing to the inequality side effect; this should be a point Pro teams are
prepared to handle in every round).
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The Impacts of Global Investment on Economic Growth
Linking economic growth to poverty reduction. DAT
Klein, Michael et al. “Foreign Direct Investment and Poverty Reduction.” OECD Global
Forum on International Investment. Organization for Economic Cooperation and
Development. November 2001. Web. 4 January 2015.
http://www.oecd.org/daf/inv/investmentstatisticsandanalysis/2422017.pdf Michael
Klein is Professor at the Frankfurt School of Finance and Management in Germany
and a Senior Adjunct Professor at the School of Advanced International Studies of
Johns Hopkins University.
Growth and poverty reduction. Economic growth remains a necessary ingredient for poverty reduction. Recent
studies suggest that growth tends to lift the incomes of the poor proportionately with overall growth (Dollar and
Kraay, 2000). FDI as a key vehicle to generate growth is thus a most important ingredient for poverty reduction.
Whether the potential for domestic diffusion of best practice can be exploited depends on the absorption capacity of
the host economy. Adequate levels of education and infrastructure are required to fully benefit from FDI
(Borenzstein, De Gregoria and Lee, 1998) as well as competition in domestic markets (Bromstrom and Kokko,
1996).
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Before establishing the links between globalization and rapid economic growth, Pro teams need to
establish that economic growth has an impact on poverty reduction, something which this card helps
accomplish.
Foreign direct investment has been a primary driver of economic growth. DAT
Klein, Michael et al. “Foreign Direct Investment and Poverty Reduction.” OECD Global
Forum on International Investment. Organization for Economic Cooperation and
Development. November 2001. Web. 4 January 2015.
http://www.oecd.org/daf/inv/investmentstatisticsandanalysis/2422017.pdf Michael
Klein is Professor at the Frankfurt School of Finance and Management in Germany
and a Senior Adjunct Professor at the School of Advanced International Studies of
Johns Hopkins University.
Cross border transfer of best practice and acceleration of growth. The key to economic development is the transfer
and adoption of best practice across borders. Before the industrial revolution it took some 350 years for income
per capita to double in Europe (Crafts, 2000). As the industrial revolution accelerated in the 19th century it took the
lead country, Britain, over 60 years to double per capita income. Towards the end of the 20th century several
rather diverse countries managed to double per capita income in just about 10 years — including, for
example, Botswana, Chile, China, Ireland, Japan and Thailand. Such rapid growth is now possible for those
developing economies that are able to import and imitate technical and organizational innovations from the
world’s leading countries. Growth of this rapid type makes it possible for the first time in history to propel people
from poverty to a reasonably comfortable life within a single life span. Indeed, it is this possibility of near-term
poverty eradication that gives rise to both hope about the possibilities and frustration about the shortcomings in the
fight against poverty.
FDI — the key mechanism to transfer best practice across borders. Best practice may be transmitted across borders
by various mechanisms. Foreign buyers of exports may provide the demand for upgrading, as well as some level of
technical assistance to domestic firms (Lim and Fong, 1982; Johansson and Nilsson, 1997). Imported capital goods
may embody improved technology. Technology licensing allows countries to acquire innovations. Expatriates
transmit knowledge. Yet, arguably the most effective means of transferring best practice is FDI. Foreign investment
tends to package and integrate elements from all of the above mechanisms. A few countries, essentially Japan
and Korea, have been able to grow rapidly with minimal reliance on FDI. Many countries have attempted to
imitate the Japanese or Korean model, but with limited success. De facto, most other fast-growing countries
have relied heavily on FDI (for example Chile, China, Malaysia, Singapore, and Thailand). Most
astonishingly, Ireland — despite being a relatively advanced country – has managed to grow at some 8 per
cent per year for most of the 1990s due in large part to effective attraction and deployment of foreign
investment. This is not to say that FDI is all it takes to achieve rapid growth, but it appears that FDI is a key
ingredient.
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Whether it’s FDI or some other mechanism, Pro teams have a central point to hammer home: given that
poverty typically exists in cyclic perpetuity, something needs to break the stasis. Foreign direct
investment, among other tenets of globalization, should be positioned not necessarily as the best tool to do
so, but as a valuable one.
International investment as a means of job creation. DAT
Tambunan, Tulus. “The Impact of Foreign Direct Investment on Poverty Reduction: A
Survey of Literature and a Temporary Finding from Indonesia.” Penn State
University. n.d. Web. 4 January 2015.
http://citeseerx.ist.psu.edu/viewdoc/download;jsessionid=9EB73197B0C1542BD32A
9AC4930A99E7?doi=10.1.1.195.484&rep=rep1&type=pdf Prof Tulus T.H.
Tambunan lectures at Trisakti University in Jakarta on Indonesian small and
medium enterprises and cooperatives.
The total employment effect of FDI can be categorized into indirect and direct effects. By promoting both forward
and backward production linkages with domestic industries and other sectors, for instance via subcontracting
systems between a foreign firm and local subcontractors who supply spare parts, components or semi-finished goods
to the foreign firm, additional employment is indirectly created and further economic activity stimulated. In many
cases, indirect employment creation effect of FDI is stronger than its indirect effect. For instance, a study in Kenya
show that FDI made a modest contribution with regard to total employment creation because direct employment
creation was small while no evidence on its indirect employment creation which may suggest that foreign firms
operated in that country have no production linkages with local firms (Nzomo,1971). In contrast to this, based on
his observation, Aaron (1999) states that likely FDI was directly responsible for 26 million jobs in developing
countries worldwide. In addition, for every one direct job created by FDI it was estimated that approximately
1.6 additional jobs were indirectly created through production linkages between FDI and local sectors. So, it
can be argued that the more linkages foreign firms have with local/domestic economy, especially through production
subcontracting and investment linkages, the higher the degree of poverty reduction effect of FDI.
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Globalization Reduces War
War always affects the poor in society. Not only does it make their lives harder, but it also devastates
economies and thus makes poverty reduction less likely. Since globalization makes war less likely to
occur, it helps to reduce poverty as well.
Economic interdependence makes war an unattractive option, Fj
Boudreaux, Donald. “Want World Peace? Support Free Trade” Christian Science
Monitor. November 20, 2006.
Back in 1748, Baron de Montesquieu observed that "Peace is the natural effect of trade. Two nations who differ with
each other become reciprocally dependent; for if one has an interest in buying, the other has an interest in selling;
and thus their union is founded on their mutual necessities."
If Mr. Montesquieu is correct that trade promotes peace, then protectionism – a retreat from open trade – raises the
chances of war.
Columbia University political scientist Erik Gartzke reaches a similar but more general conclusion: Peace is fostered
by economic freedom. Economic freedom certainly includes, but is broader than, the freedom of ordinary people to
trade internationally. It includes also low and transparent rates of taxation, the easy ability of entrepreneurs to start
new businesses, the lightness of regulations on labor, product, and credit markets, ready access to sound money, and
other factors that encourage the allocation of resources by markets rather than by government officials.
Professor Gartzke ranks countries on an economic-freedom index from 1 to 10, with 1 being very unfree and 10
being very free. He then examines military conflicts from 1816 through 2000. His findings are powerful:
Countries that rank lowest on an economic-freedom index – with scores of 2 or less – are 14 times more likely
to be involved in military conflicts than are countries whose people enjoy significant economic freedom (that
is, countries with scores of 8 or higher).
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Polachek and Seiglie study, Fj
Boudreaux, Donald. “Want World Peace? Support Free Trade” Christian Science
Monitor. November 20, 2006.
During the past 30 years, Solomon Polachek, an economist at the State University of New York at Binghamton, has
researched the relationship between trade and peace. In his most recent paper on the topic, he and co-author Carlos
Seiglie of Rutgers University review the massive amount of research on trade, war, and peace.
They find that "the overwhelming evidence indicates that trade reduces conflict." Likewise for foreign
investment. The greater the amounts that foreigners invest in the United States, or the more that Americans invest
abroad, the lower is the likelihood of war between America and those countries with which it has investment
relationships.
Professors Polachek and Seiglie conclude that, "The policy implication of our finding is that further international
cooperation in reducing barriers to both trade and capital flows can promote a more peaceful world."
Economic connections are stronger than shared political ideologies, Fj
Boudreaux, Donald. “Want World Peace? Support Free Trade” Christian Science
Monitor. November 20, 2006.
Also important, the findings of Polachek and Gartzke improve our understanding of the long-recognized reluctance
of democratic nations to wage war against one another. These scholars argue that the so-called democratic peace
is really the capitalist peace.
Democratic institutions are heavily concentrated in countries that also have strong protections for private property
rights, openness to foreign commerce, and other features broadly consistent with capitalism. That's why the
observation that any two democracies are quite unlikely to go to war against each other might reflect the
consequences of capitalism more than democracy.
And that's just what the data show. Polachek and Seiglie find that openness to trade is much more effective at
encouraging peace than is democracy per se. Similarly, Gartzke discovered that, "When measures of both economic
freedom and democracy are included in a statistical study, economic freedom is about 50 times more effective than
democracy in diminishing violent conflict."
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Globalization Reduces Civil War
Promoting Development, Fj
Barbieri, Katherine and Reuveny, Rafael. “Economic Globalization and Civil War”
Journal of Politics. November 1, 2005.
Neoclassical economics argues that free markets promote economic development. Globalization simply entails the
global spread of free markets. Openness to trade, FDI, and FPI enables allocation of production factors to their most
efficient uses, promoting development, which strengthens the government, providing it with more revenues as the
tax base is larger. Richer states, in turn, can have stronger police and military, deterring potential rebels.
Richer countries also can have better infrastructure and administrative capacity, strengthening central
control. In addition, richer people should have fewer grievances toward governments than poor and should be
less likely to revolt. Lastly, civil wars entail opportunity costs that should be higher for rich states (e.g.,
income that rebels could earn in the labor force, fighting expenses that could be utilized for growth).
Development, therefore, should deter rebellions, thus promoting peace (Fearon and Laitin 2003; Mason 2003;
World Bank 2002, 2003).
Reducing Income Inequality, Fj
Barbieri, Katherine and Reuveny, Rafael. “Economic Globalization and Civil War”
Journal of Politics. November 1, 2005.
Trade, FDI, and FPI are said to reduce income inequality in several ways (Held et al. 1999; Reuveny and Li 2003;
World Bank 2000, 2002). According to neoclassical economics, trade benefits owners of abundant factors of
production and harms owners of scarce factors. Lesser developed countries (LDCs) are relatively more endowed
with labor, while developed countries (DCs) are relatively more endowed with capital. Thus, trade will reduce the
earnings of capital and raise the earnings of labor in LDCs, promoting equality.' Trade also raises productivity since
it promotes competition and since workers that earn more acquire more education. The competition reduces prices
and diminishes monopolies, benefiting the poor. FDI inflows transfer capital, technology, and management skills,
promoting growth and reducing inequality. FPI inflows allow nations to invest and consume more, promoting
growth and reducing poverty. Regimes become more efficient to attract investments, because markets penalize bad
economic performance. More efficient public policy reduces inequality by improving tax and welfare systems.
Income equality will promote peace since it reduces the grievances that incite poor people to rebel.
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Reducing State Control Over The Economy, Fj
Barbieri, Katherine and Reuveny, Rafael. “Economic Globalization and Civil War”
Journal of Politics. November 1, 2005.
States with open economies are less able to affect domestic economic performance, since they have limited control
over external forces. For example, seeking higher profits, traders may move their businesses, investors and
multinational corporations (MNCs) may leave, and currency traders may dump the local currency.
Government's reduced ability to extract revenues from business should promote intrastate peace, since it
makes the state less of a prize for rebels. That is, under globalization the benefits from taking over the state
seem smaller than the costs of a rebellion (Goodwin 2001; Snyder 1999).
Increasing Communication And Information Flows, Fj
Barbieri, Katherine and Reuveny, Rafael. “Economic Globalization and Civil War”
Journal of Politics. November 1, 2005.
International business requires communication and information flows. Once these channels are open they also
provide information on domestic politics, increase international contacts, and transmit foreign pressures on
governments and rebels to resolve conflicts peacefully. Open information and communication channels enable
international organizations and governments to expand their activities overseas, mediate potential civil wars
before they erupt, and resolve existing wars. The channels should also facilitate the spread of democratic
norms respecting peaceful conflict resolution (Goodwin 2001; Mason 2003. On international organizations,
see also Russett and Oneal 2001).
Reducing Export of Primary Products, Fj
Barbieri, Katherine and Reuveny, Rafael. “Economic Globalization and Civil War”
Journal of Politics. November 1, 2005.
Dependence on exports of primary goods is said to promote civil war through several channels discussed shortly.
The opposite is expected to occur in the DCs, promoting inequality. However, governmental institutions in DCs are
generally able to ameliorate this effect by transferring income from capital owners to labor in various ways (e.g.,
progressive taxation, employment benefits). On the role of inequality in promoting intrastate conflict, see the next
subsection. Economic globalization is expected to promote intrastate peace since it reduces this dependence.
Trade, FDI, and FPI bring technology and knowledge to a country, promoting industrialization. Countries
dependent on exports of primary goods such as timber, oil, and diamonds can reduce their dependency,
diversifying their income sources (The Economist 2003; Mason 2003; World Bank 2003).
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Increasing the Size of Security Forces, Fj
Barbieri, Katherine and Reuveny, Rafael. “Economic Globalization and Civil War”
Journal of Politics. November 1, 2005.
Free Trade Agreements (FTAs) limit government spending on protectionism. However, FTAs do not restrict military
spending. Governments signing FTAs may increase military spending to create jobs or promote growth. The result is
larger and stronger security forces. In addition, economic openness creates winners and losers. The losers may
challenge the state to remedy their grievances. Seeking to squash dissent in order to promote trade and attract foreign
business, the state employs more security forces. This reinforces state power and reduces the risk of civil war (IPN
2003; Martin and Schumann 1998).
Generating Economic Benefits, Fj
Barbieri, Katherine and Reuveny, Rafael. “Economic Globalization and Civil War”
Journal of Politics. November 1, 2005.
Trade, FDI, and FPI benefit countries, while conflict is likely to harm these activities. The potential loss of economic
benefits due to conflict is said to moderate a government's conflictive responses, promoting international peace
(Polachek 1980; Russett and Oneal 2001). Similarly, civil war should lead to reduced trade and reduced foreign
investments. Economic openness is expected to reduce intrastate violence, as actors seek to avoid these losses. A
strong state response to rebels, for example, might temporarily stop a rebellion, but could lead to further unrest as the
rebels regroup, raising losses from forfeited international business. Thus, states and rebels should have greater
incentive to accommodate each other peacefully and public support for rebels should be smaller in open, rather than
closed, economies (Mason 2003; Wager and Shulz 1995).
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Con Evidence
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Developed Countries Shape Trade Policy to their Own
Advantage
Trade Policies are Dominated by Developed Countries AMS
Shangquan, Gao. “Economic Globalization: Trends, Risks, and Risk Prevention.” 2000.
United Nations.
http://www.un.org/en/development/desa/policy/cdp/cdp_background_papers/bp200
0_1.pdf Professor Gao Shangquan, born in September 1929 in Jiading - Shanghai, is
one of China's most prominent economists, a key figure in thinking-thanking
economic reforms in China. He is a senior research fellow, professor and former
vice-minister of the State Commission for Restructuring the Economic Systems, the
central agency that played an essential role in setting up and carrying out economic
reform policy. He is also appointed member of the United Nations Committee for
Development Policy and consultant for the World Bank.
Developed countries have been playing a dominant role in the process of economic globalization. In 1996, the total
volume of exports of developed countries was US$ 4,057 billion, accounting for 81.7% of the world’s total value of
international trade. In 1995, the foreign direct investment by 10 major developed countries including the G7,
Switzerland, Sweden and the Netherlands took up 85.1% of the total value of foreign direct investment in the whole
world. The dominant role of developed countries in the process of economic globalization is also reflected in the fact
that it is they that determine the rules for international economic exchanges. Although current rules of game for
international economic activities have the good aspect of being in keeping with socialized mass production, they are
generally laid down under the dominance of developed countries.
Trade Liberalization and Evidence of Negative Effects on Poor. PSM
McCulloch, Neil. "Trade Liberalization and Poverty: The Evidence So Far." March 2004.
N.p.. Web. 3 Jan 2015. <https://ideas.repec.org/a/aea/jeclit/v42y2004i1p72115.html>.
This paper assesses the current state of evidence on the impact of trade policy reform on poverty in developing
countries. There is little empirical evidence addressing this question directly, but a lot of related evidence on
specific aspects. We summarize this evidence using an analytic framework addressing four key areas:
economic growth and stability; households and markets; wages and employment and government revenue. Twelve
key questions are identified and empirical studies and results are discussed. We argue that there is no simple
generalizable conclusion about the relationship between trade liberalization and poverty, and the picture is much less
negative than is often suggested. In the long run and on average, trade liberalization is likely to be strongly poverty
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Con:
alleviating, and there is no convincing evidence that it will generally increase overall poverty or vulnerability. But
there is evidence that the poor may be less well placed in the short run to protect themselves against adverse
effects and take advantage of favorable opportunities.
International investment in developing countries favors large multinationals over locals.
DAT
Tambunan, Tulus. “The Impact of Foreign Direct Investment on Poverty Reduction: A
Survey of Literature and a Temporary Finding from Indonesia.” Penn State
University. n.d. Web. 4 January 2015.
http://citeseerx.ist.psu.edu/viewdoc/download;jsessionid=9EB73197B0C1542BD32A
9AC4930A99E7?doi=10.1.1.195.484&rep=rep1&type=pdf Prof Tulus T.H.
Tambunan lectures at Trisakti University in Jakarta on Indonesian small and
medium enterprises and cooperatives.
Still in Africa, Ramachandran and Shah (1997) found that only domestic firms with majority foreign ownership that
performed well. Caves (1998) and Tybout (2000) show that domestic large firms linked to FDI tend to be most
productive, suggesting that the impact of the diffusion is likely to be more effective on large firms than smaller ones.
Large firms usually have better trained workers and infrastructure to absorb transferred technologies and other
intangible assets than what small firms have. Biggs et al (1995) investigate the production function for
manufacturing companies in Ghana, Kenya and Zimbabwe in the early 1990s, using 1992-3 RPED Survey data. The
study shows that there were more foreign-owned firms than wholly domestic-owned firms conducted in-house
training of employees, and both foreign ownership and technology transfer are found to have a significant impact on
firm efficiency.
Studies in Latin America also come with the same evidence. For instance, recent research by the Overseas
Development Institute (te Velde, 2002) has examined how FDI affects the distribution of income and wages of
skilled and less skilled workers in particular. It shows that FDI did not have an inequality-reducing or poverty
reduction effect in Latin America. There are possible exceptions, such as Colombia, but even here FDI may have
played a relatively minor role in reducing inequality or poverty. On the contrary, there are indications that FDI may
have increased wage inequality in Bolivia and Chile. As stated in the report, poor people are more likely to gain from
the presence of FDI only when less skilled workers gain. The presence of FDI can have a negative consequence
for income distribution, for example when foreign firms introduce new and skilled-biased technologies (such
as electronic firms in Costa Rica) favoring specific groups or when previously publicly-owned monopolies are
taken over by foreign firms with fewer or no social objectives, which can increase wage inequality.
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International trade liberalization prescriptions cut safety nets in developing countries. DAT
Bardhan, Pranab. “Globalization and Rural Poverty.” United Nations University. June
2005. Web. 5 January 2015. http://www.wider.unu.edu/publications/workingpapers/research-papers/2005/en_GB/rp2005-30/
The author is Economics faculty at the University of California at Berkeley.
Let us now briefly turn to the case of the poor as recipients of public services. In the low-income developing
countries, the poor, particularly those who are in the preponderant informal sector, do not receive much of effective
social protection from the state, but the public sector is usually involved in basic services like education and health
and public works programmes. Cuts in public budgets on these basic services are often attributed to
globalization, as the budget cuts to reduce fiscal deficits often come as part of a package of macroeconomic
stabilization prescribed by international agencies like the IMF. Trade reforms can bring about a decline in
customs revenue (which is usually a substantial source of total government revenue in low-income countries)
due to tariff cuts, to the extent these are not compensated by the replacement of the pre-existing quotas by
tariffs. But Pritchett and Sethi (1994) analyse the experience of Jamaica, Kenya, and Pakistan on their tariff
reductions and found that revenues often fell substantially less than tariff rates did. Much depends on the nature of
customs administration, the degree of complexity of the tariff structure, and the scope for expansion of the revenue
base following trade reform.
While there is a lot of scope for improvement in the internationally prescribed (occasionally ideologically blinkered)
stabilization programmes to minimize their adverse impact on the poor, one should keep in mind that the fiscal
deficits in these poor countries are often brought about in the first place more by domestic profligacy in matters of
subsidies to the rich, salaries for the bloated public sector or military extravaganza. Faced with mounting fiscal
deficits the governments often find it politically easier to cut the public expenditures for the voiceless poor
(along with public investment programmes), and that is primarily due to the domestic political clout of the
rich who are disinclined to share in the necessary fiscal austerity, and it is always convenient to blame an
external agency for a problem that is essentially domestic in origin.
For developed countries in need of reliable trade partners and labor sources, international stabilization
incentives offer a means to an end. For the developing countries at which those measure are aimed,
however, they create issues of public revenue which, when resolved at the national (rather than
international) level by sovereign governments, often favor the wealthy over the poor. While this can be a
powerful point, the amount of linkage required to make it, as demonstrated in this card, requires simple
and clear rhetoric.
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Con:
Multinational companies often take advantage of poorer countries, Fj
Bardhan, Pranab. “Does Globalization Help or Hurt the World’s Poor?” Berkeley
University Website. 2006.
Small producers of poor countries often lack the marketing network, brand name or quality reputation for making
inroads into rich country markets. This is where transnational retail companies can help them, but the
marketing margins and fees they charge are often very high and the standards and practices they insist on are
very difficult for small producers to adopt. Restrictive business practices by transnational companies are
difficult to prove but there is a great deal of circumstantial evidence. There are reports, for example, that in
UK for every £ 1 that shoppers spend on loose Ecuadorian bananas, around 40 pence goes to supermarkets,
while plantation workers receive just 1.5 pence. Even accounting for large shipping and distribution costs, this
may not be entirely unconnected with the fact that 5 companies control over 80 per cent of the global market
in bananas. In general in agricultural and food products, giant companies like Monsanto, Cargill, Nestlé, and WalMart dominate the supply chains, from the stage of seeds all the way to the supermarket shelf. Studies show that the
gap between the price that the commodity producing countries (often poor) receive and the retail price at
which the international trading companies sell to consumers nearly doubled between 1975 and 1994,
suggesting the increasing market power of those companies. The international coffee market, for example, is
dominated by 4 companies. In the early 90’s the coffee earnings of exporting countries were a little less than
$12 billion, and the retail sales were around $30 billion; by 2002 retail sales more than doubled and yet coffeeproducing countries received about half their earnings of a decade earlier.
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Economic Globalization Increases Inequality
Mind the Gap: Economic Globalization Widens the Global Inequality Gap AMS
Shangquan, Gao. “Economic Globalization: Trends, Risks, and Risk Prevention.” 2000.
United Nations.
http://www.un.org/en/development/desa/policy/cdp/cdp_background_papers/bp200
0_1.pdf Professor Gao Shangquan, born in September 1929 in Jiading - Shanghai, is
one of China's most prominent economists, a key figure in thinking-thanking
economic reforms in China. He is a senior research fellow, professor and former
vice-minister of the State Commission for Restructuring the Economic Systems, the
central agency that played an essential role in setting up and carrying out economic
reform policy. He is also appointed member of the United Nations Committee for
Development Policy and consultant for the World Bank.
First of all, economic globalization has in fact expanded rather than reduced the gap between the North and South.
According to some report published by UN in 1999, the number of developing countries that have benefited from
economic globalization is smaller than 20. The difference of income per capita between the richest country and
poorest country has enlarged from 30 times in 1960 to the current 70 times.
Trade Deficits for Developing Countries Grow AMS
Shangquan, Gao. “Economic Globalization: Trends, Risks, and Risk Prevention.” 2000.
United Nations.
http://www.un.org/en/development/desa/policy/cdp/cdp_background_papers/bp200
0_1.pdf Professor Gao Shangquan, born in September 1929 in Jiading - Shanghai, is
one of China's most prominent economists, a key figure in thinking-thanking
economic reforms in China. He is a senior research fellow, professor and former
vice-minister of the State Commission for Restructuring the Economic Systems, the
central agency that played an essential role in setting up and carrying out economic
reform policy. He is also appointed member of the United Nations Committee for
Development Policy and consultant for the World Bank.
In 1960, the value of foreign trade of the poorest 46 countries accounted for 1.4% of the world total. Towards the
latter half of 1990, this proportion had already reduced to 0.6% and further down to an almost negligible o.4% in
1995. The average trade deficit of developing countries in 1990’s increased by 3% as compared with that in 1970s.
And over 80% of the capital are flowing among US, Western European and East Asian countries. Except for
donations and bilateral financial aids, most developing countries could not attract any capital.
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The Critics Agree AMS
Mander, Jerry. “Does Globalization Help the Poor?” IFG Bulletin, 2001, Volume 1, Issue
3, International Forum on Globalization
http://www.thirdworldtraveler.com/Globalization/DoesGlobaliz_HelpPoor.html The
International Factors Group (IFG) is the global trade association that fully
represents and promotes the interests of the factoring, invoice financing and asset
based lending industry on a global basis.
So far, almost all of the evidence from the past three decades (1970-2000) - the period of economic globalization's
most rapid ascendancy - shows that it is bringing exactly the opposite outcome that its advocates claim. The
evidence now comes nearly as much from the proponents of globalization as its opposition.
Clearly, poverty and inequality are rapidly accelerating everywhere on earth. A 1999 report by the United
Nations Development Program found that inequalities between rich and poor within and among countries are quickly
expanding, and that the global trading and finance system is one of the primary causes.
Even the U.S. Central Intelligence Agency (CIA) confirms the United Nations' (UN) conclusions, agreeing that
globalization brings massive inequalities. The benefits of globalization do not reach the poor, says the CIA, and the
process inevitably brings increased global protest and chaos.
Robert Wade of the London School of Economics, wrote in The Economist (2001), "Global inequality is worsening
rapidly...Technological change and financial liberalization result in a disproportionately fast increase in the number
of households at the extreme rich end, without shrinking the distribution at the poor end...From 1988 to 1993, the
share of the world income going to the poorest 10 percent of the world's population fell by over a quarter, whereas
the share of the richest 10 percent rose by 8 percent."
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Wealth Generated by Economic Globalization Does Not Trickle Down AMS
Mander, Jerry. “Does Globalization Help the Poor?” IFG Bulletin, 2001, Volume 1, Issue
3, International Forum on Globalization
http://www.thirdworldtraveler.com/Globalization/DoesGlobaliz_HelpPoor.html The
International Factors Group is the global trade association that fully represents and
promotes the interests of the factoring, invoice financing and asset based lending
industry on a global basis.
Economic globalization has only proved to be successful in making global corporations and a few elites wildly
wealthy. For example, of the largest 100 economies in the world, 52 are now corporations. In what the UN describes
as the "staggering concentration of wealth among the ultrawealthy," total wealth controlled by people with assets of
at least $1 million nearly quadrupled from 1986 to 2000, from $7.2 trillion to $27 trillion. Even with the dot-com
crash and the current global financial slump, Merrill Lynch predicts that wealth controlled by millionaires will
continue to increase by 8 percent a year, reaching $40 trillion by 2005.
Contrary to its claims, wealth generated by globalization does not trickle down. Rather, the rules lock the wealth at
the top, removing from governments and communities the very tools necessary to redistribute wealth, protect
domestic industries, workers, social services, the environment, and sustainable livelihoods.
Economic growth in developing nations grows inequality, too. DAT
“Why Globalisation May Not Reduce Inequality in Poor Countries.” The Economist. 2
September 2014. Web. 4 January 2015. http://www.economist.com/blogs/economistexplains/2014/09/economist-explains-0
The Economist is an English-language weekly newspaper owned by The Economist Newspaper Ltd and
edited in offices in London.
Other economic theories try to explain why inequality in developing countries has reached such heights. A Nobel
laureate, Simon Kuznets, argued that growing inequality was inevitable in the early stages of development. He
reckoned that those who had a little bit of money to begin with could see big gains from investment, and could thus
benefit from growth, whereas those with nothing would stay rooted in poverty. Only with economic development
and demands for redistribution would inequality fall. Indeed, recent evidence suggests that the growth in developingcountry inequality may now have slowed, which will prompt new questions for economists. But as things stand,
globalisation may struggle to promote equality within the world’s poorest countries.
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Some stats on inequality, Fj
Martell, Luke. “Sociology of Globalization” Polity Press. 2010.
The figures below show some global inequalities.
- The income gap between the fifth of the world’s population living in the world’s richest countries and the fifth in
the poorest countries grew from 30:1 in 1960, to 60:1 in 1990 to 74: 1 in 1997.
- The richest 5% of people receive 114 times the income of the bottom 5%, the richest 1% receive as much as the
poorest 57%.
- The 25 million richest Americans have as much income as nearly 2 billion of the world’s poorest, that is getting on
for a third of the world’s population.
- The richest 2% of the world’s population owns more than half global household wealth;the bottom half own 1%.
- Many of these factors have got worse rather than better over time. In 1820 Western Europe’s per capita income was
2.9 times Africa’s and in 1992 it was 13.2 times as great. (UNDP 2003).
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The impact of globalization on inequality. DAT
Hisako Kai and Shigeyuki Hamori, (2009) ''Globalization, financial depth, and inequality
in Sub-Saharan Africa '', Economics Bulletin, Vol. 29 no.3 pp. 2025-2037. 18 August
2009. Web. 5 January 2015.
http://www.accessecon.com/Pubs/EB/2009/Volume29/EB-09-V29-I3-P51.pdf
Shigeyuki Hamori is a member of the Economics faculty at Kobe University.
Another negative impact of globalization is its effect on financial deepening, which it is very closely linked with.
McKinnon (1973) and Shaw (1973) rejected the argument related to financial repression supported by the Tobin’s
monetary growth model (Tobin, 1965) and revealed that market intervention hinders a country’s financial deepening
and economic growth. In light of this, many developing countries have begun to promote globalization for the
purposes of financial deepening and economic growth. However, it is possible that globalization will actually
reduce the equalizing effect of financial deepening.
Financial deepening refers to the development of the financial sector. It promotes efficient credit allocation, risk
reduction through diversified investment in financial intermediaries and the lowering of transaction costs of these
intermediaries through information generation. As a result, financial deepening is believed to promote economic
growth and thereby reduce inequality. Further, it is possible to deduce that financial deepening eliminates credit
constraints on the poor, increases their productive assets and productivity, and thus, contributes to poverty
reduction (World Bank, 2001; Jalilian and Kirkpatrick, 2002). Moreover, empirical analyses, albeit limited,
on the relationship between financial deepening and inequality have been conducted. These analyses indicate
that financial deepening reduces inequality (Li et al, 1998; Beck et al, 2004).
While there may be factors apart from globalization contributing to growing inequality, this card
demonstrates that without globalization’s ultimate impacts, other mechanisms currently in play have the
potential to be actively reducing inequality.
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Linking Inequality and Hindrances to Poverty Reduction
The effectiveness of poverty reduction and inequality are inversely proportional. DAT
“Not Always With Us.” The Economist. 1 June 2013. Web. 4 January 2015.
http://www.economist.com/news/briefing/21578643-world-has-astonishing-chancetake-billion-people-out-extreme-poverty-2030-not
The Economist is an English-language weekly newspaper owned by The Economist Newspaper Ltd and
edited in offices in London.
GDP, though, is not necessarily the best measure of living standards and poverty reduction. It is usually better to
look at household consumption based on surveys. Martin Ravallion, until recently the World Bank’s head of
research, took 900 such surveys in 125 developing countries. These show, he calculates, that consumption in
developing countries has grown by just under 2% a year since 1980. But there has been a sharp increase since
2000. Before that, annual growth was 0.9%; after it, the rate leapt to 4.3%.
Growth alone does not guarantee less poverty. Income distribution matters, too. One estimate found that two thirds
of the fall in poverty was the result of growth; one-third came from greater equality. More equal countries cut
poverty further and faster than unequal ones. Mr Ravallion reckons that a 1% increase in incomes cut poverty by
0.6% in the most unequal countries but by 4.3% in the most equal ones.
Developing countries cannot leverage economic growth from globalization effectively. DAT
UN Trade and Development Board. “Globalization and Inclusive Development.” United
Nations Conference on Trade and Development. October 2007. Web. 5 January
2015. http://unctad.org/en/Docs/tdb54d7_en.pdf
In addition, many countries, especially the least developed countries and lower- and middle-income developing and
transition countries, have been unable to translate growth effectively into poverty reduction and broader human
development. For example, despite its recent recovery, the proportion of people living in extreme poverty in
sub-Saharan Africa (which includes 34 of the 50 LDCs), remains very high, decreasing only from 46.8 per
cent in 1990 to 41.1 per cent in 2004. Given the rapid population growth, this has meant that the number of
people living on less than $1 a day has actually been increasing, and is only now beginning to level off. Even in
some of the faster-growing developing economies, some segments of the population continue to be excluded from
the benefits. Poverty has been increasing in western Asia, for example, and continues to fall only slowly in Latin
America and the Caribbean.
If Con teams frame globalization as a vehicle for economic growth, this follows nicely into most
arguments on inequality and its factors in developing countries.
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Trading Off the Poor. PSM
Madeley, John. "Trading off the poor." . People & The Planet, n.d. Web. 3 Jan 2015.
<http://www.peopleandtheplanet.com/index.html@lid=27149§ion=48&topic=44.htm
l>.
Goods and services have been traded internationally for thousands of years, improving the quality of life for many.
But now, as the global market grows ever more extensive, questions are being raised about the impact that trade,
dominated by big business corporations, is having on people - and the planet.
The exchange not only of goods but also of crafts, arts, ideas and technology has enriched lives and raised the living
standards of many people. It has given most of humanity a much wider choice of goods, services and
experiences.
"Without trade, countries would have to rely exclusively on their own production; overall incomes would be far
lower, the choice of goods would be far less and hunger would increase", says the UN Food and Agriculture
Organization(FAO). Many countries in North and sub-Saharan Africa have today become critically reliant on
imports of grain. But the FAO adds that the relationship of trade to food security raises a number of complex
issues and that the expansion in the volume of trade "has been accompanied by declining terms of trade for
the products of developing countries, which have eroded possible gains considerably".
Some aspects of trade are therefore a mixed blessing. A number of developing countries turned to tourism in the late
20th century. While this earns foreign exchange and creates jobs, the jobs are often menial, environmental costs can
be high, and most of the money earned goes to the big corporations who dominate the industry. Trade in hardwood
from tropical forests can earn hard currency but again often at the expense of the environment.
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Trade Liberalization and Adversely Affects on Poverty. PSM
Winters, L Alan. "Trade Liberalization and Poverty." . World Bank, n.d. Web. 3 Jan
2015.
<http://siteresources.worldbank.org/INTPOVERTY/Resources/WDR/winters2.pdf>
.
First, poverty, and especially poverty that was not predicted, arises primarily from market failure. Most dramatically,
domestic deregulation of cash crop purchasing can leave remote farmers without buyers, precipitating them into
poverty. In Zambia, some of these farmers found it difficult to return to the subsistence farming that they had
practised prior to growing tradable maize, because they had lost the seeds and the skills necessary. Even
where private buyers are operating it is important to ensure that they do so competitively, as the contrast
between Zimbabwe and Zambia illustrates. The poor cannot always take advantage of the opportunities that
liberalisation creates because they lack either the skills or capital. For example, in Zimbabwe the growth of smallscale trading seemed not to include the very poor, and in Zambia farmers switched from maize to cotton despite
the latter’s poor returns, because cotton purchasers provided inputs and credit. Farmers’ inability or
unwillingness to cope with fluctuating prices restricts the advantage they can take of liberalisation; this
inability could arise from credit market failure, although we have no direct evidence that it does so.
Liberalizing international finance cuts off fiscal choice for the poor. DAT
Hisako Kai and Shigeyuki Hamori, (2009) ''Globalization, financial depth, and inequality
in Sub-Saharan Africa '', Economics Bulletin, Vol. 29 no.3 pp. 2025-2037. 18 August
2009. Web. 5 January 2015.
http://www.accessecon.com/Pubs/EB/2009/Volume29/EB-09-V29-I3-P51.pdf
Shigeyuki Hamori is a member of the Economics faculty at Kobe University.
With regard to theoretical issues and the results of empirical analyses, while financial deepening can be considered
to be an effective policy for reducing inequality, it can also be ascertained that such effects of financial deepening
will change as globalization increases. As indicated by McKinnon (1973) and Shaw (1973), while financial
liberalization generally promotes financial deepening, it also “worsens” financial deepening and reduces its
equalizing effects. When a small number of banks monopolize the market, for example, in developing countries, it
can be analyzed that the lending rate ceiling increases the deposit and loan amounts, and the effects of the financial
repression policy on deposit amounts are rendered dependent on market structure (Demetriades and Luintel, 1996,
2001; Courakis, 1984). It can be also regarded that liberalization concentrates fund allocations to the rich, limits
access to finance, and changes the quality of financial deepening. Ang (2008) states that, before liberalization, the
poor were able to obtain financial access through direct credit programs that allocate funds to agricultural
and small businesses in India, but owing to liberalization, the prevalence of these programs decreased and the
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Con:
poor suffered. According to Ang (2008), banks were obligated to hold a certain number of branches in rural
areas before liberalization, but these rules were eased after liberalization. Consequently, foreign and private
banks pulled out of rural areas and supplied funds in areas populated by the rich, and thus, reduced the
poor’s access to finance. Even if financial deepening occurs and if markets become more open, funds are allocated
only to efficient clients and a country’s income redistribution functions are undermined. As a result, funds fail to
reach the poor and inequality worsens. Thus, it can be deduced that liberalization changes the quantity and quality of
financial deepening, and consequently, reduces equalizing effects. Liberalization for the purpose of financial
deepening can actually worsen financial deepening or reduce its great equalizing effects. Hence, there is a need to
analyze the compound effects of liberalization and financial deepening as this will enable us to determine whether or
not economic liberalization for achieving financial deepening will reduce its equalizing effects, and to further
elucidate the impact of liberalization on inequality.
Financial deepening is a holistic term referring to the development of financial services.
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Economic Globalization Reduces Security
Financial Uncertainty for Developing Countries AMS
Shangquan, Gao. “Economic Globalization: Trends, Risks, and Risk Prevention.” 2000.
United Nations.
http://www.un.org/en/development/desa/policy/cdp/cdp_background_papers/bp200
0_1.pdf Professor Gao Shangquan, born in September 1929 in Jiading - Shanghai, is
one of China's most prominent economists, a key figure in thinking-thanking
economic reforms in China. He is a senior research fellow, professor and former
vice-minister of the State Commission for Restructuring the Economic Systems, the
central agency that played an essential role in setting up and carrying out economic
reform policy. He is also appointed member of the United Nations Committee for
Development Policy and consultant for the World Bank.
Under open economic conditions, the conflict between the realization of external economic equilibrium and that of
internal economic equilibrium is a great constraint on the macroeconomic policies of developing countries,
weakening their capacity of macroeconomic control and regulation. With continuous innovation of financial
instruments, rapid expansion of financial assets and the trend of privatization of international capital, a large volume
of international floating capital has brought along enormous impacts on the economic safety and financial stability of
developing countries. According to some data provided by IMF, the value of short-term bank loans flowing at and
through international financial markets and other financial and capital markets in 1997 at least amounted to
US$7,200 billion, which was about equal to 1/4 of the total output of the whole world. According to an estimation by
the US Federal Reserve Board, the daily total value of transactions of foreign exchanges in New York, Tokyo and
London alone in 1997 was about equal to US$620, 18% of which was used for foreign trade and investment, and the
rest 82% were used for speculation at international financial markets. This huge amount of floating international
capitals may lead up to bubble economies and disorderly fluctuation of foreign exchange rates. They may also
weaken the monetary sovereignty of a country and bring along a dysfunction of its monetary policy.
The ‘sheep-flocking effect’ and the ‘self-fulfilling mechanism” of monetary crisis existing in international financial
markets will further strengthen the concussion suffered by developing countries. Although the financial crises
erupted in Mexico and East Asia in 1990s were rooted in the defects of the economic systems and economic
structures, the impact from the floating international capital was the direct fuse, which also greatly reinforced their
destructiveness.
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China is the chief thief of U.S. intellectual property FJ
Gerwin, Ed and McConaghy, Ryan. “China’s Trade Barrier Playbook: Why America
Needs a New Game Plan” The Bernard L. Schwartz Initiativeon American
Economic Policy. February 2012.
The extent of China’s outright IP theft—and its impact on the U.S. economy—is staggering. Business groups
estimate that 99% of China’s music and 78% of its personal computer software is pirated. China’s massive failure to
enforce the intellectual property rights of U.S. companies effectively provides free intellectual property to Chinese
firms. This includes some $2 billion in benefits to Chinese internet firms that profit from reselling music that they’re
essentially allowed to pilfer for free.
According to China’s own estimates, between 15 to 20% of the products made in China are counterfeits. Over threequarters of the counterfeited and pirated goods seized by U.S. customs in 2010 originated in China or Hong Kong. A
recent analysis by the U.S. International Trade Commission estimates that China’s infringement of IP rights cost
America’s IP-intensive firms over $48 billion annually in lost sales, royalties and license fees.
China’s IP theft also saps a key driver of American economic growth and good jobs. The USITC estimates
that, if China protected IP at levels comparable to the United States, U.S. exports and affiliate sales to
China would increase by $107 billion and the U.S. economy would add some 2.1 million jobs.
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Chinese dumping hurts American businesses FJ
Barker, Ned. “U.S. Trade with China: Expectations vs. Reality” PBS November 16, 2004.
Another major source of friction between the U.S. and China has been the fairly frequent American charge that
Chinese producers are guilty of dumping -- that is, producing exports and selling them in the U.S. below the price in
China, or below what it costs to manufacture and ship abroad.
In recent years, U.S. companies in a variety of industrial sectors have brought trade complaints to the International
Trade Commission (ITC), an independent, nonpartisan, quasi-judicial federal agency in Washington that provides
trade expertise to both the legislative and executive branches of government, determines the impact of imports on
U.S. industries, and directs actions against certain unfair trade practices, such as patent, trademark, and copyright
infringement. The American companies have accused Chinese companies of dumping everything from shrimp to
household goods like brushes and plastic bags, from tissue paper and bedroom furniture to color television sets.
"It's not a matter of China versus the U.S.," says Hartquist, who has represented several American companies in antidumping cases against the Chinese. "It's a matter of the Chinese producers are pricing their products in a manner that
simply doesn't allow anybody else in the world to compete with that, and that's not fair," he says.
Earlier this year, the ITC gave relief to a company Hartquist represents, Five Rivers Electronic Innovations, located
in Greeneville, Tenn. It employs more than 700 workers, and is the last American-owned color TV maker in the U.S.
In May 2003, Five Rivers filed an anti-dumping petition in Washington, charging that color television makers in
China were illegally dumping their larger-sized color sets in the U.S., thereby threatening to put Five Rivers out of
business. The company tracked TV imports from China and found that sales of the Chinese televisions skyrocketed
from just over 50,000 sets in 2001 to 1.5 million sets during the first nine months of 2003.
Last December, Five Rivers CEO Tom Hopson told a congressional committee, "Imports of large screen TVs from
China have created havoc in the U.S. marketplace. In my 24 years in the television business, I have never a similar
or more worrisome situation."
In May 2004, the ITC unanimously agreed that the surge of these imports from China had injured Five Rivers, and
then imposed duties averaging about 23 percent on these sets.
Hopson says without the decision, Five Rivers would have gone out of business. "I strongly believe that we would
have already closed this factory," he says. "Had we not found the data … we would have looked very strongly at …
laying our employees off."
Dumping is a predatory economic policy where companies sell their products so cheap that they incur a
loss, but they also put their competitors out of business. China has often been found guilty of this
practice.
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China is clearly guilty of dumping FJ
Van, Le and Tong, Sarah. “China and Anti-dumping: Regulations, Practices and
Responses” East Asian Institute. May 14, 2009.
China was the number one target of anti-dumping cases, with 640 antidumping investigations and 441 antidumping measures against exports from China between January 1995 and June 2006 . These accounted for 20% of
the world total of anti-dumping filings.
According to WTO, about 70% of all anti-dumping investigations against Chinese export have led to the imposition
of some sort of anti-dumping measures.
Statistics show that in 2002, Chinese enterprises were very active in responding to anti-dumping cases, at a response
rate of 70% and at an increasing recovering rate. In particular, the response rate to dumping charges from the US and
EU was 100%...
China has often been accused of dumping and most of those accusations (70%) have been proven right.
Even when Chinese businesses have appealed these charges (through World Trade Organization dispute
settlement) anti-dumping measures have been upheld. As described in the previous source, dumping is a
predatory policy that attempts to literally put the competition out of business. Continuous trade with
China will result in even more U.S. companies getting hurt by this kind of behavior.
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Economically Unhealthy Dependence AMS
Green, Adam Robert. “African Economies Face Down European Storms.” August 6, 2012.
Global Policy Forum. https://www.globalpolicy.org/globalization/globalization-ofthe-economy-2-1/general-analysis-on-globalization-of-the-economy/51818--africaneconomies-face-down-european-storms.html?itemid=id#646 Global Policy Forum is
an independent policy watchdog that monitors the work of the United Nations and
scrutinizes global policymaking. We promote accountability and citizen
participation in decisions on peace and security, social justice and international law.
GPF plays an active role in NGO networks and other advocacy arenas. We organize
meetings and conferences and we publish original research and policy papers.
"Mozambique, Kenya, Niger, Cape Verde and Cameroon are among the most vulnerable African countries to the
eurozone crisis," says Isabella Massa, an economist at the Overseas Development Institute. "This is due to the fact
that these countries are highly dependent on eurozone trade flows. Cape Verde, for example, relies on the EU for
over 90 percent of its exports." Mozambique and Cameroon are highly vulnerable also because of their strong
financial linkages with Europe, she adds. European banks represent over half of total bank assets in these countries.
"Mozambique is also highly dependent on aid flows from Europe, especially from Portugal. Cameroon and Niger are
also likely to feel the effects of the eurozone crisis through a depreciation of the euro to which their currencies are
pegged".
The International Labor Organisation is predicting 22 million out of work over the next four years in Europe. This in
turn depresses demand for developing countries' exports, as well as potentially reducing remittances. This concern is
relevant for countries such as Gambia and Nigeria which depended on remittances for more than 10 percent of their
GDP in 2010, and for which the EU is the main source of those funds. Recent evidence shows that remittances from
Nigerians have more than halved in 2011 partly because of the eurozone crisis.
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Developing Countries Hurt Deepest by Global Economic Crises AMS
Nissanke, Machiko. “Linking Economic Growth to Poverty Reduction under
Globalisation: A Case for Harnessing Globalisation for the Poor in Sub-Saharan
Africa.” University of London. 2009. Machiko Nissanke is Professor of Economics at
School of Oriental and African Studies (SOAS), University of London, where she
teaches graduate courses in international economics and financial economics since
1993. She studied economics at Birkbeck College and received MSc and PhD
degrees in Economics from University of London.
The downside of globalization is most vividly illuminated at times of periodical global financial and economic
crises. Until the current global financial crisis was broken out in 2007, the costs of repeated financial crises fuelled
by the globalization process have been borne largely by the developing world, and often disproportionately so by the
poor in these countries who are the most vulnerable.
Most developing countries are commodity-dependent, which fluctuate in the global market.
DAT
UN Trade and Development Board. “Globalization and Inclusive Development.” United
Nations Conference on Trade and Development. October 2007. Web. 5 January
2015. http://unctad.org/en/Docs/tdb54d7_en.pdf
Commodity-dependent economies are historically more likely to be excluded from the benefits of globalization than
economies with a more diversified resource base. Out of 144 developing countries, 86 depend on commodities for
more than half of their export earnings. In the past, falling and highly volatile prices for key commodities
have made this dependence particularly problematic, but today the current boom in commodity prices
created by new demand in the emerging economies has opened up new opportunities for commodity-rich
countries. Policy issues that are attracting the attention of the international community include: the need to find new
approaches to investment that are more advantageous to host countries; how to improve the transparency and
accountability of international revenue payments in the sector; and the related need for recipient Governments to use
their revenues wisely and in ways that lead to a more equitable distribution to the poor. Moreover, commoditydependent countries are looking for ways to diversify more into upstream and downstream activities related to the
commodities sector, such as distribution and higher value-added processing activities; in addition to diversifying
beyond the commodities sector.
While currently, developing countries can leverage commodity revenue to invest in diversification, this is
not a static situation. The reliance on the global commodity market leaves developing countries liable to
boom and bust cycles, which is unacceptable for long-term poverty reduction goals.
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Problems with Financial Globalization for Developing Countries: Instability AMS
Yusuf, Shahid. “Globalization and the Challenge for Developing Countries.” June 2001.
The World Bank. Web. 5 Jan 2015.
http://elibrary.worldbank.org/doi/pdf/10.1596/1813-9450-2618 The World Bank is a
United Nations international financial institution that provides loans to developing
countries for capital programs. The World Bank is a component of the World Bank
Group, and a member of the United Nations Development Group.
[T]he rising flow of trade and capital has heightened the sense of vulnerability. Blue and many white collar workers
in industrialized countries fear being displaced by cheaper labor in developing countries. The volume and volatility
of capital flows, has increased the risks of banking and currency crises as well as their costs (World Bank 1999).
Production and trade is increasingly dominated by transnational corporations which use the options afforded by
globalization to their own best advantage, and without much regard for the longer term development objectives of
individual countries.
Case study: Sub-Saharan Africa is economically vulnerable to international markets. DAT
Handley, Geoff et al. “Poverty and Poverty Reduction in sub-Saharan Africa: An
Overview of the Issues.” Overseas Development Institute. January 2009. Web. 4
January 2015. http://www.odi.org/sites/odi.org.uk/files/odi-assets/publicationsopinion-files/860.pdf The Overseas Development Institute (ODI) is the UK's leading
independent think tank on international development and humanitarian issues.
Market failure and market volatility increase the prevalence of poverty in SSA. This is because, in many instances,
the poor do not possess the level of assets (both physical and human capital assets) required to protect themselves
from shocks resulting from markets. Market fragmentation – inadequate institutional and infrastructural
linkages (e.g. railway, roads, landline and mobile telecommunications) between local, national and
international markets – means that markets are poorly integrated, over both time and space. This not only
affects physical markets but reduces producers’ and traders’ access to information that signals price changes,
which limits their ability to change their patterns of production and trade to avoid economic shocks. The
advantages of rural infrastructure and markets is seen in Tanzania, where households within 100 metres of a yeararound road that has a regular bus service, earn on average one-third more per capita than the rural average (IFAD
2001: 164 in Bird et al., 2002: 12).
Market volatility is driven by international economic shifts or more localised market failures. International market
volatility in key staples and commodities (e.g. coffee, sugar, cocoa, tea) can lead to higher prices (as in Uganda in
the late 1990s) but also to low prices, which cause extreme hardship for producers. The catastrophic impact of the
collapse of coffee prices in recent years in Ethiopia, Burundi and Uganda is demonstrative of this (CPRC,
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Con:
2004: 45). But price volatility can also be a poverty driver for urban and net consumer households. This is
because the cost of their basket of goods increases as the price of staples, including fuel oil, rises. Such price
rises have a similar impact on national budgets as well, as the 1970s oil crisis did throughout SSA, and mass
importations of maize had in southern Africa in the 1990s.
Due to inadequate infrastructure (among other factors), businesses and households in SSA (sub-Saharan
Africa) are ill-equipped to take advantage of access to international markets. Con teams can use this card
as part of a general effort to establish roadblocks in the linkage between globalization and poverty
reduction, which can seem like a direct causal/correlative relationship as framed by many economic
studies.
Import reliance threw Sub-Saharan Africa into economic freefall. DAT
Abatena, Hailu. “Globalization and Development Problems in Sub-Saharan Africa.”
Norfolk State University. May 2009. Web. 4 January 2015.
http://orgs.bloomu.edu/gasi/2009%20Proceedings%20PDFs/AbetinaDVPRBSSAF1.
pdf
Over the last three decades since 1973, all regions of the world have experienced trade deficits. From 1973-1987
Sub-Saharan Africa had an average annual trade imbalance of -0.34 percent. Latin America and the Caribbean, and
South Asia on the average had more than twice as much annual deficit. Available evidence suggests that the global
recession of the 1980's may have worsened the situation further. During most of this period (1980-87) SubSaharan Africa, Latin America and the Caribbean, and East Asia have experienced persistent deficits on the
average ranging from -2.3 to -5.7 percent annually. Among them Sub-Saharan Africa had the largest deficit
growth with an average annual increase of -5.7 percent from 1980-1987 (see table 3).
The deteriorating economic situation in Sub-Saharan Africa, at least in part, may have been worsened by the
relatively higher cost of energy imports. In 1989 the cost of energy import in this region was nearly a third (28%) of
its merchandise exports. In sharp contrast to this, East Asia and Latin America spent only eight and five percent
respectively of their merchandise exports (World Bank, 1991, p-213). This may have helped to increase the trade
deficit and reduced the purchasing power of the developing nations in this region. Consequently their ability to
invest in development programs may have been adversely affected likewise. In the 1980's the rate of average annual
growth of gross domestic investment declined significantly from the previous level. It dropped from an average
annual rate of growth of 8.7 percent in the period 1965-1980 to -4.3 percent from 1980-1990 (World Bank, 1992, p233). This was indeed a sharp decline indicating the harsh economic reality which Sub-Saharan Africa had to face
during the 1980's. The situation is much worse now.
Trade liberalization is one of several factors which reduces incentives to become economically selfsufficient. In this case, dependence on energy imports led to prices determining boom and bust cycles in
Africa.
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Developing economies are the most susceptible to trade shocks. DAT
Montalbano, Pierluigi et al. “Trade Openness and Vulnerability in Central and Eastern
Europe.” United Nations University. June 2005. Web. 7 January 2015.
http://www.wider.unu.edu/publications/working-papers/researchpapers/2005/en_GB/rp2005-43/
The author is Economics faculty at the University of Rome.
The main result of the analysis is that in spite of the apparent association between trade openness and good
macroeconomic performance, Eastern European countries have experienced a deterioration of their
macroeconomic wellbeing as a result of the trade shocks of the early 1990s. Moreover, it is the ‘extreme’
component of the volatility of trade variables that has the strongest negative effects on the macroeconomic
performance of partner countries. This has to be related to the limited ability of the more fragile countries in
terms of their economy and institutional capacity to cope with a higher degree of ‘uncertainty’ as well as the
poor utilization of adequate policy tools which would be able to mitigate the repercussions of trade shocks on
the domestic economy. These results are robust also in the case of the poorest quintile of the population, sparking
concern for the actual subsistence of these people in case of trade shocks.
The impact of this card lies in the link that “fragile” economies are typically those of developing nations,
which are the most likely to seize on vulnerability-inducing trade opportunities as a means of bolstering
growth. Essentially, the countries making the largest risks are the ones least capable of withstanding the
harms.
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Economic Globalization Hinders Other Necessary Means
of Globalization
Globalization of Labor Standards, Environmental Protection, Etc. Neglected AMS
Department of Social Policy and Development Division. “Can the Rural Poor Benefit from
Globalization?” 2001.
http://undesadspd.org/ExpertGroupMeetingsPanelDiscussions/MoreExpertGroupM
eetings/PovertyReduction.aspx The United Nations Department of Economic and
Social Affairs (DESA) works closely with governments and stakeholders to help
countries around the world meet their economic, social and environmental goals.
From poverty reduction to governance to finance to the environment, DESA’s work
is about human progress for all, especially the most vulnerable. We are
fundamentally concerned, not only with global prosperity today, but also for
tomorrow.
The economic arguments in favour of globalization stress the positive relationships between increasing international
trade and investment flows and faster economic growth, higher living standards, accelerated innovation, diffusion of
technological and management skills, and new economic opportunities.
Reality has proven not to be so rosy. First, the benefits of globalization are not equally distributed and tend to be
concentrated among a relatively small number of countries, particularly the more advanced ones. The poorest
countries such as the least developed countries in Africa have not been able to sufficiently harvest the benefits of
globalization. Second, most efforts have been placed in facilitating free trade flows, particularly in products which
are of importance to the developed countries, as part of the globalization process. Other dimensions of globalization
like labour market standards, the environment, sustainable development and poverty alleviation has received much
less attention. Third, globalization has also led to an increased vulnerability among many countries to international
economic conditions, as clearly demonstrated by the Asian financial crisis of 1997-1998.
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Key Resources Damaged AMS
Mander, Jerry. “Does Globalization Help the Poor?” IFG Bulletin, 2001, Volume 1, Issue
3, International Forum on Globalization
http://www.thirdworldtraveler.com/Globalization/DoesGlobaliz_HelpPoor.html The
International Factors Group (IFG) is the global trade association that fully
represents and promotes the interests of the factoring, invoice financing and asset
based lending industry on a global basis.
Most measures of "economic growth" such as Gross Domestic Product (GDP) and Gross National Product (GNP)
tend only to measure increases in the market value of economic production, i. e., the rate at which resources are
converted to commodities, and that other paid services and activities are performed. By such standards of
measurement, expansion of military hardware, prisons, wars, crime (and its prevention), as well as the clear-cutting
of forests, or building of toxic dumpsites are all made to seem positive as they increase GNP and GDP. Meanwhile,
unpaid household labor, care for the sick and elderly, or self-sufficient food growing and distribution are not deemed
positive results because they don't get counted.
Such standards also contribute to the depletion of social and natural capital (nature) which, as former World Bank
economist Herman Daly has suggested, is the foundation of all real wealth. In fact, export-driven globalization is the
greatest single contributor to the massive ecological crises of our time. Its emphasis on exponentially increased trade
and transport activity requires corresponding expansion of infrastructures - airports, seaports, roads, rail-lines,
pipelines, dams, electric grids; many of these in pristine places, often on indigenous lands. Increased transport also
uses drastically increased fossil fuels adding to the problems of climate change, ozone depletion, and ocean and air
pollution. And an ever expanding economy requires the depletion of the last resources on the planet; under free trade
these are nearly always located in the global South. One of the greatest injustices against southern countries is that
they are net resource exporters to the already rich North.
Indeed ecological degradation-forests, rivers, biodiversity-has the most devastating impact on the poor; and resource
depletion reduces livelihoods and creates poverty. So economic growth is certainly not a measurement that benefits
the poorest parts of the world. In any case, depleting nature cannot serve anyone for much longer, even the rich, who
may be, as the late British financier James Goldsmith put it - "enjoying champagne on the deck of the Titanic."
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Misguided Intervention AMS
Department of Social Policy and Development Division. “Can the Rural Poor Benefit from
Globalization?” 2001.
http://undesadspd.org/ExpertGroupMeetingsPanelDiscussions/MoreExpertGroupM
eetings/PovertyReduction.aspx The United Nations Department of Economic and
Social Affairs (DESA) works closely with governments and stakeholders to help
countries around the world meet their economic, social and environmental goals.
From poverty reduction to governance to finance to the environment, DESA’s work
is about human progress for all, especially the most vulnerable. We are
fundamentally concerned, not only with global prosperity today, but also for
tomorrow.
Recent estimates by the International Fund for Agricultural Development (IFAD) indicate that 75 percent of the poor
work and live in rural areas. Rural poor have restricted access to and control over assets - land, water, credit,
information, technology, health, education and skills - and to markets. As such their lives have limited links to
the macro-economic environment in which globalization takes place.
Developing countries have been given the main responsibility to harness the potential benefits of globalization for
the rural poor and to counter possible negative effects. They are urged to adopt appropriate structural and social
measures that promote macro-economic stability essential for economic growth and poverty alleviation. Highincome countries are urged to support these initiatives through increased aid, debt relief, experience exchanges e.g.
on policy making and good governance, liberalized market access for products of importance to low-income
countries, and increased resources for the fight against communicable diseases. However, many low-income
countries already face tremendous and often contradicting challenges in achieving poverty-alleviation goals
e.g. implementation of education for all programmes with reduced government expenditure, or ensuring
sufficient income-generating and employment prospects for the rural poor without intervention in
agricultural output prices or in investment allocation policies.
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One Size Fits All Approach Fails AMS
Mander, Jerry. “Does Globalization Help the Poor?” IFG Bulletin, 2001, Volume 1, Issue
3, International Forum on Globalization
http://www.thirdworldtraveler.com/Globalization/DoesGlobaliz_HelpPoor.html The
International Factors Group (IFG) is the global trade association that fully
represents and promotes the interests of the factoring, invoice financing and asset
based lending industry on a global basis.
Economic globalization policies as enforced by the World Bank, IMF, and the WTO actually have far more to do
with creating poverty than solving it. Free trade requires that all countries adopt the same economic model, thus
eliminating variations that might slow down the smooth global operations of major corporations as they seek new
resources, markets and cheap labor. It is not efficient for global corporations when individual nations are permitted
their own expressions of what is best for their people via their own democratic laws. These laws might be designed
to protect resources and the environment; or social services for the poor; or the rights of local workers; or they might
help struggling small businesses; or require foreign investors to keep their investment in place for a time; or require
that foreign investors include domestic partners. All such laws are viewed as pesky impediments to corporate
freedom. They have got to go.
The specific role of the WTO is to set homogenized global rules for all countries-one size fits all-and to specifically
challenge national environmental and social laws viewed as obstacles to corporate free trade. Given that it was
granted draconian enforcement powers, the WTO can now impose harsh punishments on democratic nations that
stray from its rules. A past president of the WTO, Renato Ruggiero put it bluntly in 1998 The WTO will be "the new
constitution for a global economy." (Since Seattle, such statements have not been repeated.)
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Environmental Problems with Economic Globalization AMS
The University of Queensland. January 2008. “Cost-Benefit Analysis of Economic
Globalization.” Web. 5 Jan 2015.
http://ageconsearch.umn.edu/bitstream/90614/2/WP%2045.pdf The University of
Queensland (UQ) is a public research university primarily located in Brisbane,
Australia. Founded in 1909, UQ is the oldest, most selective and largest Queensland
university in Australia.
Most developing countries are reluctant to impose stricter controls on emissions of global pollutants because this is
likely to slow their rate of economic growth. They also point out that their per capita level of greenhouse gas
emissions are much lower than in higher income countries. Their opposition to global pollution controls appears to
be mainly based on the grounds that income in their countries are lower than in more developed countries, and
therefore, they should be less constrained in their growth options. Significant international political barriers exist to
having uniformity or near uniformity in charges for greenhouse gas emissions in all regions. Those barriers are
unlikely to be overcome soon. In these circumstances, greater economic globalization is making it more difficult to
address environmental issues arising from market failures.
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Investment on a national level to leverage the global economy hurts the poor. DAT
UN Trade and Development Board. “Globalization and Inclusive Development.” United
Nations Conference on Trade and Development. October 2007. Web. 5 January
2015. http://unctad.org/en/Docs/tdb54d7_en.pdf
20. In order to participate fully in the global economy, developing countries must first have productive capacity and
become more competitive. In part, this is an issue of the natural resources with which a country is endowed, but
increasingly in the modern global economy it is also a question of created advantages relating to infrastructure,
human capital, skills, resources and knowledge. The crucial lack of adequate transport, telecommunications and
energy infrastructure in many developing countries requires a range of policy responses including publicprivate partnerships, foreign direct investment and domestic resource mobilization.6 One of the challenges
for improving inclusion is that mechanisms to recoup the costs of investment in essential infrastructure and
utilities can be disproportionately damaging to the poor, so that new approaches for financing and service
provision may be required.
21. Skills development and training is another important ingredient to help create a more inclusive global economy.
Both in the agricultural and nonagricultural sectors, policy attention is needed to help introduce new productive
techniques, investment in innovation and research and development, better entrepreneurial skills, and management
and marketing training. The extent to which skills and technology can be boosted through mechanisms such as
foreign direct investment, global knowledge partnerships, public-private initiatives and even migration policy, is yet
to be fully addressed by developed and developing countries.
Without adequate physical and intellectual infrastructure, developing nations risk losing out on the
economic benefits of development. The development of this infrastructure, in turn, needs to be
accomplished in a sustainable manner; this often is not the case.
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Trade Liberalization is Not a Panacea for Poverty. PSM
Cruz Pereira, Dionisio. "Is trade liberalisation a panacea for poverty?." . Why Dev, 29
Oct 2010. Web. 3 Jan 2015. <http://www.whydev.org/is-trade-liberalisation-apanacea-for-poverty/>.
In spite of this, reports from the UNCTAD (2001) indicate that poverty in developing countries continue to exist.
The number of people living on less than one dollar a day has been increasing by almost 50 per cent in the last
few years and the gap between rich and poor people in developing countries is widening. UNCTAD (2001)
points out that the poorest 49 countries make up 10 per cent of the world population, but accounts for only 0.4 per
cent of world trade and this disparity is continuing to grow at an alarming rate.
By using the case study of India and China, this essay will argue that trade liberalisation has contributed to
increasing poverty and inequality in many developing countries. This will be supported from three main aspects: the
increasing gap between rich and poor, the increase in human rights violations and the dept of environmental damage.
Arguments in favour of trade liberalisation tend to suggest that trade liberalisation is the key to fight poverty and
inequality in developing countries. It is frequently argued that trade liberalisation provides opportunities for
developing countries to gain access to international markets, and also allows the flow of Foreign Direct
Investment (FDI) to developing countries which in turn boosts economic growth. The arguments for this in turn
contribute to reducing poverty in developing countries (WTO 2007; World Bank 2007a). For instance, the
emergence of India and China as an economic powerhouse has been hailed as the major achievement brought by
trade liberalisation.
The World Bank (2007a) stated that since embarking on trade liberalisation, both India and China have achieved
considerable economic growth and have been able to lift millions of their people out of poverty. In addition, the
improvement in education provides fundamental skills to the Indians and Chinese to enable them to compete at
international levels.
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False Premises of Trade Liberalization. PSM
Pérez, Mamerto. "The false promises of agricultural trade liberalization." . Momagri.
Web. 3 Jan 2015. <http://www.momagri.org/UK/focus-on-issues/-The-falsepromises-of-agricultural-trade-liberalization-_560.html>.
There are a number of reasons export agriculture holds less promise than free-trade proponents suggest. First, despite
the repeated assertions that developing countries hold a comparative advantage in agriculture, it is the rich countries
that dominate world agricultural markets. With the exception of tropical commodities such as coffee and bananas,
they hold a large and in many cases rising share of global agricultural commodity markets. Developed countries in
2005 controlled two-thirds or more of exports of maize, wheat, barley, and cotton. Among the most traded nontropical agricultural commodities, only rice, sugar, and oilseeds showed developing countries as a group with a
majority share of export markets. And rich countries control the entire value chain in most agricultural
commodities, from patented seeds, agro-chemicals, machinery, and credit to trade itself, even in the case of
many commodities exported from developing countries.
Second, not all developing countries are equal in the world of international agricultural trade. To compete in global
commodities markets, countries need a relatively high level of industrial development and infrastructure. It is not
surprising, then, that only a few countries have shown the ability to compete internationally. Parts of the former
Soviet Union can compete in temperate grains, and China competes in global maize markets (though its own
growing consumption of animal feed and its depleted environment limit its production and export potential).
But the two countries that dominate developing country agricultural trade are Brazil and Argentina. Both have vast
tracts of rich land suitable for industrial agriculture. Both have achieved levels of development that give them the
infrastructure and capital to compete internationally. Brazil has emerged or is poised to emerge as an export
power in soybeans, sugar, coffee, oranges, meats, tobacco, and ethanol. Argentina has established a strong and
growing market presence in soybean products and maize. When the World Bank and other international
agencies speak of Latin America as a region showing gains from trade liberalization, they are overwhelmingly
speaking of Brazil and Argentina.
As Timothy A. Wise shows in his overview for this project, if one separates out Brazil, Argentina, China, and the
former Soviet Union in analyzing the developing world’s export potential in agriculture, the rest of the developing
world has demonstrated little capacity to compete in major agricultural markets. While this is not necessarily the
result of liberalization, Wise shows that besides these few (but important) countries or regions, from 19952005 developing countries gained little in the way of global market share.
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Globalization has hindered education in Africa. DAT
Takyi-Amoako, Emefa. “Globalization: An Impediment to Sustainable Educational
Development in Sub-Saharan African Countries?” Norrag. Graduate Institute of
International Studies (Geneva). n.d. Web. 5 January 2015. Web.
http://www.norrag.org/es/publications/boletin-norrag/online-version/education-forsustainable-development-or-the-sustainability-of-education-investment-a-specialissue/detail/globalisation-an-impediment-to-sustainable-educational-developmentin-sub-saharan-african-countries.html NORRAG is an independent network whose
Secretariat is located at the Graduate Institute of International and Development
Studies in Geneva, Switzerland, with which it maintains close working relations.
The neo-liberal macro-policies (including the current Poverty Reduction Strategy Papers (PRSPs)) prescribed by the
World Bank / IMF with the support of bilateral donors and Northern non-governmental organisations (NGOs) for a
number of countries in Africa, demand that governments curtail their spending on higher education while enforcing
cost-sharing (Puplampu 2006). This has led to the commodification and privatization of education and the fact
that it is no longer seen as a social benefit but an economic advantage, only from the point of view of profit
that can be gained by investors in education. The result is a restriction of access of the poor to higher
education, hence undermining poverty reduction, and a weakening of the role of tertiary institutions as mind
trainers and knowledge generators for Africa?s development. The disinvestment of the state undermined not just
educational opportunities, but also knowledge production in general, which has an impact on Africans being able to
develop their own paradigms of development and social change.
This card’s basic premise is the idea of leverage: with increased outside investment, African nations
become corresponding subject to the directives of eternal parties, rather than internal interests. This
typically contradicts the sovereign goals of individual nations.
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Examples of Developing Countries Hurt by Economic
Globalization
Failure to Reduce Poverty in Nigeria AMS
Applied Economics and International Development: University of Santiago de
Compostela.“Analyzing the Impact of Glaoblization on Economic Development in
Developing Economies: An Application of Error Correction Modeling (ECM) to
Nigeria). University of Santiago de Compostela. 2006.
http://www.usc.es/economet/journals1/aeid/aeid6314.pdf The University of Santiago
de Compostela - USC is a public university located in the city of Santiago de
Compostela, Galicia, Spain. In 2009, the University received the accreditation of
Campus of International Excellence by the Ministry of Education (Spain),
recognising USC as one of the most prestigious universities in Spain.
The discussion above is a testimony that Nigeria is joining globalization train. However, the records of economic
growth since the introduction of SAP in 1986 have been very disappointing. With a real GDP per capita of just=,N
1000, poverty in Nigeria is a daily worsening and painful reality to majority of the population of over 120 million.
There is no gain saying that the majority of Nigerians are poor. Indeed, Nigeria is ranked among the 20 poorest
countries of the world, despite its widely acknowledged huge economic potentials and abundant natural resources.
The country is rated among the African countries where poverty level is relatively high. Evidence from survey
investigations shows that above 60.0 per cent of the population of Nigeria live below the poverty line. Its poor
human development indicator puts Human Development Index (HDI) at 168th out of the 173 countries of the world
(World Bank, 2001). These statistics about poverty rate and HDI seem uncomfortable when compared with the
global average record and even when compared with some other developing countries.
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Devastating Effects of Trade Liberalization in Zambia and Ghana AMS
Byers, Stephen. “I was Wrong. Free Market Trade Policies Hurt the Poor.” The
Guardian. May 19, 2003.
http://www.theguardian.com/politics/2003/may/19/globalisation.politics Stephen
John Byers is a British Labour Party politician who was the Member of Parliament
(MP) for North Tyneside from 1997 to 2010.
On the other hand, there are an increasing number of countries in which full-scale trade liberalisation has been
applied and then failed to deliver economic growth while allowing domestic markets to be dominated by imports.
This often has devastating effects.
Zambia and Ghana are both examples of countries in which the opening up of markets has led to sudden falls in rates
of growth with sectors being unable to compete with foreign goods. Even in those countries that have experienced
overall economic growth as a result of trade liberalisation, poverty has not necessarily been reduced.
In Mexico during the first half of the 1990s there was economic growth, yet the number of people living below the
poverty line increased by 14 million in the 10 years from the mid-1980s. This was due to the fact that the benefits of
a more open market all went to the large commercial operators, with the small concerns being squeezed out.
Trade Liberalization and Lagging Regions in Asia. PSM
Krishna, Pravin. "Trade liberalisation and lagging regions in South Asia." . CEPR, 13
Feb 2011. Web. 3 Jan 2015. <http://www.voxeu.org/article/trade-liberalisation-andlagging-regions-south-asia>.
In recent research (Krishna et al. 2010), we have studied the unequal effects of trade liberalisation on poverty
reduction across different sub-national regions within the developing nations of South Asia, with particular emphasis
on India. According to a classification based on per capita GDP, now in use by the World Bank, the “lagging”
regions within India include: Arunachal Pradesh, Assam, Bihar, Chattisgarh, Jharkhand, Madhya Pradesh,
Manipur, Meghalaya, Mizoram, Nagaland, Orissa, Rajasthan, Tripura, Uttar Pradesh, Uttarkand, Tripura
and the leading regions include the Andaman & Nicobar Islands, Andhra Pradesh, Chandigarh, Delhi, Goa,
Gujarat, Haryana, Himachal Pradesh, Karnataka, Kerala, Maharashtra, Pondicherry, Punjab, Sikkim, Tamil Nadu.
The lagging states in India are farther away from ports (on average about 25% further from the nearest port than an
average leading state). For example, the northeastern states in India that fall in the “lagging category” are
somewhat geographically isolated. This isolation from the rest of India is accentuated by the intermediate
presence of Bangladesh, which makes distance by road to the nearest port quite large (more than 700 miles in
some instances). Also, the quality of roads and highway connections in this area lag behind most states. In contrast,
Maharashtra is a leading state and itself has the country’s largest port, the city of Mumbai.
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We examine the association between poverty reduction and trade liberalisation over the 1987-2000 period in lagging
and leading states. For this exercise, we use state level measures of poverty rates constructed using household survey
data collected by the National Sample Survey Organisation in India and state level measures of trade exposure
constructed by weighting national trade barriers by state level employment shares in different manufacturing
industries. Our analysis suggests that while poverty fell in India over this time period, trade liberalisation is
associated with increases in poverty rates (relative to the mean rate of overall poverty reduction) in lagging
regions. Specifically, in lagging regions, a percentage point reduction in the tariff rate is associated with a 0.8%
increase in the poverty rate (relative to the mean rate of poverty reduction overall). Furthermore, this was true to a
greater extent in rural areas than in the urban areas in lagging regions.
Globalization created instability in Thailand and Indonesia, Fj
Bardhan, Pranab. “Does Globalization Help or Hurt the World’s Poor?” Berkeley
University Website. 2006.
For example, the speculative attack against the Thai currency baht in 1997 led to events as a result of which the
percentage of poor people in rural Thailand jumped about 50 per cent in just one year. In Indonesia, in the first year
of the Asian financial crisis, real wage in manufacturing dropped 44 per cent. Many economists (even those who
otherwise support free trade) now believe in the need for some form of control over short-term capital flows,
particularly if domestic financial institutions and banking standards are weak, though there are differences on the
specific form such control should take and on the assessment of the effects of the rise in the cost of capital this may
entail. It is widely believed that China, India, and Malaysia largely escaped the severe impact of the Asian financial
crisis because of their stringent controls on capital flights.
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Chinese Economic Involvement in Africa Hurts African Countries
Toxic Relationship AMS
Melber, Henning. “China, BRICS And Africa: Who Really Benefits?” April 2, 2013.
Global Policy Forum. https://www.globalpolicy.org/globalization/globalization-ofthe-economy-2-1/general-analysis-on-globalization-of-the-economy/52373-chinabrics-and-africa-who-really-benefits.html?itemid=id#27997 Global Policy Forum is
an independent policy watchdog that monitors the work of the United Nations and
scrutinizes global policymaking. We promote accountability and citizen
participation in decisions on peace and security, social justice and international law.
GPF plays an active role in NGO networks and other advocacy arenas. We organize
meetings and conferences and we publish original research and policy papers.
The trade between China and Africa rose from about US$6.5 billion in 1999 to US$160 billion in 2011, with
investments amounting to US$13 billion the same year. But the old exchange patterns remained the same:
primary goods were exported from Africa and manufactured commodities imported from China. In 2010
some 2 200 Chinese companies had operations in Africa. The question remains, who really benefits from this
new engagement?
Chinese, who come along with businesses and often stay in search of a better life abroad, have certainly changed the
realities in various parts of the continent. There are growing sentiments among the ordinary people, often bordering
on racism. They feel threatened in their livelihoods, from street hawkers to construction workers. Chinese compete
in economic spheres and activities in which Europeans have not been directly engaged. But Chinese people in Africa
are mostly not interacting socially. This creates a notion of ‘otherness’, which makes it difficult for both sides to get
familiar with each other. There are also complaints that the working conditions in Chinese companies (notably in the
mining and construction sector) are worse than elsewhere.
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Trade with China Hurts African Business AMS
Sanusi, Lamido. “Africa Must Get Real about Chinese Ties.” March 11, 2013. Financial
Times. http://www.ft.com/cms/s/0/562692b0-898c-11e2-ad3f-00144feabdc0.html The
Financial Times (FT) is a British English language international daily newspaper
with a special emphasis on business and economic news internationally. The FT has
an average daily readership of 2.2 million people worldwide and is internationally
respected for its research on global affairs.
Nigeria, a country with a large domestic market of more than 160m people, spends huge resources importing
consumer goods from China that should be produced locally. We buy textiles, fabric, leather goods, tomato paste,
starch, furniture, electronics, building materials and plastic goods. I could go on.
The Chinese, on the other hand, buy Nigeria’s crude oil. In much of Africa, they have set up huge mining operations.
They have also built infrastructure. But, with exceptions, they have done so using equipment and labour imported
from home, without transferring skills to local communities.
So China takes our primary goods and sells us manufactured ones. This was also the essence of colonialism. The
British went to Africa and India to secure raw materials and markets. Africa is now willingly opening itself up to a
new form of imperialism.
Chinese Hinder African Countries from Reaching Economic Potential AMS
Sanusi, Lamido. “Africa Must Get Real about Chinese Ties.” March 11, 2013. Financial
Times. http://www.ft.com/cms/s/0/562692b0-898c-11e2-ad3f-00144feabdc0.html The
Financial Times (FT) is a British English language international daily newspaper
with a special emphasis on business and economic news internationally. The FT has
an average daily readership of 2.2 million people worldwide and is internationally
respectedf for its research on global affairs.
Three decades ago, China had a significant advantage over Africa in its cheap labour costs. It is losing that advantage
as its economy grows and prosperity spreads. Africa must seize the moment. We must encourage a shift from
consuming Chinese-made goods to making and consuming our own. We must add value to our own agricultural
products. Nigeria and other oil producers need to refine crude; build petrochemical industries and use gas reserves –
at present often squandered in flaring at oil wells – for power generation and gas-based industries such as fertiliser
production.
For Africa to realise its economic potential, we need to build first-class infrastructure. This should service an afrocentric vision of economic policies. African nations will not develop by selling commodities to Europe, America and
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China. We may not be able to compete immediately in selling manufactured goods to Europe. But in the short term,
with the right infrastructure, we have a huge domestic market. Here, we must see China for what it is: a competitor.
We must not only produce locally goods in which we can build comparative advantage, but also actively fight off
Chinese imports promoted by predatory policies. Finally, while African labour may be cheaper than China’s,
productivity remains very low. Investment in technical and vocational education is critical.
Africa must recognise that China – like the US, Russia, Britain, Brazil and the rest – is in Africa not for African
interests but its own. The romance must be replaced by hard-nosed economic thinking. Engagement must be on
terms that allow the Chinese to make money while developing the continent, such as incentives to set up
manufacturing on African soil and policies to ensure employment of Africans.
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Dutch Disease
Dutch disease is when one sector in a country is extremely profitable, which results in all of the
investment going towards that one sector. As a result, the rest of the economy lags behind. Even worse,
when this one sector experiences any kind of turmoil, the rest of the country is severely affected.
Globalization accelerates this process by having countries be more likely to specialize in one field at the
cost of others, in order to meet foreign demand. As a result certain necessary domestic demands are not
met. In the long term, this is bad for the poor of that country,
Defining Dutch Disease, Fj
“What Dutch Disease Is and Why It’s Bad” The Economist. November 5, 2014.
But what exactly is Dutch disease? The Economist coined the term in 1977 to describe the woes of the Dutch
economy. Large gas reserves had been discovered in 1959. Dutch exports soared. But, we noticed, there was a
contrast between "external health and internal ailments". From 1970 to 1977 unemployment increased from 1.1%
to 5.1%. Corporate investment was tumbling. We explained the puzzle by pointing to the high value of the
guilder, then the Dutch currency. Gas exports had led to an influx of foreign currency, which increased
demand for the guilder and thus made it stronger. That made other parts of the economy less competitive in
international markets. That was not the only problem. Gas extraction was (and is) a relatively capitalintensive business, which generated few jobs. And in an attempt to stop the guilder from appreciating too fast,
the Dutch kept interest rates low. That prompted investment to rush out of the country, crimping future
economic potential.
Dutch Disease can appreciate the real exchange rate, Fj
“What Dutch Disease Is and Why It’s Bad” The Economist. November 5, 2014.
Since that article, economists have proposed other Dutch-disease effects. A well-known paper, published five years
later, identified other means by which commodity booms cause economic trouble. Let us assume that a country’s
currency is fixed. Extra foreign currency enters the country, is converted into local currency, and is spent on
goods that cannot be traded across borders (construction, certain services and so forth). As foreign currency
is changed into local currency, the money supply rises: extra domestic demand pushes up domestic prices.
That, in the jargon, results in an appreciation of the "real" exchange rate: a unit of foreign currency now
buys fewer services in the domestic economy than it did before. The country loses competitiveness.
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Commodity rich countries that trade extensively are often doomed, Fj
“What Dutch Disease Is and Why It’s Bad” The Economist. November 5, 2014.
Some economists protest that Dutch disease is no bad thing. Shouldn’t economies focus on what they are most
efficient at producing? But commodity prices fluctuate: most economies need back-up industries. Commodity-rich
countries tend to struggle: indeed one paper showed that 97 developing countries with a high ratio of naturalresource exports to GDP had low growth rates during the 1970s and 1980s. And when the commodities run
out, there will be little left to sustain an economy. Just look at Nauru, a country that used to rely almost
entirely on phosphate, a sought-after fertiliser ingredient. Russia should be worried now: oil-and-gas exports
make up 70% of Russia’s annual exports and 52% of the federal budget. Unless commodity-rich countries use
their fortunes to diversify their economies—or can get their real exchange rate down—Dutch disease can prove
fatal.
Colombia and Dutch Disease, Fj
Dolan, Ed. “Will the Dutch Disease Kill Hopes Raised by Colombia’s Free Trade
Agreement?” EconoMonitor. August 10, 2012.
As the next chart shows, Colombia has rapidly become a major oil exporter. It is now the third-largest producer in
Latin America, with output equal to a third of Mexico’s and two-fifths of Venezuela’s. Oil exports are giving
Colombia a classic case of the Dutch disease. That affliction gets its name from the experience of The
Netherlands, whose exchange rate rapidly appreciated when it first began producing natural gas from the
North Sea. The appreciation, in turn, undermined the competitiveness of its traditional manufacturing and
farm exports.
Resource-based export earnings are all well and good, but extractive industries, especially oil, employ relatively few
people per dollar of value added. By making it hard for non-exractive sectors to compete, a rising exchange rate can
block the spread of prosperity to the population at large. For example, the Fashionista report cited above
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estimates that Colombia’s textile manufacturers already must pay a minimum wage 70 percent higher than
China’s. That puts the jobs of textile workers, farm workers, and others at risk as oil exports grow.
While some of the appreciation of Colombia’s exchange rate comes directly from oil exports, some also comes
indirectly from strong inflows of foreign direct investment (FDI). As the next chart shows, FDI inflows have come
out of nowhere to reach a projected $15 billion for 2012, nearly 60 percent of it directed to oil and mining.
Link between globalization and Dutch Disease, Fj
Spatafora,Nikola and Tytell, Irina. “Globalization, Commodity Prices, and Developing
Countries” International Monetary Fund. 2008.
A look at relative changes in real effective exchange rates and tariff rates provides further insights into these trade
patterns. During past booms, nonfuel commodity exporters experienced relatively strong real exchange rate
appreciations, with adverse effects for their manufacturing exports and import--competing sectors owing to
Dutch disease (see Figure 5.11). Probably related to this, their tariff rates fell relatively less. Conversely, during
busts, these countries had relatively weaker real exchange rates, which allowed them to undertake relatively larger
tariff reductions.
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A reduction of tariffs shows a conscious policy decision to open up one’s country to globalization. This
source shows that commodity exporters often hurt some of their other industries when they reduce
tariffs.
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Oil Exporting Countries are vulnerable to Dutch Disease, Fj
Ross, Michael and Voeten, Erik. “Oil and Unbalanced Globalization” Social Science
Research Network. October 29, 2013.
Of the 37 significant oil exporters, 21 relied on oil for at least 80 percent of their income from exports.
Although states that are rich in other types of minerals can sometimes suffer the same fate, it is relatively
uncommon: in 2010, for example, only four countries were this dependent on other types of minerals.
Oil Exporting Countries are already experiencing Dutch Disease, Fj
Ross, Michael and Voeten, Erik. “Oil and Unbalanced Globalization” Social Science
Research Network. October 29, 2013.
The problem with this argument is that oil-exporting countries tend to suffer from the Dutch Disease, which creates a
structural barrier to export diversification. The Dutch Disease occurs when a country’s natural resource exports
boom; this tends to drive up real wages and exchange rates, which makes its other tradable goods too costly to
compete in global markets (Corden and Neary 1982; Neary and van Wijnbergen 1986). The more oil a country
exports, the less able it is to profitably export other kinds of goods, and the more ‘concentrated’ its basket of
exports. Harding and Venables (2013), for example, find that for each additional dollar of resource revenues,
countries tend to see a decrease in non-resource exports of 75 cents.
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Globalization Measures Hurt Developing Countries
Structural Adjustment Programs Hurt Developing Countries AMS
Mander, Jerry. “Does Globalization Help the Poor?” IFG Bulletin, 2001, Volume 1, Issue
3, International Forum on Globalization
http://www.thirdworldtraveler.com/Globalization/DoesGlobaliz_HelpPoor.html The
International Factors Group (IFG) is the global trade association that fully
represents and promotes the interests of the factoring, invoice financing and asset
based lending industry on a global basis.
The World Bank and the IMF have their own powerful and dangerous instrument Structural Adjustment Programs
(SAPs). The infamous SAPs of the IMF, and so-called "development" loans from the World Bank routinely come
with harsh conditionalities that require developing nations to abandon important domestic programs that serve the
population. These include education, health services and environmental programs, which don't produce revenues to
repay IMF and World Bank loans or interest. As the IMF forces countries to downsize government agencies, the
ranks of the unemployed grow faster than the private sector can absorb them. IMF policies raise interest rates,
preventing small businesses from obtaining capital needed to expand or stay afloat, which leads to further
unemployment. Meanwhile, removing barriers to foreign investment and trade, insisted upon by the IMF and
enforced by the WTO, makes it harder for local producers to compete against bigger, richer foreign businesses.
Developing countries are increasingly capable of dealing with poverty locally. DAT
“Not Always With Us.” The Economist. 1 June 2013. Web. 4 January 2015.
http://www.economist.com/news/briefing/21578643-world-has-astonishing-chancetake-billion-people-out-extreme-poverty-2030-not
The Economist is an English-language weekly newspaper owned by The Economist Newspaper Ltd and
edited in offices in London.
Yet all the problems of aid, Africa and the intractability of the final billion do not mask the big point about poverty
reduction: it has been a hugely positive story and could become even more so. As a social problem, poverty has been
transformed. Thanks partly to new technology, the poor are no longer an undifferentiated mass. Identification
schemes are becoming large enough—India has issued hundreds of millions of biometric smart cards—that
countries are coming to know their poor literally by name. That in turn enables social programmes to be
better targeted, studied and improved. Conditional cash-transfer schemes like Mexico’s Oportunidades and
Brazil’s Bolsa Família have all but eradicated extreme poverty in those countries.
As the numbers of poor fall further, not only will the targets become fewer, but the cost of helping them will fall to
almost trivial levels; it would cost perhaps $50m a day* to bring 200m people up above the poverty line. Of course,
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there will be other forms of poverty; the problems of some countries and places will remain intractable and may well
require different policies; and $1.26 a day is still a tiny amount.
But something fundamental will have shifted. Poverty used to be a reflection of scarcity. Now it is a problem of
identification, targeting and distribution. And that is a problem that can be solved.
Globalization addresses scarcity; it offers an influx of empirically measurable funding to regions which
otherwise would not see such levels of economic development. Globalization, however, fails to aid with
identification, targeting, and distribution. This falls to national governments, NGOs, etc. to start. By
clearly defining globalization in economic terms—the term is likely nebulous with lay judges—Pro teams
position themselves to focus the debate and win through differentiation of the effects of globalization and
the necessary effects to reduce poverty further in a contemporary context.
Reliance on global trade is a vulnerability for developing countries. DAT
UN Trade and Development Board. “Globalization and Inclusive Development.” United
Nations Conference on Trade and Development. October 2007. Web. 5 January
2015. http://unctad.org/en/Docs/tdb54d7_en.pdf
Despite the impressive performance of developing countries as a whole in recent years, and the aggregate
development progress achieved, many countries, in particular the least developed and other low-income economies,
have not been able to benefit from the propitious environment. Despite the recovery in 2003– 2007, the per capita
growth rates in Africa (3 per cent on average) and the developing countries of America (3.5 per cent) were
only half that in East and South Asia (6.3 per cent). Moreover, some countries have not been lifted to the same
extent by the economic recovery and continue to rely on exports of lowvalue- added primary commodities.
These countries have suffered from worsening terms of trade, highly volatile world prices and a decline in
their share in world trade. For example, the export share of the 50 least developed countries (LDCs), fell from 2.5
per cent in 1960 to about 0.5 per cent in 1995, and has since hovered around this level, though the improvement in
commodity prices helped raise their share to 0.8 per cent in 2006.
For an individual country, global trade is inherently less manageable and more volatile than any local
factors. This makes global trade especially problematic, given that many developing countries see it as a
lucrative path out of poverty.
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Developing countries cannot regain import tariff revenue. DAT
Keen, Michael, and Mario Mansour. “Revenue Mobilization in Sub-Saharan Africa:
Challenges from Globalization.” International Monetary Fund. July 2009. Web. 5
January 2015. http://www.imf.org/external/pubs/ft/wp/2009/wp09157.pdf The
International Monetary Fund (IMF) is an organization of 188 countries, working to
foster global monetary cooperation.
The first is the typical existence in most developing countries of a large informal sector, less than fully tax
compliant. With some final consumption being produced informally, the simple argument above ceases to apply,
since then not all consumption can be taxed: switching to a consumption tax in the way described could lead revenue
to fall. Here, however, the precise form of the consumption tax becomes important. The VAT, in particular (as
opposed, for example, to a tax simply on final retail sales), is fully charged on imports: this import VAT is then
available to formal sector businesses as a credit (or refund) against the output VAT due on their own sales. But for
informal operators not registered for VAT, the tax will be unrecovered: the VAT acts, for them, exactly like a tariff.
This may seem to reestablish the theoretical case for revenue replacement along the lines above, emphasizing that
the replacement tax be a VAT. But that is not quite correct: while the VAT will reach the imported inputs of
informal operators, since it taxes formal sector operators on their full value added, its net effect is to favor
informality—and the consequent increase in the size of the informal sector is a source of welfare loss to the extent
that informal operators tend to be relatively inefficient (and perhaps impose other social costs). This does not mean
that shifting away from tariffs to the VAT is necessarily unwise—but it makes the case for doing so less than clearcut. Instruments that bear differentially on informal operators (such as withholding taxes on imports, which formal
operators can credit against their income tax liability) can in principle usefully supplement the VAT, though also
raises further practical difficulties.
The author looks at the consumption tax as the likely successor to import tariffs to replace tax revenue
for governments after the implementation of trade liberalization measures. The argument, in plainer
terms, is that a VAT would have the unintended effect of incentivizing black-market (read: untaxed)
behavior, thus lessening revenue, on top of the lost revenue from not being able to tax whatever initial
amount of black market activity exists at the moment of implementing trade liberalization measures.
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The influx of international money and power saps African nations’ governing ability. DAT
Takyi-Amoako, Emefa. “Globalization: An Impediment to Sustainable Educational
Development in Sub-Saharan African Countries?” Norrag. Graduate Institute of
International Studies (Geneva). n.d. Web. 5 January 2015. Web.
http://www.norrag.org/es/publications/boletin-norrag/online-version/education-forsustainable-development-or-the-sustainability-of-education-investment-a-specialissue/detail/globalisation-an-impediment-to-sustainable-educational-developmentin-sub-saharan-african-countries.html NORRAG is an independent network whose
Secretariat is located at the Graduate Institute of International and Development
Studies in Geneva, Switzerland, with which it maintains close working relations.
Significantly, a World Development Movement study of the PRSPs of fifty countries revealed that seventy per cent
of them (PRSPs) included trade liberalisation measures, which weakened the economic freedom and growth of these
countries (WDM 2005; Stewart and Wang 2003). Regrettably, the egoism and corrupt activities of most African
governments prevent them from operating from a moral and critical base in an attempt to perceptively analyse this
situation in order to challenge it and make sound (educational) choices so as to protect the interests of ordinary
citizens in their nation-states. Tikly (2003: 550) puts it succinctly: "the complicity of local elites in externally driven
reform agendas; and, the weak capacity of the state to play a more proactive role in defining alternative strategies"
represent some of the problems that need to be tackled. Essentially, globalisation in its current condition represents a
hindrance to the sustainable development of any sector in most African nations because it fails to promote social
equity and economic growth, both of which are necessary preconditions for a sustainable development of the
education sector. The ability to develop any sector of contemporary society effectively and in a sustainable manner
depends largely on the amount and efficient management of resources available. However, globalisation, in its
present form is mainly controlled by its powerful agents, and tends to sap the economic, political and intellectual
energy of most sub-Saharan African countries.
PRSPs are Poverty Reduction Strategy Papers, issued by the World Bank as internationally-backed
development guidelines for developing African nations. The central premise of this card (and most points
related to developing countries) is that economic growth (and poverty reduction) fulfills two criteria:
sustainability and consistency—growth is both high and has little alteration. The problem with economic
growth which fails to promote education, social equity, etc. is that, long term, it typically fails to fulfill the
“sustainability” criterion.
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Globalization has fueled rampant migration in developing countries: Brazil case study. DAT
Aguayo-Tellez, Ernesto et al. “Globalization and Formal Sector Migration in Brazil.”
United Nations University. March 2008. Web. 5 January 2015.
http://www.wider.unu.edu/publications/working-papers/researchpapers/2008/en_GB/rp2008-22/
The author is Economics faculty at the Universidad Autónoma de Nuevo León.
Brazil has a long history of high rates of internal migration, similar to many developing countries. Over the past
century, massive flows of internal migrants left states in the North and Northeast for the growing urban centres in the
Southeast and for Brasilia (Library of Congress 1998). Migration has not subsided. To the contrary, estimates of
lifetime interstate migration rates grew from 20 per cent of the population in 1980 (Martine 1990) to 40 per
cent of the population in 1999 (Fiess and Verner 2002). This migration surge coincides with market-oriented
reforms and Brazil's progressing integration into the global economy since the late 1980s. Brazil implemented
major trade reforms in the early 1990s, trade integration with its Southern Cone neighbors in 1993, gradual foreign
direct investment liberalizations over the 1990s, and an exchange-rate devaluation in 1999 that facilitated foreign
market access for exporters. The total stock of foreign direct investment (FDI) in Brazil, for instance, stood at
US$115.5 billion in 1995. Within five years, this stock more than quintupled following Brazil's trade and capitalaccount liberalizations and macroeconomic stabilization (Rodrigues 2000). Most foreign investments owed to newly
privatized utilities and services companies so that industries beyond manufacturing were impacted.
An influx of outside investment typically spurns manufacturing and, generally, urban job growth.
Individual provinces and cities acting as investment hubs attract internal migrant populations, leading to
population reductions elsewhere. At the scale seen in Brazil, the internal migration rate is too high to
maintain stability with respect to tax revenues and public services in areas which see a net migration out.
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Export Oriented Agriculture Shift Creates Poverty
Export Oriented Agriculture Shift Hurts Developing Countries, Creates Poverty AMS
Mander, Jerry. “Does Globalization Help the Poor?” IFG Bulletin, 2001, Volume 1, Issue
3, International Forum on Globalization
http://www.thirdworldtraveler.com/Globalization/DoesGlobaliz_HelpPoor.html The
International Factors Group (IFG) is the global trade association that fully
represents and promotes the interests of the factoring, invoice financing and asset
based lending industry on a global basis.
Probably the most traumatic impacts of globalization policies - both in terms of poverty-creation, and environmental
devastation - have come with the forced shift of local economies away from small-scale diversified agricultural
models to the industrial export model, directed by global corporations.
Nearly half of the world population, even today, lives directly on the land, growing food for their families and
communities. They emphasize growing staples and a mix of diverse crops, and they replant with indigenous seed
varieties that their communities have developed over centuries. They have perfected their own fertilizers, crop
rotations, and pesticide management, and their communities share all elements of the local commons, including
seeds, water, and labor. Such systems have kept hundreds of millions of people going for millennia.
Local self-sufficiency systems are anathema to global corporations and the bureaucracies that serve them. In a global
economic system, corporate profits primarily come from increased processing activity, and global trading. So now
we find corporations including Archer Daniels Midland, Monsanto, and Cargill, among others, spending tens of
millions of dollars in public relations and advertising campaigns arguing that small farmers are not "productive"
enough to "feed the hungry world."
These campaigns run hand in hand with the investment and trade strategies and rules of the WTO, the IMF, the
World Bank and the U. S. government. All of these strongly favor the entry of global corporations, which replaces
local, diverse farming for self-reliance with monocultures run by corporations.
An export-oriented system of agriculture favors high priced, high margin luxury export items - flowers, potted
plants, beef, shrimp, cotton, coffee, exotic vegetables - to be sent to the already overfed countries. As for the people
who used to live on the lands, growing their own foods for their communities and for local markets, they are rapidly
being driven off their lands. People who once fed themselves become landless, jobless, cashless, homeless,
dependent and hungry. Self-sustaining communities disappear; still intact cultures are decimated. This is as true in
the United States as in the Third World.
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Con:
International investment has abandoned agriculture and, in turn, the rural poor. DAT
Handley, Geoff et al. “Poverty and Poverty Reduction in sub-Saharan Africa: An
Overview of the Issues.” Overseas Development Institute. January 2009. Web. 4
January 2015. http://www.odi.org/sites/odi.org.uk/files/odi-assets/publicationsopinion-files/860.pdf The Overseas Development Institute (ODI) is the UK's leading
independent think tank on international development and humanitarian issues.
As noted before poor people are disproportionately concentrated in rural areas, which means that agricultural growth
and rural development are key to growth and poverty reduction (Wiggins, 2005: 1; Dorward et al, 2004: 1). In fact,
agricultural growth in some countries is responsible for 40-70% of poverty reduction (World Bank, 2005: 38 in Bird
and Busse, 2006: 11). Broad-based agricultural growth can increase the income of poor farmers, as well as landless
labourers reliant on agricultural employment. Agricultural growth can also have a strong impact on food prices and
as the poor usually spend a high proportion of their incomes on staple foods, productivity increases which result in
declines in food prices benefit the poor. However, findings from case studies in Malawi and Zimbabwe (Dorward et
al, 2004) suggest that only high-yielding and appropriate technologies, combined with extension services and
improved access to markets will enable the increasing productivity necessary for pro-poor growth (Bird and Busse,
2006: 11)
In recent decades, though, there has been less emphasis on agriculture and rural development in PRSs and other
initiatives. There are two reasons for this. First, was a shift in the global orthodoxy on development which,
driven by the Washington Consensus, led powerful donors to focus attention on market liberalisation and the
development of the private sector, and to moves to liberalise agriculture markets and reduce government
involvement in the agriculture sector. Second, there was a significant reduction in public investment in agriculture,
in part driven by a perceived failure of earlier agriculture investment and an increased emphasis on non-farm rural
livelihoods (Dorward et al, 2004: 1). To some extent this is being turned around and more importance is being
placed on coordinating the activities of those engaged in the agriculture sector (Evans et al, 2006:13). The World
Bank’s World Development Report for 2007 titled Agriculture for Development demonstrates this renewed interest
(World Bank, 2007b).
Development has essentially shifted away from expanding individual opportunities for the poor to
expanding international investment opportunities. Without an influx of funds for sustainable economic
development in the agricultural sector, those reliant on it (the poor, in many cases) are marginalized.
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Case study: Ethiopia’s agricultural trade liberalization harmed export-oriented farmers. DAT
Dercon, Stefan. “Globalization and Marginalization in Africa: Poverty, Risk, and
Vulnerability in Rural Ethiopia.” United Nations University. November 2007. Web.
5 January 2015. http://www.wider.unu.edu/publications/working-papers/researchpapers/2007/en_GB/rp2007-73/
The author is Economics faculty at the University of Oxford.
The policy measures meant that, compared to before 1989, agricultural crops could move freely across regional
borders within the country without trade restrictions and heavy tariffs. Cereals such as teff, wheat and maize were
most strongly affected. This resulted in downward pressure on staple food crop prices in food deficit areas and
upward pressure in surplus areas. Further measures allowing free entry into many trade and other business activities
meant that food and other markets became spatially more integrated, resulting in lower marketing margins between
the prices in surplus and deficit areas (Dercon 1995). These measures had less impact on previously smuggled
crops, such as coffee and chat; once these began to be legally traded, prices settled at levels close to those seen
in black markets before the liberalization. A subsequent decline in world coffee prices, however, resulted in
actual declines in prices for coffee farmers. Finally, crops that were typically not traded across regional borders,
bulky permanent crops like enset and yams, for instance, became relatively less interesting to grow, since they
tended to be grown in cereal deficit areas, where consumer now could benefit from decreases in staple food prices.
The overall result was that terms of trade moved very favourably for farmers in food surplus areas, especially
in cereal areas, but farmers specializing in export crops such as coffee and chat, as well as in less traded crops
such as enset experienced a relative decline.
The case study here is particularly impactful given that as a landlocked, resource-scarce economy,
Ethiopia’s economic growth is relatively dependent on agriculture.
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Problems with Debt Relief
Charity or Debt Relief Fails to Reduce Poverty AMS
Roy, Sumit. “Globalization, Debt Relief, and Poverty Reduction: Concepts and Policies.”
London School of Hygiene and Topical Medicine. 2000.
http://www.eldis.org/fulltext/Sumitroy.pdf Dr Sumit Roy is a Senior Visiting Fellow
of the School of Social and Human Sciences, City University, UK. Roy has been
researching on globalization and structural change and has acted as an Independent
Expert on Globalization and poverty for UNCTAD, United Nations Conference on
Trade and Development.
Simple debt relief implies charity. It ignores the deep seated causes of debts and places the primary
burden on the debtor. Hasty measures emerge to repay debts siphoning off resources from essential
human needs. This inhibits and frustrates the scope of the poor to participate in society. In contrast,
refusal to repay debts mirrors defiance accusing the creditor and sections of the national population who
procured and used the loans, often with the support of external creditors, for illegitimate ends; this is supported
by the experience of late President Mobuto of Zaire who obtained loans for maintaining a luxurious life style
and a dictatorial regime while the poor were deprived of justice and essential needs. The recent history of the oil
crisis reveals that debts werebrought about by a mixture of economic and political forces.
Aid Backfires AMS
Moyo, Dambisa. “Why Foreign Aid is Hurtin Africa.” The Wall Street Journal. March 21,
2009. http://www.wsj.com/articles/SB123758895999200083 The Wall Street Journal
is an American English-language international daily newspaper with a special
emphasis on business and economic news.The Journal is the largest newspaper in
the United States by circulation.
Giving alms to Africa remains one of the biggest ideas of our time -- millions march for it, governments are judged
by it, celebrities proselytize the need for it. Calls for more aid to Africa are growing louder, with advocates pushing
for doubling the roughly $50 billion of international assistance that already goes to Africa each year.
Yet evidence overwhelmingly demonstrates that aid to Africa has made the poor poorer, and the growth slower. The
insidious aid culture has left African countries more debt-laden, more inflation-prone, more vulnerable to the
vagaries of the currency markets and more unattractive to higher-quality investment. It's increased the risk of civil
conflict and unrest (the fact that over 60% of sub-Saharan Africa's population is under the age of 24 with few
economic prospects is a cause for worry). Aid is an unmitigated political, economic and humanitarian disaster.
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Con:
Outsourcing and Inequality in Developing Nations
When foreign multinationals hire local labor, the poor do not see benefits. DAT
“Why Globalisation May Not Reduce Inequality in Poor Countries.” The Economist. 2
September 2014. Web. 4 January 2015. http://www.economist.com/blogs/economistexplains/2014/09/economist-explains-0
The Economist is an English-language weekly newspaper owned by The Economist Newspaper Ltd and
edited in offices in London.
But the high inequality seen today in poor countries is prompting new theories. One emphasises outsourcing—when
rich countries shift parts of the production process to poor countries. Contrary to popular belief, multinationals in
poor countries often employ skilled workers and pay high wages. One study showed that workers in foreignowned and subcontracting clothing and footwear factories in Vietnam rank in the top 20% of the country's
population by household expenditure. A report from the OECD found that average wages paid by foreign
multinationals are 40% higher than wages paid by local firms. What is more, those skilled workers often get to work
with managers from rich countries, or might have to meet the deadlines of an efficient rich-world company. That
may boost their productivity. Higher productivity means they can demand even higher wages. By contrast,
unskilled workers, or poor ones in rural areas, tend not to have such opportunities. Their productivity does
not rise. For these reasons globalisation can boost the wages of skilled workers, while crimping those of the
unskilled. The result is that inequality rises.
The classical economic theory on globalization is that nations transition from poor to wealthy, more
developing nations with huge labor reserves step in to deliver low-level work. When these nations are
tapped for white collar work (e.g. for management) this situation fails to play out, leading to rises in
inequality.
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Con:
Globalization has unpaired high and low-skilled workers in developing countries. DAT
“Revisiting Ricardo.” The Economist. 23 August 2014. Web. 4 January 2015.
http://www.economist.com/news/finance-and-economics/21613280-whyglobalisation-not-reducing-inequality-within-developing-countries-revisiting
The Economist is an English-language weekly newspaper owned by The Economist Newspaper Ltd and
edited in offices in London.
Mr Maskin’s theory relies on what he calls worker “matching”. Unskilled workers can be more productive when
matched with skilled ones—that is, when they work together. Assigning a manager to a group of workers can do
more for total output than just adding another worker. He places workers into four classes: skilled workers in rich
countries (A); low-skilled workers in rich countries (B); high-skilled workers in poor countries (C); and low-skilled
workers in poor countries (D). Crucially, he thinks low-skilled workers in rich countries (the Bs) are likely to be
more productive than high-skilled workers in poor ones (the Cs).
Before the current wave of globalisation started in the 1980s, skilled and unskilled workers in developing
countries—the Cs and Ds—worked together. Mr Maskin gives the example of a rural Indian man, fluent in English,
who helped local farmers understand modern agricultural methods. Wage growth of high-skilled workers (Cs) was
weak, because poor transport and communication links made it hard for them to work with skilled workers in rich
countries. But low-skilled workers (Ds) did well: their interactions with the Cs boosted total output, which let them
demand higher wages, so pushing down inequality.
The latest bout of globalisation has jumbled the pairings: high-skilled workers in poor countries can now work more
easily with low-skilled workers in rich ones, leaving their poor neighbours in the lurch. Take “intermediate goods”,
the semi-finished products that account for about two-thirds of world trade. The production processes
outsourced by big companies in factories or call-centres are by rich-world standards unskilled. But when jobs
are sent offshore, they are snapped up by C workers, the relatively skilled ones. According to research from
Cornell University, the typical call-centre employee in India has a bachelor’s degree.
Eric Maskin, of Harvard University, won the Nobel Prize for Economics in 2007. The theory from the
above card essentially argues that jobs which are considered low-level in developed countries are snapped
up by well- or overqualified workers in the developing world.
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Low-skilled workers are excluded from the global economy. DAT
“Revisiting Ricardo.” The Economist. 23 August 2014. Web. 4 January 2015.
http://www.economist.com/news/finance-and-economics/21613280-whyglobalisation-not-reducing-inequality-within-developing-countries-revisiting
The Economist is an English-language weekly newspaper owned by The Economist Newspaper Ltd and
edited in offices in London.
The result of booming trade in intermediate goods is higher demand and productivity for skilled poor-country
workers. Higher wages ensue: multinationals in developing countries pay manufacturing wages above the norm for
the country. One study showed that in Mexico export-oriented firms pay wages 60% higher than nonexporting ones. Another found that foreign-owned plants in Indonesia paid white-collar workers 70% more
than locally owned firms.
Globalisation, though, does not boost wages for all. The least skilled cannot “match” with skilled workers in rich
countries; worse, they have lost access to skilled workers in their own economies. The result is growing income
inequality.
Instead of working for local firms with local blue-collar workers, white-collar workers in developing
countries take better jobs with foreign companies. Given that these opportunities (and, more importantly,
their benefits) are not available to low-skill workers, inequality burgeons.
Developing countries outside Asia have missed the boat on benefitting from globalization.
DAT
Dercon, Stefan. “Globalization and Marginalization in Africa: Poverty, Risk, and
Vulnerability in Rural Ethiopia.” United Nations University. November 2007. Web.
5 January 2015. http://www.wider.unu.edu/publications/working-papers/researchpapers/2007/en_GB/rp2007-73/
The author is Economics faculty at the University of Oxford.
Whatever the explanation for the past failure of some developing countries to increase their growth rates and trade
shares, there is reason to be concerned that they may ‘have missed the boat’ (World Bank 2002). For instance,
increasing returns in manufacturing activities and general agglomeration effects, i.e., positive externalities to
locating in the same geographical areas, mean that firms tend to locate in clusters. Once firms have setup in
selected labour-abundant economies, latecomers have little to offer even if initially clusters could have been
formed within these countries. Furthermore, the mere fact that some developing countries that have not missed the
boat had similar initial characteristics to those that have, may induce further negative externalities from
globalization. Since increased capital market liberalization in the globalizing economies will make capital inflows
easier, not only will firms not locate in the latecomers, capital will be encouraged to flow away from these marginal
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Con:
economies into the globalizing ones. This could happen, via illegal capital flight, even if the marginal economies do
not liberalize capital markets. For example, by 1990, 40 percent of private African wealth was held outside Africa,
even though capital is scarcer in Africa than anywhere else in the world (Collier, Hoeffler and Pattillo 2001).
Another self-perpetuating mechanism of marginalization includes the apparent higher risk of civil war in economies
more heavily dependent on primary commodities; this increases the cost of failure to engage in the world economy
(ibid.).
All this paints rather a bleak future for these marginal economies, not least in Africa. They may be stuck in a
growth and poverty trap—an equilibrium outcome with permanently low growth and high poverty. While
plausible, there is no reason for uniform pessimism, although naïve optimism would be misplaced as well. In recent
few decades, a number of countries, often written off by experts, have been able to transform themselves. For
example, World Bank (2002) quotes how Nobel winner Gunnar Myrdal wrote off Indonesia in the 1960s only for it
to emerge in the 1980s as a fast growing economy substantially reducing poverty aided by labour-intensive
manufacturing exports. Even after the serious crisis of the late 1990s, poverty is far lower than in the early 1980s.
Similarly, after descending into chaos and civil war in the first part of the 1980s, Uganda has emerged as a fast
growing economy, delivering large poverty reduction in both rural and urban areas.
While the card lists some countries which buckled expectations, the overall message is this: the
Chinese/Indian globalization-fueled ascension is not replicable. The “past performance does not dictate
future results” is a simple trope to describe the economic data on globalization for Con teams.
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Globalization Increases the Likelihood of Civil War
Promoting Underdevelopment, Fj
Barbieri, Katherine and Reuveny, Rafael. “Economic Globalization and Civil War”
Journal of Politics. November 1, 2005.
According to dependency theory, trade and foreign investment harm LDCs. The world economy consists of a
developed core, which includes a few countries, and an underdeveloped periphery, which includes most other
countries. The core is capital intensive. The periphery has a dual economy, including a small, relatively developed
sector controlled by foreign interests and local elites who export labor-intensive goods to the core. The rest of the
economy is underdeveloped. The core exports capital-intensive goods to the periphery. The core-periphery terms of
trade harm the periphery. The periphery's development is distorted: industrialization is limited, and the masses
remain poor. The setup is kept in place through explicit or implicit coalitions between the elites in the core and
the periphery (Amin 1990; dos Santos 1970; Rapley 2002). Distorted development promotes dissent, since the
masses in the periphery resent the status quo. The dissent is countered with state repression. A cycle of
violence ensues, making rebellion and civil war more likely (Boswell and Dixon 1990, 1993; Russett, Starr,
and Kinsella 2002). As order deteriorates, MNCs pressure host governments to defend their investments. If
MNCs feel that the state does not serve their interests, they may hire private armies, fund rebels, or lobby
their home state to support rebels. The resulting social chaos weakens the state and reduces its perceived
legitimacy, raising the likelihood of civil war (Duffield 2000; Hawley 2000; Reno 2000; Winters 1999).
Raising Income Inequality, Fj
Barbieri, Katherine and Reuveny, Rafael. “Economic Globalization and Civil War”
Journal of Politics. November 1, 2005.
Globalization is said to raise inequality in several ways. First, it favors elites at the expense of the masses, as
dependency theory argues. Second, the argument that trade reduces inequality in LDCs assumes that markets
are free, but rent seeking is prevalent in LDCs, labor is weaker than land and capital owners, and wages fall
behind (IADB 1998; Rapley 2002; Robbins 1996; Tullock 1980). Third, as LDCs open up to the world economy
and begin to modernize, inequality rises since wages in more developed sectors are higher than those in other sectors
(Nielson and Alderson 1995). Fourth, MNCs push local suppliers and governments to cut employment benefits and
wages. Their threat to leave weakens labor's bargaining position. MNCs promote a dual economy and employ
capital-intensive techniques that marginalize workers. They also evade paying local taxes, reducing state
revenues and, therefore, welfare programs, which hurts the masses more than the elites (Bornschier and
Chase-Dunn 1985; Dixon and Boswell 1996; Firebaugh 1992; Held et al. 1999; Reuveny and Li 2003). Fifth, to
attract foreign investment, states reduce public employment and privatize, raising unemployment and inequality.
Sixth, financial openness is prone to crises due to volatile money movements across countries. In crises, the
economy contracts, the tax base shrinks, welfare programs decline or cease, and many lose their jobs. The
poor suffer more than the rich, and inequality rises (Germain 1997; Held et al. 1999; Reuveny and Li 2003;
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Strange 1996; UNDP 1999). The link from inequality to civil war begins with a sense of deprivation when
economic conditions differ from expectations. Deprived people feel that some groups succeed since they are favored
unfairly by the government. The grievance provides fertile recruiting grounds for rebels who depict the regime
as promoting the interests of some groups at the expense of others (Boswell and Dixon 1990; Mason 2003;
Muller 1985; Muller and Seligson 1987; Selbin 2001).
Reducing State Control of The Economy, Fj
Barbieri, Katherine and Reuveny, Rafael. “Economic Globalization and Civil War”
Journal of Politics. November 1, 2005.
State control of an open economy is harder than control of a closed economy. Foreign interests may override local
needs. Investors may move money in and out of the country. Commodity prices may fluctuate in world markets.
Facing these forces, the state is less able to compensate the losers from openness. Disputes over who should bear the
costs of adjustment may lead to calls for a retrenchment to liberalization. Sensing state weakness, the opposition
may protest, strike, riot, and even rebel (Adams, Dev Gupta, and Mengisteab 1999; Hoogvelt 2001; IPN 2003;
Martin and Schumann 1998). Growing economic openness also typically involves deregulation of electronic
commerce and communications, which eases the ability of rebels and arms dealers to evade state control.
Deregulation of transportation sectors, flags of convenience, and offshore registration of companies make it harder
for states to monitor freight traffic. Rebels are thus better able to acquire external supplies needed to wage war
against the state (Berdal 2003; Duffield 2000; SAS 2001; Wood and Peleman 1999).
Increasing Communication and Information Flows, Fj
Barbieri, Katherine and Reuveny, Rafael. “Economic Globalization and Civil War”
Journal of Politics. November 1, 2005.
The globalization induced expansion of communication and information networks facilitates rebels' organizational
activities. The media helps spread the rebels' cause, which assists in recruitment, fund raising, and mobilization of
the masses. Cross border information flows raise expectations about ethnic sovereignty through demonstration.
Electronic networks help finance rebels' activities, including acquiring arms. Market deregulation also may ease
the creation of business alliances among rebels, warlords, foreign mercenaries, organized crime syndicates,
and arms dealers. All of these activities assist the rebellion, increasing the likelihood of civil war (Berdal 2003;
de Zeeuw and Frerks 2000; Mason 2003; United Nations 2001).
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Promoting Export of Primary Products, Fj
Barbieri, Katherine and Reuveny, Rafael. “Economic Globalization and Civil War”
Journal of Politics. November 1, 2005.
International markets force LDCs to focus on their comparative advantage in producing primary goods, which raises
the likelihood of civil war due to several forces. Leaders may amass personal wealth by siphoning off export
earnings and ignoring society's needs. Corrupt leaders may share profits with support bases, angering other groups.
Moreover, when primary products are found in a region dominated by one ethnic group, that group may wish to
secede from the home country. The state is likely to react with force. Controlling primary goods also can provide
rebels with funds to finance their activities. When the production and transport of primary resources are
complex (e.g., oil), rebels can extort money from firms through kidnappings and threats to damage economic
installations, unless ransoms are paid (Berdal 2003; The Economist 2003; Wood 2003; World Bank 2003).
Stimulating Alliances Between Rebels and Organized Crime, Fj
Barbieri, Katherine and Reuveny, Rafael. “Economic Globalization and Civil War”
Journal of Politics. November 1, 2005.
Rebellions typically begin with a political goal. Over time, some rebellions acquire attributes of criminal ventures,
appropriating resources and wealth. As intrastate violence centered on appropriation rises, the state becomes more
oppressive. Globalization weakens state legitimacy, as it cannot shield people from external economic shocks.
The combination of a weaker state and stronger rebel-organized crime alliances raises the risk of attempts to
take over the state (Duffield 2000; The Economist 2003; FBI 2004; Kaldor and Luckham 2001).
Generating Unequal Economic Benefits, Fj
Barbieri, Katherine and Reuveny, Rafael. “Economic Globalization and Civil War”
Journal of Politics. November 1, 2005.
One argument in the previous subsection was that the fear of forfeiting the economic benefits of globalization
prevents civil war. This logic assumes implicitly that all groups benefit equally from economic openness and are,
therefore, similarly motivated to refrain from violence. In international relations, some studies reason that since
two states do not necessarily equally share the gains from economic interaction, globalization may not
promote peace, and may even promote conflict (see Barbieri 2002 for review). Similarly, the gains and losses
from globalization are distributed unequally among domestic actors. While neoclassical economics envisions the
benefits of openness outweighing its costs, stylized observations suggest that winners typically do not compensate
the losers unless compelled to do so by the government. When compensation is imperfect, the gap between winners
and losers widens. Consequently, it is possible to argue that the fear of economic losses may not deter the losers of
globalization.
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Pro Counters
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Pro Counters:
African Businesses Not Dependent on Aid
African Businesses Not Dependent on the Eurozone AMS
Green, Adam Robert. “African Economies Face Down European Storms.” August 6, 2012.
Global Policy Forum. https://www.globalpolicy.org/globalization/globalization-ofthe-economy-2-1/general-analysis-on-globalization-of-the-economy/51818--africaneconomies-face-down-european-storms.html?itemid=id#646 Global Policy Forum is
an independent policy watchdog that monitors the work of the United Nations and
scrutinizes global policymaking. We promote accountability and citizen
participation in decisions on peace and security, social justice and international law.
GPF plays an active role in NGO networks and other advocacy arenas. We organize
meetings and conferences and we publish original research and policy papers.
Where growth slowed, this was often related to internal troubles - political crisis in Côte d'Ivoire, the Sahelian
drought - rather than eurozone effects. The IMF's baseline prediction for 2012 sees output keeping momentum, with
natural resource production and West African recovery pushing growth to 5.5 percent overall and some countries
poised for phenomenal results - notably Sierra Leone, which should hit a world-leading 34 percent.
"All our evidence, both anecdotal and empirical, is that investors are increasingly interested and active in Africa,"
says Michael Lalor, director of the Ernst and Young Africa Business Centre. "This is as true for investors from many
of the developed markets as it is for the Chinese and Indians. Over the past 4 years, and through the global crisis,
FDI projects into Africa from the US and UK, for example, have grown at a compound annual growth rate in excess
of 20 percent."
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Pro Counters:
The problem with how Income inequality Studies
Measure Income
Income Inequality is Decreasing Overall AMS
Birdsall, Nancy. “Asymmetric Globalization: Outcomes versus Opportunities.” September
2001.
http://www.bc.edu/bc_org/avp/cas/isp/inequality/Asymmetric_Globalization.pdf
Nancy Birdsall is a Senior Associate and Director of the Economic Reform Project
at the Carnegie Endowment for International Peace. She was Executive Vice
President of the Inter-American Development from 1993 until 1998.
Recent studies combine data on differences across countries in average incomes with household data on incomes
within countries to produce a "world" distribution of income. This measure lines up individuals or households
around the world in a single unified ranking, and each person (or household) has the same weight in the distribution,
independent of whether he or she lives in a small or large country. World inequality measured this way is
incredibly high--greater than the inequality in the most unequal countries in the world (such as Brazil and
South Africa, where the richest 20% of households are about 25 times richer than the poorest 20%). Has
world inequality by this definition been increasing? Over the last 100 years, yes. Those differences in historic rates
of growth between what have become today's rich and poor countries have dominated the "world" distribution.
However in the last 20 years that long-term trend has been moderated. With rapid growth in average income in
China and to a lesser extent in India, two of the world's largest poorest countries, increases in world inequality have
slowed. (The world distribution as I have described it of course gives much greater weight to these high population
countries). Average income of China's poorest 20 percent of mostly rural households--more than a hundred million
people--has grown rapidly (even though income of China's urban households has grown even faster). Income in
urban India has also been rising, including for the urban poor. If we compare not changes in average incomes
between the richest and poorest countries, but changes in average incomes between the initially 20% richest
and 20% poorest households in the world (from about two decades ago), we arrive at a less grim conclusion:
world inequality, though incredibly high, is leveling off.
This analysis provides a powerful rebuttal to Con teams providing statistics to show increases in global
income inequality.
foundationbriefs.com
Page 164 of 224
February 2015
Pro Counters:
Studies Fail to Account for Geographic Differences AMS
Dollar, David, Kraay, Aart. "Trade, Growth, and Poverty". Finance and Development.
International Monetary Fund. Retrieved 6 June 2011. The International Monetary
Fund (IMF) is an international organization "of 188 countries, working to foster
global monetary cooperation, secure financial stability, facilitate international trade,
promote high employment and sustainable economic growth, and reduce poverty
around the world.
First, many existing studies measure trade openness simply as the share of a country's trade in its GDP. However,
differences in countries' trade shares reflect their geographic characteristics (for example, countries that are small
and close to major markets tend to trade more than countries that are large or remote) to a much greater extent than
their trade policy decisions. As a result, it is difficult to draw conclusions from many of these studies, which rely on
cross-country evidence, about the effects of trade liberalization on growth. Worse, the observed correlation between
trade and growth may simply reflect geographical determinants of growth. Efforts to use more direct measures of
trade policy (such as average tariffs or nontariff barriers) have shown mixed results, although this may simply reflect
the difficulties in systematically measuring these indicators of trade policy.
This card provides another effective rebuttal to studies claiming to show a rise in income inequality with
economic globalization.
World Income Inequality Stabilized AMS
Dollar, David, Kraay, Aart. "Trade, Growth, and Poverty". Finance and Development.
International Monetary Fund. Retrieved 6 June 2011. The International Monetary
Fund (IMF) is an international organization "of 188 countries, working to foster
global monetary cooperation, secure financial stability, facilitate international trade,
promote high employment and sustainable economic growth, and reduce poverty
around the world.
foundationbriefs.com
Page 165 of 224
February 2015
Pro Counters:
Worldwide interpersonal inequality has been quite stable over the past forty years, showing at most a weak
downward trend that is unlikely to be statistically significant, given the immense difficulties of measurement
inherent in such calculations. More interesting for our purposes is the effect of the rapid growth of the post-1980
globalizers on this inequality measure. To illustrate this, the top panel of Chart 3 first divides worldwide inequality
into inequality between countries and inequality within countries. Consistent with the findings of other studies, most
worldwide interpersonal income inequality can be attributed to the large differences in average incomes between
countries, rather than to inequities in the distribution of income within countries. And since many of the globalizers
were initially poor, their rapid growth over the past twenty years has contributed to reducing income inequality
between countries. This can be seen in the bottom panel of Chart 3, which takes the between-country component of
inequality and further subdivides it into the globalizers, the rich countries, and the rest of the world. Much of the
decline in the between-country component of inequality can be seen to be due to the rapid growth of the globalizers,
most notably China and India, whose economies' vast size has given them substantial weight in these calculations.
foundationbriefs.com
Page 166 of 224
February 2015
Pro Counters:
Importance of Seeing the Big Picture AMS
Center for Economics and Business Research. “Globalisation Can Reduce Poverty.”
September 18, 2013. http://www.cebr.com/reports/globalisation-can-reduce-poverty/
The Centre for Economic Policy Research (CEPR), a registered European charity
founded in 1983 by Richard Portes, FBA, CBE, is a network of over 700 researchers
based mainly in universities throughout Europe, who collaborate through the centre
in research and its dissemination.
But new and credible data from the respected Brookings Institute suggests that far from poverty not being reduced
by as much as 50%, it is likely over this period to be reduced by over 75%.
Gresham Professor of Commerce Douglas McWilliams this evening in his first Gresham lecture of the new
academic year 2013/14 asks the anti-globalisation campaigners ‘to be brave enough to admit they were wrong’ and
to ‘apologise to those who have been misled’.
In the lecture ‘Globalisation and Inequality’ Professor McWilliams shows how globalisation has been associated
with rising inequality within countries as low skilled jobs have migrated from richer economies to poorer economies
but that this has been offset by falling inequality between rich and poor countries.
He uses the example of Premier league footballers’ salaries to illustrate how income disparities have risen. ‘Sir
Bobby Charlton in the early 1970s was paid about twice the average pay in the top league and about ten times what a
player in the lower leagues would be paid. Today Wayne Rooney is paid about ten times the average pay for a
premiership footballer and about five hundred times what a lower league footballer would earn. Professor
McWilliams argues that this widening of the income gap in top football probably has further to go. ‘It all
depends on what incomes the clubs achieve – if they get more from pay per view and from opening up the
international market for soccer it remains feasible that we could see a footballer earning £100 million a year
within the next 10-15 years.
This analogy illustrates the flaws with traditional sources approach to measuring global inequality and
explains a more practical approach for viewing global inequality.
foundationbriefs.com
Page 167 of 224
February 2015
Pro Counters:
China Isn’t Responsible for Global Poverty Reduction
While China’s growth accounted for heavy global growth, other regions mirrored it. DAT
“Not Always With Us.” The Economist. 1 June 2013. Web. 4 January 2015.
http://www.economist.com/news/briefing/21578643-world-has-astonishing-chancetake-billion-people-out-extreme-poverty-2030-not
The Economist is an English-language weekly newspaper owned by The Economist Newspaper Ltd and
edited in offices in London.
The country that cut poverty the most was China, which in 1980 had the largest number of poor people anywhere.
China saw a huge increase in income inequality—but even more growth. Between 1981 and 2010 it lifted a stunning
680m people out poverty—more than the entire current population of Latin America. This cut its poverty rate from
84% in 1980 to about 10% now. China alone accounts for around three quarters of the world’s total decline in
extreme poverty over the past 30 years.
What is less often realised is that the recent story of poverty reduction has not been all about China. Between 1980
and 2000 growth in developing countries outside the Middle Kingdom was 0.6% a year. From 2000 to 2010 the rate
rose to 3.8%—similar to the pattern if you include China. Mr Ravallion calculates that the acceleration in growth
outside China since 2000 has cut the number of people in extreme poverty by 280m.
Martin Ravallion is the World Bank’s former head of research. While China is in fact accountable for
most growth, Pro teams shouldn’t have to over-focus their strategies on China; global gains in poverty
reduction have more methodologies than the Chinese one employed from 1980 through 2010.
foundationbriefs.com
Page 168 of 224
February 2015
Pro Counters:
Looking forward, China will be a nonfactor in global poverty reduction. DAT
“Not Always With Us.” The Economist. 1 June 2013. Web. 4 January 2015.
http://www.economist.com/news/briefing/21578643-world-has-astonishing-chancetake-billion-people-out-extreme-poverty-2030-not
The Economist is an English-language weekly newspaper owned by The Economist
Newspaper Ltd and edited in offices in London.
Second, the geography of poverty will be transformed. China passed the point years ago where it had more citizens
above the poverty line than below it. By 2020 there will be hardly any Chinese left consuming less than $1.25 a
day: everyone will have escaped poverty. China wrote the first chapter of the book of poverty reduction but
that chapter is all but finished.
The next will be about India. India mirrors the developing world as a whole: growth will push a wave of Indians
through the $1.25 barrier over the next decade (see chart 3). The subcontinent could generate the largest gains in
poverty reduction in the next decade (which is why the current Indian slowdown is worrying). After that,
though, continued growth will benefit relatively comfortable Indians more than poor ones.
The last chapter will be about Africa. Only in sub-Saharan Africa will there be large numbers of people below the
poverty line. Unfortunately they are currently too far below it. The average consumption of Africa’s poorest people
is only about 70 cents a day—barely more than it was 20 years ago. In the six poorest countries it falls to only 50
cents a day. The continent has made big strides during the past decade. But even 20 more years of such progress will
not move the remaining millions out of poverty. At current growth rates, a quarter of Africans will still be
consuming less than $1.25 a day in 2030. The disproportionate falls in Africa’s poverty rate will not happen until
after that date.
Looking at the present economic picture, the emphasis of poverty reduction is on India; Pro teams
looking to have both a more favorable and contemporaneous argument set would be well-advised to look
into case studies and data on Indian economic development.
foundationbriefs.com
Page 169 of 224
February 2015
Pro Counters:
Foreign Direct Investment (FDI) Benefits Developing
Countries
Increased FDI Benefits Developing Countries AMS
Prasad, E., Rogoff, K., Kose, M., & Wei, S. “Financial Globalization: Beyond the Blame
Game.” International Monetary Fund. March 2007. Web. 5 Jan 2015.
http://www.imf.org/external/pubs/ft/fandd/2007/03/kose.htm The International
Monetary Fund (IMF) is an international organization "of 188 countries, working to
foster global monetary cooperation, secure financial stability, facilitate international
trade, promote high employment and sustainable economic growth, and reduce
poverty around the world.
Interestingly, despite the general consensus that FDI is most likely to spin off positive growth benefits, these benefits
are harder to detect in aggregate data than those associated with equity flows. Fortunately, recent research using
micro data is starting to confirm that FDI flows do have significant spillover effects on output and productivity
growth.
foundationbriefs.com
Page 170 of 224
February 2015
Pro Counters:
FDI can step in where local institutions fail. DAT
Handley, Geoff et al. “Poverty and Poverty Reduction in sub-Saharan Africa: An
Overview of the Issues.” Overseas Development Institute. January 2009. Web. 4
January 2015. http://www.odi.org/sites/odi.org.uk/files/odi-assets/publicationsopinion-files/860.pdf The Overseas Development Institute (ODI) is the UK's leading
independent think tank on international development and humanitarian issues.
Low levels of productivity (in manufacturing and agriculture) and lack of capital are key causes of poverty in Africa.
As a result, access to finance16 (including loans, savings accounts and insurance services) is receiving ever greater
attention from policy makers. There is growing evidence regarding the positive contribution that finance makes
toward growth (Levine, 2005) and for escaping from poverty (see Demirgüç-Kunt (2006) for an overview).
Finance also exerts a disproportionately large positive impact on the poor and thus reduces income inequality
(Beck et al., 2004). Not surprisingly, though, small enterprises and poor households find it much harder to access
finance than others do, largely because of high costs and risk. The lack of agricultural credit has often been
attributed to the inability of local financial institutions to diversify the high risk stemming from agricultural
activity. But financial institutions have only limited control over their costs and risks because of ‘state
variables’ that do not change in the short-run and affect all financial sector activity, such as macroeconomic
fundamentals and the costs of doing business generally. Again, the role of the state and its leadership in creating
the right environment is evident, for instance, in dealing with regulatory distortions and creating marketdevelopment
policies. Meanwhile, private sector and non-governmental organisations have had some success with small credit
schemes, especially in aiding women to start small businesses. A ‘ladder’ is necessary for such micro-entrepreneurs,
which enables them to invest, accumulate assets and then borrow more securely.
Foreign direct investment can fill in where local institutions have no means or too great of risk aversion,
thus providing the capital necessary for agriculture growth where the state is also unwilling or unable to
assist.
foundationbriefs.com
Page 171 of 224
February 2015
Pro Counters:
FDI doesn’t increase inequality over the long term. DAT
Klein, Michael et al. “Foreign Direct Investment and Poverty Reduction.” OECD Global
Forum on International Investment. Organization for Economic Cooperation and
Development. November 2001. Web. 4 January 2015.
http://www.oecd.org/daf/inv/investmentstatisticsandanalysis/2422017.pdf Michael
Klein is Professor at the Frankfurt School of Finance and Management in Germany
and a Senior Adjunct Professor at the School of Advanced International Studies of
Johns Hopkins University.
The other side of the coin is that FDI will only flow into countries with low productivity when wages and other costs
are low enough to offset the productivity disadvantage. By the standards of developed economies foreign
investors in developing countries pay low wages. Relative to local wages, however, they tend to pay high
wages, because foreign companies tend to be more productive than local ones (Graham and Wada, 2000;
Mazumdar and Mazaheri, 2000).
The first round effect of greater foreign investment is often to raise wages of relatively well skilled workers in
developing countries. This would increase inequality there. Over time as productivity improvements spread in
the recipient economy other people benefit and incomes become again more equal than they would otherwise
be. In time, FDI thus helps improve income growth in the low wage countries. To this extent FDI actually helps
equalize the global distribution of incomes. For developing countries FDI thus creates a race to the top.
While primarily about FDI, this card is also a helpful economic rebuttal to the contention that
globalization is a driver of income inequality.
foundationbriefs.com
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February 2015
Pro Counters:
FDI is key to technology globalization (see corresponding Pro Evidence topic). DAT
Tambunan, Tulus. “The Impact of Foreign Direct Investment on Poverty Reduction: A
Survey of Literature and a Temporary Finding from Indonesia.” Penn State
University. n.d. Web. 4 January 2015.
http://citeseerx.ist.psu.edu/viewdoc/download;jsessionid=9EB73197B0C1542BD32A
9AC4930A99E7?doi=10.1.1.195.484&rep=rep1&type=pdf Prof Tulus T.H.
Tambunan lectures at Trisakti University in Jakarta on Indonesian small and
medium enterprises and cooperatives.
Yet, arguably the most effective means of transferring best practice is FDI, since it tends to package and integrate
elements from the various methods (Klein et al, 2000). By using data on FDI received by 69 developing countries
for 1970-89 from industrial countries only, a study of Borenzstein et al (1998) tested the effect of FDI on
economic growth in a cross-country regression framework. The result suggest that FDI is an important
vehicle for the transfer of technology, contributing relatively more to economic growth than domestic
investment, but the result holds only when there is some threshold stock of human capital.
Several studies show that effective diffusion is possible and works, for example, through subcontracting
arrangements between foreign firms and local/domestic firms. Batra and Tan (2000) investigate the relationship
between inter-firm production linkages and productivity growth using evidence from Malaysian manufacturing.
They found that, differently with local large-sized firms, foreign firms in Malaysia are more likely to subcontract to
foreign and local suppliers, and rely more heavily on the latter. Production function results show that having any
subcontracting links with other firms is associated with higher productivity, a relationship that is large,
positive and statistically significant. Local subcontractors were less productive when they first became
suppliers compared to the survey point, suggesting that the productivity increased over time. While, from their
earlier study in 1997, investigating the productivity effect of employee sponsored and other training programs using
data from a survey of 2200 companies, they found that the productivity of local firms lags behind that of foreign
firms because local firms invest relatively less in training and new technology. This finding suggests that
technology can be effectively acquired besides through licensing agreements and technology embodied in new
equipment, also via subcontracting arrangements with FDI-based firms (Batra and Tan, 1997).
foundationbriefs.com
Page 173 of 224
February 2015
Pro Counters:
Economic Globalization is Beneficial in the Long Term
Indirect Impacts of Financial Globalization AMS
Prasad, E., Rogoff, K., Kose, M., & Wei, S. “Financial Globalization: Beyond the Blame
Game.” International Monetary Fund. March 2007. Web. 5 Jan 2015.
http://www.imf.org/external/pubs/ft/fandd/2007/03/kose.htm The International
Monetary Fund (IMF) is an international organization "of 188 countries, working to
foster global monetary cooperation, secure financial stability, facilitate international
trade, promote high employment and sustainable economic growth, and reduce
poverty around the world.
The notion that financial globalization influences growth mainly through indirect channels has powerful implications
for an empirical analysis of its benefits. Building institutions, enhancing market discipline, and deepening the
financial sector take time, as does the realization of growth benefits from such channels. This may explain why, over
relatively short periods, it seems much easier to detect the costs but not the benefits of financial globalization. More
fundamentally, even over long horizons, it may be difficult to detect the productivity-enhancing benefits of financial
globalization in empirical work if one includes structural, institutional, and macroeconomic policy variables in crosscountry regressions that attempt to explain growth. After all, it is through these very channels that financial
integration generates growth (see Chart 3).
foundationbriefs.com
Page 174 of 224
February 2015
Pro Counters:
Globalization not to blame for Africa’s current economic situation, Fj
Bardhan, Pranab. “Does Globalization Help or Hurt the World’s Poor?” Berkeley
University Website. 2006.
Those who are more dubious of global processes point out that in the same decades poverty has remained stubbornly
high in sub-Saharan Africa; between 1981 and 2001 the percentage of people living below the international poverty
line increased in sub-Saharan Africa from about 42 per cent to about 46 per cent. 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 (29 out of 43 countries in sub-Saharan Africa in the 80’s and 90’s had civil
conflicts). If anything, such instability only reduced their extent of globalization, as it scared off many foreign
investors and traders.
foundationbriefs.com
Page 175 of 224
February 2015
Pro Counters:
Dutch Disease Is Not Impactful
Dutch Disease rarely happens, Fj
Spatafora,Nikola and Tytell, Irina. “Globalization, Commodity Prices, and Developing
Countries” International Monetary Fund. 2008
For instance, export volumes (relative to real GDP) grew in the sample by an average 30 percent between the 1980s
and 2000s. Institutions and financial development accounted for almost one-quarter of this overall increase (Figure
5.12). Reduced policy distortions, including fewer exchange restrictions, lower tariffs, and diminished overvaluation,
accounted for another quarter. In contrast, commodity export and import prices accounted for very little of the
increase in export volumes, in either advanced or developing economies.
foundationbriefs.com
Page 176 of 224
February 2015
Pro Counters:
Globalization Not to Blame for Poverty
Too Many Other Factors to Blame Globalization AMS
The University of Queensland. January 2008. “Cost-Benefit Analysis of Economic
Globalization.” Web. 5 Jan 2015.
http://ageconsearch.umn.edu/bitstream/90614/2/WP%2045.pdf The University of
Queensland (UQ) is a public research university primarily located in Brisbane,
Australia. Founded in 1909, UQ is the oldest, most selective and largest Queensland
university in Australia.
There is little evidence that growing economic globalization has led to the immiserization of developing
countries as a whole. In fact, just the opposite has happened for several developing nations. For example, the
increasing involvement of East Asian countries in economic globalization has contributed greatly to their economic
growth and a reduction in their poverty rates. The result has been the opposite to that predicted by the Marxist-like
theory of Frank (1974). Nevertheless, many less developed countries have failed to exhibit economic growth
and their poverty rates have risen, as is evident in Africa and to some extent in the Pacific islands. It is
doubtful whether their economic misfortune can be mainly attributed to growing globalization. Yet, in many
cases, political corruption has reduced their national gains from their limited participation in global trading. For
example, in some cases bribes paid to local politicians and officials has reduced the royalties such nations have
obtained from their exports of natural resources, such as minerals and timber.
Even countries that have reduced their incidence of poverty in step with their increased involvement in economic
globalization have not always been able to reduce the incidence of poverty in all their sectors and regions. For
example, the incidence of rural poverty has risen in some. This is because adjustments to changing market
conditions takes time and some labourers seem less mobile and less able to adjust to market cange than
others.
foundationbriefs.com
Page 177 of 224
February 2015
Pro Counters:
Domestic institutions bear the blame for globalization’s failures, Fj
Bardhan, Pranab. “Does Globalization Help or Hurt the World’s Poor?” Berkeley
University Website. 2006.
In general while globalization inevitably creates winners and losers, opening the economy to trade and long-term
capital flows need not make the poor worse off, if appropriate domestic policies and institutions (particularly for
support infrastructure to help production reorganization, labor market adjustment and social protection) are in place.
In fact it can open the door for some new opportunities for the poor. Whether a country can harness the opportunities
unleashed by globalization in helping its poor people depends a great deal on the structure of domestic social and
political institutions. Weak states, unaccountable regimes, lopsided wealth distribution, inept or corrupt politicians
and bureaucrats often combine to block out the opportunities for the poor. Contrasting case studies of countries
involved in the global economy but having markedly different domestic institutional structure make this quite
apparent:
-the island economies of Mauritius and Jamaica had similar per capita incomes in the early 80’s,
but their economic performance in the two following decades has been dramatically different,
with the former having better participatory institutions and rule of law, and the latter mired in
crime and violence;
-South Korea and the Philippines had similar per capita incomes in the early 60’s, but there were
dramatic differences in economic growth in the next four decades, with the Philippines
languishing in terms of political and economic institutions;
- Botswana and Angola are two diamond-exporting countries in southern Africa, with the former
having a continuous democratic regime and high growth since independence, while the latter was
ravaged by civil war and plunder.
foundationbriefs.com
Page 178 of 224
February 2015
Pro Counters:
Not all nations are set up to benefit from globalization. DAT
Lee, Eddy, and Marco Vivarelli. “The Social Impact of Globalization in the Developing
Countries.” Institute for the Study of Labor. January 2006. Web. 4 January 2015.
http://ftp.iza.org/dp1925.pdf The Institute for the Study of Labor (IZA) in Bonn is a
local and virtual international research center and a place of communication
between science, politics and business.
Matusz and Tarr (1999) survey the studies carried out before 1995 on the impact of globalization on employment in
DCs. Comparing the level of employment before and after trade liberalization the authors conclude that trade and
FDI liberalization has been beneficial for labour except in the transition countries of Eastern Europe. Ghose (2000
and 2003) analyses the relationship between trade liberalization and manufacturing employment. He highlights that although increasing trade and FDI have been relevant only in a small bunch of newly industrialized countries - for
those countries the growth of trade in manufactured products has implied a large positive effect on manufacturing
employment. More evidence has been collected at the national level mostly for the manufacturing sector. It draws a
contrasted picture of the effect of globalization. In successfully integrating DCs, the employment effects of trade
liberalization has been mixed (mostly negative) in Latin America (see Rama, 1994; Revenga, 1997; Levinsohn,
1999; ILO, 2002; Cimoli and Katz, 2003) whereas they seem globally positive in Asian countries (see Lee, 1996;
Orbeta, 2002).
DCs are developing countries; FDI is foreign direct investment. The card demonstrates that globalization
has historically been mixed bag, with countries primed for industrialization more capable of leveraging
globalization into economic growth and poverty reduction. Pro teams should distinguish between Con
case studies and Con rhetoric, only one of which categorically applies to the debate—case studies cannot
override holistic economic theory.
foundationbriefs.com
Page 179 of 224
February 2015
Pro Counters:
While frequent, increasing poverty is still an exception to the rule. DAT
Lee, Eddy, and Marco Vivarelli. “The Social Impact of Globalization in the Developing
Countries.” Institute for the Study of Labor. January 2006. Web. 4 January 2015.
http://ftp.iza.org/dp1925.pdf The Institute for the Study of Labor (IZA) in Bonn is a
local and virtual international research center and a place of communication
between science, politics and business.
Much more cautious conclusions have been derived by Ravallion (2001) who points out that microeconomic and
country-specific researches are needed to understand why some poor people are able to take up the opportunities
offered by a globalizing developing economy while others not.
Finally, UNCTAD (2002) report on low-income developing countries stresses that the current conventional wisdom
that persistent poverty in LDCs is mainly due to their low level of trade integration is too simplistic; indeed the
characteristics of trade integration are more important than its intensity. In particular, it is underlined that completely
different paths in poverty are exhibited by non-oil primary commodity exporters (in which poverty has increased)
and by manufacturer exporters, which generally display a trend towards poverty alleviation.
Thus, the overall conclusion by Winters (2000) sounds particularly wise: while trade liberalization is generally found
to increase economic opportunities and potentialities for DCs, it is absurd to think that globalization never pushes
anyone into poverty, if any because the poor are so heterogeneous within a country and because poor countries differ
so much among themselves.
foundationbriefs.com
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February 2015
Pro Counters:
One explanation for Africa’s economic lag: financial outflow. DAT
Nkurunziza, Janvier D. “Illicit Financial FLows: A Constraint on Poverty Reduction in
Africa.” Association of Concerned Africa Scholars. 2012. Web. 4 January 2014.
http://concernedafricascholars.org/bulletin/issue87/nkurunziza/ ACAS was founded
in 1977 by scholars who sought to organize scholarly analysis and action to work
toward “moving U.S. policy toward Africa in directions more sympathetic to
African interests.”
The amount of illicit financial flows out of Africa is staggering. According to estimates by Global Financial Integrity
(GFI), these flows amounted to between USD 854 billion and $1.8 trillion over the period 1970-2008 (GFI 2010).
Another study found that the cumulated amount of capital flight out of Sub-Saharan Africa over the same
period is in excess of $700 billion (Ndikumana and Boyce 2011). It is ironic that out of the six countries with
the highest average capital flight over the period 2000 to 2008, namely Angola, the Democratic Republic of
Congo, Côte d’Ivoire, Nigeria, South Africa, and Zimbabwe, four had poverty rates above the African
average in 2008. Moreover, five out of eight countries with the highest capital flight in Africa are classified as low
human development countries (UNDP 2011).
Even with financial investment, the oupour of capital from Africa ensures that wealth has a harder time
accumulating.
The poverty impact of capital flight in Africa. DAT
Nkurunziza, Janvier D. “Illicit Financial FLows: A Constraint on Poverty Reduction in
Africa.” Association of Concerned Africa Scholars. 2012. Web. 4 January 2014.
http://concernedafricascholars.org/bulletin/issue87/nkurunziza/ ACAS was founded
in 1977 by scholars who sought to organize scholarly analysis and action to work
toward “moving U.S. policy toward Africa in directions more sympathetic to
African interests.”
These simulations suggest that over the period 2000 to 2008, assuming that all flight capital had been invested in
Africa with at least the same productivity as actual investment, poverty would have been remarkably lower in the
region than it currently is. The average rate of poverty reduction would have been 4 to 6 percentage points
higher per year, on average. There are differences between oil-rich and non-resource-rich groups of
countries. Using the ICOR methodology, poverty reduction would be highest in the group of non-resourcerich countries whereas the capital stock-based method returns a better performance in the case of oil-rich
countries. Discussing the reasons of these differences is beyond the scope of this article.
Considering the most recent average annual rate of poverty reduction of -2.87% per year, the results of the
simulation suggest that stemming capital flight would indeed have a very significant impact on poverty reduction.
foundationbriefs.com
Page 181 of 224
February 2015
Pro Counters:
Adding 4 to 6 percentage points to the current rate of poverty reduction would allow most African countries
to reach the MDG1 of halving poverty by 2015, a goal that only a handful of them will reach if the most recent
trend in poverty reduction is maintained. The stimulation results show that stemming capital flight would
have an even stronger impact on poverty in oil-rich economies, which have the highest incidence of capital
flight. Oil-rich countries as a group would comfortably meet MDG1 if their illicit financial transfers had been
invested domestically.
The author performed two simulations of future poverty reduction; in one, al capital flight was instead
re-invested in African economies.
In many African nations, stagnation is due to misallocated internal resources. DAT
Abatena, Hailu. “Globalization and Development Problems in Sub-Saharan Africa.”
Norfolk State University. May 2009. Web. 4 January 2015.
http://orgs.bloomu.edu/gasi/2009%20Proceedings%20PDFs/AbetinaDVPRBSSAF1.
pdf
There is growing evidence that the developing countries in Sub-Saharan Africa are not investing their scarce
resources wisely. The resources which are available are usually misallocated to cover unproductive ventures which
have relatively lower contribution to economic growth. The pattern of public expenditure during the 1970's and early
1980's indicates that the agricultural sector, which is the back bone of their economy received the lowest percentage
of the total expenditures by function. In contrast to this other branches of the government like defense and general
services administration received proportionately larger share of the budget (Abatena, 1988).
The same trend has continued during the mid and late 1980's. Defense spending in the region, as a whole, was one
and one-half times as much as the spending for the agricultural sector, and almost as much as (0.87%) that for
education. The data for a few selected countries indicate even greater disproportionate spending patterns. For a
group of eight countries from the Eastern and Western parts of the region, defense spending is more than five
times that for agriculture, and more than two times that for education. The pattern is even worse among the
poorest countries in the region. For instance, Burkina Faso, Chad, Mali, Somalia and Uganda appropriated
substantially more percentage to defense and general government services than to agriculture (see table 1).
For many sub-Saharan nations where a significant portion of the population is well below the poverty
threshold, governments face a Catch-22: economic growth is only sustainable in peacetime, which
requires enhanced defense spending, but this spending is diverted from investment in economic growth.
Speaking from a purely economic standpoint, however, these nations fail to benefit from globalization
due to the significant negative impact of misspent internal funds.
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Pro Counters:
Globalization needs to be coupled with sensible domestic policy. DAT
Bardhan, Pranab. “Globalization and Rural Poverty.” United Nations University. June
2005. Web. 5 January 2015. http://www.wider.unu.edu/publications/workingpapers/research-papers/2005/en_GB/rp2005-30/
The author is Economics faculty at the University of California at Berkeley.
Let us first take the case of poor workers in the rural sector. They are mainly either self-employed or wage earners.
The self-employed work on their own tiny farms or as artisans and petty entrepreneurs in small shops and household
enterprises. The major constraints they usually face are in credit, marketing and insurance, and infrastructure (like
roads, power, extension service and irrigation), and government regulations (involving venal inspectors, insecure
land rights, etc.). These often require substantive domestic policy and governance changes; foreign traders and
investors are not directly to blame. If these changes are not made and the self-employed poor remain constrained,
then, of course, it is difficult for them to withstand competition from large agri-business or firms (foreign or
domestic). Let us just cite two examples. Using panel data for farm households in Zambia, Deininger and Olinto
(2000) show that many households could not reap productivity benefits from external liberalization because they
lacked key assets like draft animals and farm implements. Similarly Lopez, Nash, and Stanton (1995) show from
panel data of farm households in Mexico that the supply response to price incentives is much lower for households
with more limited access to capital. Opening the product markets internationally without doing anything about the
weak or distorted factor markets like credit or infrastructural services may thus be a sub-optimal policy for many
poor farmers and artisans, both from the point of view of their exploiting new opportunities and of social protection
for those who may need extra help to cope.
Pro advocacies which acknowledge the need for constructive domestic policy eliminate Con attacks by
leaving case studies of failed economic development irrelevant, so long as the Pro can demonstrate in
some form that such failures are at least partially caused by domestic policies (which is the case in nearly
every case).
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February 2015
Pro Counters:
Globalization Does Not Promote Economic Inequality
There is no empirical causative link between globalization and inequality. DAT
Lee, Eddy, and Marco Vivarelli. “The Social Impact of Globalization in the Developing
Countries.” Institute for the Study of Labor. January 2006. Web. 4 January 2015.
http://ftp.iza.org/dp1925.pdf The Institute for the Study of Labor (IZA) in Bonn is a
local and virtual international research center and a place of communication
between science, politics and business.
On the empirical side and starting from simple correlation analyses, both Bowles (2001) and Dollar and Kraay
(2001b) do not find any significant correlation between changes in openness and changes in inequality. Turning the
attention to more sophisticated econometric analyses, Edwards (1997) does not find any evidence linking
trade liberalization to increases in inequality; Higgins and Williamson (1999) – using a framework based on
the unconditional Kuznets’ curve - fail to find any significant relationship between economic openness and
inequality; Spilimbergo et al. (1999) find that trade openness has a positive impact on income inequality in skillabundant countries, but when they limit the analysis to DCs, they fail to find any significant relationship between
trade and inequality; Ravallion (2001) finds no significant effect of exports as a share of GDP on Gini index changes
across 50 countries (both developed and developing countries).
The Kuznets curve describes inequality in developing countries relative to time as an upside-down U,
peaking with maximum industrialization and going down as an economy advances. The Gini index
evaluates the inequality in a nation (higher is more unequal).
A summary of findings on inequality. DAT
Lee, Eddy, and Marco Vivarelli. “The Social Impact of Globalization in the Developing
Countries.” Institute for the Study of Labor. January 2006. Web. 4 January 2015.
http://ftp.iza.org/dp1925.pdf The Institute for the Study of Labor (IZA) in Bonn is a
local and virtual international research center and a place of communication
between science, politics and business.
The main common conclusion of these empirical studies is that the popular idea that greater economic integration
across countries is associated with an increase in inequality within DCs is not necessarily in contrast with theoretical
considerations, but it cannot be significantly supported by available recent empirical evidence. As stated by Cornia
(2004) globalization in se’ does not emerge as the main culprit of the current increase of WCII in DCs. Yet,
recent evidence is consistent with the hypothesis that the diffusion of SBTC from richer to developing
countries may imply – at least temporarily - an increase in within-country inequality.
While there is in fact some correlation between recent globalization and inequality increases, Con teams
are not justified in painting globalization as a primary causal factor for inequality.
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Pro Counters:
Trade Liberalization Doesn’t Decrease States’ Revenue
Case study: Sub-Saharan African nations make more tax revenue after trade liberalization.
DAT
Keen, Michael, and Mario Mansour. “Revenue Mobilization in Sub-Saharan Africa:
Challenges from Globalization.” International Monetary Fund. July 2009. Web. 5
January 2015. http://www.imf.org/external/pubs/ft/wp/2009/wp09157.pdf
The International Monetary Fund (IMF) is an organization of 188 countries, working to
foster global monetary cooperation.
Central African Republic, and Tanzania) regardless of whether they lost or gained trade tax revenue. On average, the
increase was twice the loss in trade tax revenue. However, in MICs the gain in indirect tax revenue roughly
offset the loss in trade tax revenue (except in Botswana and Equatorial Guinea—both resource countries, and
showing a substantial increase in other revenues). Domestic revenue mobilization, it seems, has proved less
challenging in MICs than in many LICs—and, indeed, with the exception of Cameroon and Cape Verde, all MICs
had a tax/GDP ratio above 15 percent in the early 1980s.
In a small number of LICs, the loss in trade tax revenue was accompanied by a reduction in total tax revenue.
Typically, however, such reductions in total revenue reflected losses from other sources too: the loss in trade tax
revenue accounted for 32 percent of the decline in the total tax ratio in Togo, 70 percent in Côte d’Ivoire, and 84
percent in Central African Republic.
Most countries that lost trade tax revenue were able to recover the loss, and many were able to increase their total tax
revenue. For those LICs that increased their tax ratio, indirect taxes (VAT and excises) played a major role,
accounting on average for 66 percent of the increase in the total tax effort (32 percent for resource LICs, and 92
percent for nonresource LICs).
In developing nations, where government stability is crucial, having steady revenue is crucial. This card
establishes the lack of connection between trade liberalization and revenue losses (and, in turn,
instability). LICs are low-income countries, MICs are middle-income countries.
foundationbriefs.com
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Pro Counters:
Globalization and Environmental Protection
Globalization has not led to any environmental opportunism. DAT
Bardhan, Pranab. “Globalization and Rural Poverty.” United Nations University. June
2005. Web. 5 January 2015. http://www.wider.unu.edu/publications/workingpapers/research-papers/2005/en_GB/rp2005-30/
The author is Economics faculty at the University of California at Berkeley.
In the case of some resource-intensive exports, it is difficult for a country by itself to adopt environmental
regulations if its international competitors do not adopt them at the same time and have the ability to undercut the
former in international markets. Here there is an obvious need for coordination in the environmental regulation
policies of the countries concerned. Given the low elasticity of demand for many resource-intensive primary export
commodities from developing countries in the world market,16 such coordinated policies, while raising prices and
the terms of trade, need not lead to a decline in export revenue.
A common charge against multinational companies is that they flock to developing country ‘pollution havens’ to
take advantage of lax environmental standards. In one of the very few careful empirical studies on the question,
Eskeland and Harrison (2003) examine the pattern of foreign investment in Mexico, Venezuela, Morocco and
Côte d’Ivoire. They find no evidence that foreign investment in these countries is related to pollution
abatement costs in rich countries. They also find that within a given industry, foreign plants are significantly
more energy-efficient and use cleaner types of energy compared to their local peers.
One charge leveled at multinational corporations (and thus extended to globalization) is that companies
use developing countries as environmental havens for their production processes. This card shows that
across the surveyed countries, this was not the case.
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Con Counters
foundationbriefs.com
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February 2015
Con Counters:
Figures Showing Poverty Reduction are Inaccurate
Reduction in Poverty can be Only Attributed to China’s Economic Growth AMS
Yale University. “With Little Notice, Globalization Reduced Poverty.” July 5, 2011.
http://yaleglobal.yale.edu/content/little-notice-globalization-reduced-poverty Yale
University is a private Ivy League research university in New Haven, Connecticut.
Founded in 1701 as the "Collegiate School" by a group of Congregationalist
ministers and chartered by the Colony of Connecticut, the university is the thirdoldest institution of higher education in the United States. The University's global
research is widely-regarded all over the world.
Behind these aggregate figures lies a somber reality. In assessing the fortunes of the developing world during the
late 20th century, countries can be roughly divided into two categories: China and the rest. China’s stunning
economic reversal – 30 years ago, only 16 percent of its population lived above the poverty line, but by 2005, only
16 percent stood below it – masks others’ failings. Excluding China, the 500 million decrease in global poverty
becomes an increase of 100 million. In the world’s poorest region, sub-Saharan Africa, the poverty rate
remained above 50 percent throughout the period, which, given the region’s rapid population growth,
translated into a near doubling in the number of its poor. Similarly in South Asia, Latin America and Europe–
Central Asia there were more poor people in 2005 than there were a quarter of a century earlier.
Con teams should rebut pro teams using statistics to show the reduction of poverty in the last 50 years by
producing evidence on China’s rapid economic growth. As this piece explains, global poverty reduction is
misconstrued because of China’s economic expansion—in fact these numbers have nothing to do with
global efforts to eradicate poverty. As this piece demonstrates, the poor in other regions has nearly
doubled.
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February 2015
Con Counters:
Problems with Surveys of Income and Expenditure AMS
Wade, Robert Hunter. “Is Globalization Reducing Poverty and Inequality?” 2004.
London School of Economics and Political Science.
http://graduateinstitute.ch/files/live/sites/iheid/files/sites/developpement/shared/deve
loppement/cours/E756/seance%20avant%202/Wadeglobalization%20reduction%20poverty%20and%20inequality.pdf The London
School of Economics and Political Science is a public research university specialized
in social sciences located in London, United Kingdom, and a constituent college of
the federal University of London. LSE is a global leading social sciences dedicated
institution and is considered one of the most prestigious universities in the world.
Second, the poverty headcount is very sensitive to the reliability of household surveys of income and expenditure.
The available surveys are of widely varying quality, and many do not follow a standard template. Some sources of
error are well known, such as the exclusion of most of the benefits that people receive from publicly provided
goods and services. Others are less well known, such as the sensitivity of the poverty headcount to the survey
design. For example, the length of the recall period makes a big difference to the rate of reported expenditure––the
shorter the recall period the higher the expenditure. A recent study in India suggests that a switch from the standard
30-day reporting period to a seven-day reporting period lifts 175 million people from poverty, a 290 nearly 50%
drop. This is using the Indian official poverty line. Using the higher $1/day 292 international line the would be even
greater. The point here is not that household surveys are less reliable than other possible sources (for example,
national income accounts); simply that they do contain large amounts of error.
foundationbriefs.com
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February 2015
Con Counters:
Problems with Poverty Line Calculation AMS
Wade, Robert Hunter. “Is Globalization Reducing Poverty and Inequality?” 2004.
London School of Economics and Political Science.
http://graduateinstitute.ch/files/live/sites/iheid/files/sites/developpement/shared/deve
loppement/cours/E756/seance%20avant%202/Wadeglobalization%20reduction%20poverty%20and%20inequality.pdf The London
School of Economics and Political Science is a public research university specialized
in social sciences located in London, United Kingdom, and a constituent college of
the federal University of London. LSE is a global leading social sciences dedicated
institution and is considered one of the most prestigious universities in the world.
The second reason is that the Bank’s new international poverty line of $1.08/day probably increases the downward
bias, leading the Bank to exaggerate the decline in the poverty headcount between the years covered by the old
methodology and those covered by the new one. The new international poverty line of $PPP 1.08 lowers the
equivalent national poverty lines in most countries compared to the earlier $PPP 1 line. It lowers them in 77% of the
94 countries for which data are available, containing 82% of their population. It lowers the old international poverty
line for China by 14%, for India, by 9%, for the whole sample by an average of 13%. As noted, even a small
downward shift in the poverty line removes a large number of people out of poverty.
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Con Counters:
A major factor is how many people, annually, approach the poverty line. DAT
Chancy, Laurence et al. “The Final Countdown: Prospects for Ending Extreme Poverty
by 2030.” Brookings Institution. April 2013. Web. 4 January 2015.
http://www.brookings.edu/~/media/research/files/reports/2013/04/ending%20extrem
e%20poverty%20chandy/the_final_countdown.pdf
Laurence Chancy is a fellow at the Development Assistance and Governance Initiative.
In the 1990s, progress in poverty reduction was made possible by a consistently large mass of people lining up
behind the poverty line. The number of people in the world living between $1.20 and $1.25 a day stood at a little
over 100 million each year. Average consumption growth per person in the developing world, weighted by the
location of poor people, was relatively modest over the decade at 2.3 percent per year.
In the 2000s, a different dynamic emerged. The number of people lined up behind the poverty line began to fall at
the start of the new millennium. By 2010, the number of people living between $1.20 and $1.25 a day stood at
only 85 million. This was compensated for by stronger consumption growth per person, which rose to 3.1
percent per year on average for the decade.
Throughout both decades, the extent to which people immediately below the poverty line shared in their economies’
consumption growth, on average, varied from year to year. However, in several years, these “immediate poor”
appear to have lost out, resulting in more sluggish poverty reduction than would have been possible under equitable
consumption growth (Figure 6).
This card shows that consistent poverty reduction was not accompanied by consistent economic growth
(as shown through consumption per person). This makes is valuable for Con teams to present
globalization as simply a vehicle of economic growth.
Global poverty reduction in the past has been deceptively easy. DAT
Chancy, Laurence et al. “The Final Countdown: Prospects for Ending Extreme Poverty
by 2030.” Brookings Institution. April 2013. Web. 4 January 2015.
http://www.brookings.edu/~/media/research/files/reports/2013/04/ending%20extrem
e%20poverty%20chandy/the_final_countdown.pdf
Laurence Chancy is a fellow at the Development Assistance and Governance Initiative.
Today we stand at a momentary sweet spot, where the mode of consumption per person is at the $1.25 poverty line.
That is, there are more people living around the $1.25 mark than at any other consumption level in the world, as
illustrated by the peak of the probability density function. Equitable growth around the world will result in more
movement of people across the poverty line than across any other level of consumption. However, the height of the
curve at the poverty line is diminishing precipitously, meaning that the number of immediate poor is continuing to
fall.
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Con Counters:
In our baseline scenario, the number of people living between $1.20 and $1.25 a day drops to 56 million in 2020—
the year when our baseline falls behind the historical trajectory of poverty reduction—and 28 million in 2030.
Despite assumptions of slightly stronger consumption growth per person between now and 2030 (averaging 3.4
percent), and growth being equitable, it is not possible to maintain the trend rate of poverty reduction with so many
fewer individuals ready to cross the line. In our best case scenario, consumption growth is stronger still and that
growth is skewed toward the poor, but the number of people positioned just below the poverty line drops even lower.
By 2028, when our best case scenario falls behind the trend trajectory of poverty reduction, the number of people
living between $1.20 and $1.25 a day is less than 15 million. More than 10 times that number stand further back
from the line.
Sustaining the trend rate of poverty reduction requires that each year a new set of individuals is primed to cross the
poverty line. When one year’s immediate poor crosses the $1.25 a day threshold, those a little further from the
poverty line must move up to take their place. The reduction in the number of immediate poor indicated by
our analysis suggests that some of the poorest of the poor will struggle to make enough progress to be in a
position to escape poverty over the next 20 years. Even in our best case scenario, many poor people remain some
distance behind the poverty line in 2030.
This card makes it more difficult for Pro teams to establish the linkage between growth and what is
officially termed “poverty reduction”: Con teams can show the mass reduction in poverty from the past
couple decades as a function more of a technicality (millions of people crossed the artificial $1.25
threshold) than a true lasting economic improvement.
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February 2015
Con Counters:
Case study: village-level studies show no progress on poverty. DAT
Onyeiwu, Steve, et al. “Distributional Impact of Globalization-Induced Migration.”
United Nations University. October 2007. Web. 5 January 2015.
http://www.wider.unu.edu/publications/working-papers/researchpapers/2007/en_GB/rp2007-66/
The corresponding author is faculty at the Allegheny College Department of Economics.
Analysts who claim that globalization has alleviated poverty often do so based on national or regional data, with
little or no information on the conditions of the village poor. Because the majority of the poor in developing
countries live in villages, it is crucial to assess the impact of globalization on poverty, using village-level data.
We use the survey data to compute two standard measures of poverty in the village: the poverty headcount index and
the poverty gap index. The poverty headcount index was calculated by finding the ratio of individuals who lived
below the poverty line to all the individuals in the survey.13 The poverty gap index, which measures the severity of
poverty, was computed by multiplying the headcount index by the ratio of the difference between the poverty line
and the average income of individuals in the sample living under the poverty line expressed as a proportion of the
poverty line. Both indexes are reported in Tables 3 and 4. These tables illustrate the sobering extent of poverty in the
village, with 87 per cent of all the respondents living below US$1 per day. An upward revision of the poverty line to
US$2 per day increases the poverty rate amongst the respondents to a whopping 94 per cent. While sub-Saharan
Africa (SSA) has the ‘highest incidence of extreme poverty and the greatest depth of poverty’ (Chen and
Ravallion, 2004), the poverty rate in Umuluwe is shocking – even by African standards! It may well be that
the poverty rate in African villages is underestimated by macrolevel data, a point poignantly made by
Ravallion (2004). While the accuracy of using of using macrodata to measure the poverty rate may be
debatable, it is clear that two decades of globalization have not reduced the overall poverty rate in Umuluwe.
As Tables 3 and 4 illustrate, both the poverty headcount and poverty gap indexes in Umuluwe exceed regional levels
by very wide margins.
Perhaps more revealing is the fact that the migrant villagers did only slightly better than the rest of the villagers. As
Tables 3 and 4 show both the headcount and poverty gap indexes are slightly lower for migrant individuals,
indicating that globalization only marginally improved the economic condition of those who took advantage of the
process.
This study took samples across an entire village and compared data for migrating and non-migrating
villagers to assess the poverty-alleviating extent of globalization, in this case represented by outsidevillage opportunities.
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February 2015
Con Counters:
Economic data on globalization’s effects makes showing causal relationships impossible.
DAT
Dercon, Stefan. “Globalization and Marginalization in Africa: Poverty, Risk, and
Vulnerability in Rural Ethiopia.” United Nations University. November 2007. Web.
5 January 2015. http://www.wider.unu.edu/publications/working-papers/researchpapers/2007/en_GB/rp2007-73/
The author is Economics faculty at the University of Oxford.
One point should be clear from the outset. Given the nature of the question—the impact of globalization—empirical
analysis using actual observed micro-data is highly problematic and close to impossible. We can point to two
methodological reasons for this. First, in the general debate, globalization is used as an evocative term describing the
closer integration of societies and economies around the world. Integration is linked to lower trade barriers, reduced
costs of transport, faster communication, including of ideas, and rising capital flows. It is a composite concept and,
by its nature, vague in terms of what it actually describes. It is also a gradual process rather than a well-defined
change at one particular moment in time.
Furthermore, there is no doubt that something like ‘globalization’ is taking place across the world and Ethiopia is to
some extent affected. But even if one is able to define a general process as describing ‘globalization’, inference
on its impact is highly problematic by the common lack of a well-defined counterfactual in the data available.
Most studies appear to attribute observed changes over time in living standards and risk to globalization or
specific elements of it. However, many aspects change over time, and many of them are represented by
common factors in the data. Typically, therefore, they cannot be separately identified in the data. For example,
simply observing an increase in the exports of a crop such as coffee (Ethiopia’s most important export crop) may be
due to opportunities offered by globalization, but it could also be due to improved extension services increasing
productivity, or just a terms-of-trade change related to domestic returns to alternative crops. In short, analyzing
‘globalization’ as a ‘natural experiment’ is hardly possible, and more structural modelling is required to
understand its impact.
This isn’t to say that economic data and analysis (which is an important evidentiary component for both
sides) is useless. This card is, however, credible ammunition for Con teams against cases heavily reliant
on economic evidence.
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February 2015
Con Counters:
Chinese and Indian poverty reductions may not have been fuelled by globalization. DAT
Bardhan, Pranab. “Globalization and Rural Poverty.” United Nations University. June
2005. Web. 5 January 2015. http://www.wider.unu.edu/publications/workingpapers/research-papers/2005/en_GB/rp2005-30/
The author is Economics faculty at the University of California at Berkeley.
Most of the general statements one sees in popular presentations on the impact of globalization on poverty are
essentially those of correlation. Pro-globalizers point to the large decline in poverty in China, India and Indonesia
(countries long characterized by massive rural poverty) in the recent decades of international economic integration.
Chen and Ravallion have estimated that between 1981 and 2001 the percentage of rural people living below an
international poverty line of US$1.08 per day (at 1993 purchasing power parity) declined from about 79 per cent2 to
about 27 per cent in China, from about 63 per cent to about 42 per cent in India, and 55 per cent to 11 per cent in
Indonesia. But, contrary to repeated assertions in the international financial press, no one has yet convincingly
demonstrated that this decline is mainly due to globalization. In China it could instead be, to a large extent,
due to internal factors like expansion of infrastructure or the massive 1978 land reforms or policy changes
relating to grain procurement prices or the relaxation of restrictions on rural-to-urban migration. That the
spurt in agricultural growth following the 1978 decollectivization and land reform may be largely responsible for
poverty reduction in China is suggested by the fact that the substantial part of the decline in poverty in the last two
decades already happened by mid-1980s, before the big strides in foreign trade or investment.3 Similarly, rural
poverty reduction in India may be attributable to the spread of Green Revolution in agriculture, large
antipoverty programmes or social movements in India, and not the trade liberalization of the 1990s (which, in
any case, was largely confined to the non-agricultural sectors). In Indonesia4 sensible macroeconomic policies—
an active rice price stabilization policy, massive investment in rural infrastructure—and the green revolution played
a substantial role in the large reduction of rural poverty between 1981 and 2001 (note that by early 1980s the oil
boom was largely over and by 2001 the economy has not fully recovered from the financial crisis).
This card is one example of a larger premise both teams need to consider: the economic data for this
topic is both overwhelming in scope and porous in integrity, inherently. This still creates demand for
teams on both sides to utilize evidence (along the lines of what’s found in this section) to challenge the
integrity of economic analysis.
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February 2015
Con Counters:
Agriculture is better at reducing poverty, Fj
The sectoral composition of economic growth has clearly played an important role in overall poverty reduction.
Ravallion and Chen (2004) divided GDP into ‘primary’ (mainly agriculture), ‘secondary’ (manufacturing and
construction) and ‘tertiary’ (services and trade) sectors. The primary sector’s share fell from 30 per cent in 1980
to 15 per cent in 2001, though not monotonically. Almost all of this decline was made up for by an increase in
the tertiary-sector share. Ravallion and Chen used a regression decomposition method to test whether the source of
growth mattered to the rate of poverty reduction. They found that primary sector growth had far higher impact
(by a factor of about four) than either the secondary or tertiary sectors. The regression coefficient on the
(share-weighted) growth rate in primary-sector GDP was four times higher than for either the secondary or
tertiary sectors and the impacts of the latter two sectors were similar (and one cannot reject the null
hypothesis that they have the same impact). With a relatively equitable distribution of access to agricultural land
and higher incidence and depth of poverty in rural areas it is plausible that agricultural growth would have brought
large gains to China’s poor.
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February 2015
Con Counters:
Globalization does not reduce inflation
Commodity Prices have increased due to globalization, Fj
Gross, Daniel. “Inflation Everywhere” Slate. April 26, 2006.
The conventional wisdom on inflation can turn on a nickel—and on copper, zinc, and gold. Trading data from
the New York Mercantile Exchange and the Markets section of the Financial Times chronicle the relentless rise in
commodity prices. Copper (more than $7,000 a ton), nickel ($20,000 a ton), and zinc ($3,385 a ton) have all
recently hit record prices. Gold is above $600, while oil trades hands for $72 a barrel. Rates on the 10-year
U.S. government bond have spiked above 5.10 percent, hitting levels not seen since 2002, largely because of
fears that inflation is picking up. And it is. Theconsumer price index rose at a 4.3 percent annual rate in the
first quarter of 2006, compared with 3.4 percent for all of 2005.
Ironically, one of the chief culprits of today's inflation—and today's fear of inflation—is the same source that has
kept inflation low for much of the last two decades: globalization.
Globalization does not reduce inflation in the long term, Fj
Gross, Daniel. “Inflation Everywhere” Slate. April 26, 2006.
But now globalization's deflationary run may be flagging. In its "World Economic Outlook," released earlier this
month, the International Monetary Fund displays charts (on Page 98) that unambiguously show how inflation has
generally declined around the globe in the last two decades—although the charts conveniently end in 2004, when
inflation began to rise again. But as in investing, the past is not necessarily a guide to future performance when
it comes to macroeconomics. The migration of U.S. manufacturing to China in the 1990s surely played a
gigantic role in moderating inflation. But that can't be repeated. Once a factory is in China, its managers will
have difficultly finding a place where labor costs one-fifth as much. And, indeed, there are signs that wages
for skilled factory workers in China are on the rise. Meanwhile, the service sector, which dominates the U.S.
economy, will likely have difficulty realizing the same type of productivity gains as manufacturing has thanks to
globalization.
Commodities will have increased inflation, Fj
Gross, Daniel. “Inflation Everywhere” Slate. April 26, 2006.
There's another risk to inflation: the recent commodity boom, propelled by the rise of emerging economies.
Globalization doesn't just mean that American companies gain access to cheap labor in the developing world, or that
the cheap labor in those markets gains access to our rich markets. It means that people living in those places gain
access to the infrastructure and products and services that we take for granted—like McDonald's or Chevrolets.
China is one of the few bright spots for General Motors—last week the beleaguered company reported that vehicle
sales in China were up 76 percent in the most recent quarter. In the coming years, car sales in China and India are
likely to continue to grow rapidly.
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Con Counters:
Such growth is boosting demand (and prices) for steel, as well for rubber and other car components. But it's also
boosting demand for gas—and raising concerns about the world's oil supplies. As Shai Oster noted in the Wall
Street Journal, China is already the "second-biggest oil consumer after the U.S.," gulping about 7 million
barrels per day. (The United States uses about 21 million barrels per day.) This forecast from the Energy
Information Administration suggests that Chinese oil consumption will double in a dozen years.
In other words, the rise of a massive consuming class in China and, to a lesser degree, India, is making gas more
expensive for everyone. A look at the most recent CPIreport reveals that inflation is concentrated in energy. But
when energy costs remain elevated for long periods of time, the higher costs start to spill over into other sectors. The
cost of transportation has risen 5.1 percent in the last 12 months. And if the fuel surcharges tacked on in recent
weeks by my garbage collection and lawn-care companies are any guide, the high cost of oil is being passed on.
Oil prices have increased due to globalization, Fj
Bowen, Alex and Mayhew, Karen. “Globalisation, import prices and inflation: how
reliable are the ‘tailwinds’?” Bank of England. 2008.
Pain et al (2006) estimated how real commodity prices would have differed in 2005 had emerging market economies
grown more slowly. Their estimates for oil range from 20% to 40% lower (depending on whether non-OECD
economies’ share of trade or of world GDP was assumed to be constant in the counterfactual case). And with
more countries becoming more fully integrated into the global economy, the demand for raw materials is likely to
increase further.
Studies on globalization are not reliable, Fj
Bowen, Alex and Mayhew, Karen. “Globalisation, import prices and inflation: how
reliable are the ‘tailwinds’?” Bank of England. 2008.
However, these results are better interpreted as describing the magnitude of relative price changes rather than as
estimates of the true impact on domestic or import price inflation of the globalisation phenomena considered.
Nickell (2005), for example, writes, ‘what we are, in fact, investigating is why goods prices have been falling
relative to the general price level. … Ultimately, inflation is the consequence of monetary policy and
macroeconomic shocks’. The key point is that some assumption has to be made about what would have
happened if the globalisation effects had not been experienced. What would have happened, for example, if the
share of trade with the ‘low-cost’ countries had not increased and import price inflation had been the same in the
‘low-cost’ countries as the ‘high-cost’ countries? The studies of import price inflation, for example, implicitly
assume that the inflation rate for imports from ‘high-cost’ countries would not have been any different. But,
in that counterfactual world, overall import price inflation would have been higher and so would the
aggregate inflation rate. But monetary policy under an inflation-targeting regime would have followed a
different path in that event, in order to keep aggregate inflation in check, resulting in a different path for
import price inflation than assumed. Then the estimate of the impact of globalisation would be different from
the one actually calculated.
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Disadvantages of Free Trade
The Problems with Free Trade AMS
Edge, Ken. “Free Trade and Protection: Advantages and Disadvantages of Free Trade.”
Hampden-Sydney College. 1999.
http://www.hsc.csu.edu.au/economics/global_economy/tut7/Tutorial7.html
Hampden–Sydney College, also known as H-SC, is a liberal arts college for men
located in Hampden Sydney, Virginia, United States. The school ranked #6 among
Forbes 20 best colleges in the South.
Although free trade has benefits, there are a number of arguments put forward by lobby groups and protestors who
oppose free trade and trade liberalisation. These include:

With the removal of trade barriers, structural unemployment may occur in the short term. This can
impact upon large numbers of workers, their families and local economies. Often it can be difficult for these
workers to find employment in growth industries and government assistance is necessary.

Increased domestic economic instability from international trade cycles, as economies become
dependent on global markets. This means that businesses, employees and consumers are more vulnerable
to downturns in the economies of our trading partners, eg. Recession in the USA leads to decreased demand
for Australian exports, leading to falling export incomes, lower GDP, lower incomes, lower domestic
demand and rising unemployment.

International markets are not a level playing field as countries with surplus products may dump them on
world markets at below cost. Some efficient industries may find it difficult to compete for long periods under
such conditions. Further, countries whose economies are largely agricultural face unfavourable terms of trade
(ratio of export prices to import prices) whereby their export income is much smaller than the import
payments they make for high value added imports, leading to large CADs and subsequently large foreign
debt levels.

Developing or new industries may find it difficult to become established in a competitive environment with
no short-term protection policies by governments, according to the infant industries argument. It is difficult
to develop economies of scale in the face of competition from large foreign TNCs. This can be applied to
infant industries or infant economies (developing economies).

Free trade can lead to pollution and other environmental problems as companies fail to include these costs in
the price of goods in trying to compete with companies operating under weaker environmental legislation in
some countries.

Pressure to increase protection during the GFC
During the global financial crisis and recession of 2008-2009, the impact of falling employment meant that
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protection pressures started to rise in many countries. In New South Wales, for example, the state
government was criticised for purchasing imported uniforms for police and firefighters at cheaper prices
rather than purchasing Australian made uniforms from Australian companies. Similar pressures were faced
by governments in the United States, Britain and other European countries.
Con teams should carefully explain the problems with the key principles of economic globalization and
how these principles are applied to developing countries.
How Free Trade Hurts Developing Countries AMS
Byers, Stephen. “I was Wrong. Free Market Trade Policies Hurt the Poor.” The
Guardian. May 19, 2003.
http://www.theguardian.com/politics/2003/may/19/globalisation.politics Stephen
John Byers is a British Labour Party politician who was the Member of Parliament
(MP) for North Tyneside from 1997 to 2010.
This has led President Museveni of Uganda to say: "Africa does need development assistance, just as it needs debt
relief from its crushing international debt burden. But aid and debt relief can only go so far. We are asking for the
opportunity to compete, to sell our goods in western markets. In short, we want to trade our way out of poverty."
The World Bank estimates that reform of the international trade rules could take 300 million people out of poverty.
Reform is essential because, to put it bluntly, the rules of international trade are rigged against the poorest countries.
Rich nations may be pre pared to open up their own markets, but still keep in place massive subsidies. The quid pro
quo for doing this is that developing countries open up their domestic markets. These are then vulnerable to heavily
subsidised exports from the developed world.
Con teams should stress that while free trade provides a multitude of advantages for the United States,
newly emerging economies are often hurt by free trade policies. Their fledgling industries often cannot
compete with the heavily subsidized world competitors.
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The primary benefit of free trade is for companies requiring high-skill labor. DAT
Winters, L. Alan. “Globalization, Infrastructure, and Inclusive Growth.” Asian
Development Bank Institute. February 2014. Web. 4 January 2015.
http://www.adbi.org/files/2014.02.24.wp464.globalization.infrastructure.inclusive.gr
owth.pdf
L Alan Winters is Professor of Economics in the University of Sussex. He is a Research Fellow and
former Programme Director of the Centre for Economic Policy Research (CEPR, London) and Fellow of
IZA, Munich.
An important feature of Verhoogen’s results is that both blue-collar and white-collar wages increase, so that trade is
aiding everyone’s income growth, just to a different extent. Frias et al. (2012) find a similar outcome: they look at
the effect of exporting on the within-plant wage distribution using employer-employee data for Mexico and a similar
identification strategy to Verhoogen’s (2008). They find that exporting is associated with higher wages on
average but that when disaggregated by quantiles of the within-firm wage distribution, there is no evidence of
an impact of exporting at the tenth percentile while the effect is significant and increasing at higher
percentiles.
Bustos (2011) studies Argentina, as the implementation of Mercosur led to differential reductions in Brazil’s tariffs
across sectors. She allows firms not only to have different productivities but to choose technologies as well. In
equilibrium there are three types of firms: the skill-intensive exporter, the unskilled exporter, and the unskilled
domestic-only firm. A tariff reduction in an export market induces more firms to enter and upgrade to the
skill-intensive technology and increases the market share of more productive firms. This generates higher
demand for skilled workers and increases the skill premium. The least productive firms, on the other hand,
are instead forced to downgrade skill. Bustos does not consider wages directly, but finds that the net effect of
Mercosur on the share of skilled labor is positive and explains one third of the increase in the employment share of
skilled labor in Argentina between 1992 and 1996.
As barriers to trade break down, companies producing more advanced goods using more advanced labor
(higher skill and pay) are the primary beneficiaries. While generally beneficial, this does little to aid
lower-end workers, which is the focus here.
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Free trade treaties can force countries into human rights violations. DAT
Becker, Andreas. “Globalization Comes at the Cost of Human Environment.” Deutsche
Welle. 11 July 2012. WEb. 4 January 2014. http://www.dw.de/globalization-comesat-the-cost-of-humanity-environment/a-16088505 DW is Germany's international
broadcaster. The service is aimed at the overseas market. It broadcasts news and
information on shortwave,Internet and satellite radio in 30 languages.
Franz-Josef Radermacher, a professor at Ulm University in Germany and a member of the Club of Rome, tells of a
rather gloomy picture when talking about the effects of globalization.
For years he's been throwing his weight behind a market economy which adheres to social and ecological standards.
But he feels that governments have been dragging their feet on enforcing national legislation to this end, not being
able to keep abreast of global economic developments. The result is a kind of hollow democracy, he claims.
Radermacher points out that international treaties like those within the World Trade Organization (WTO) also oblige
German traders to sell products which have been produced by children under slave-like conditions. "And we're
talking about products that have been made in countries which, just like Germany, are signatories to relevant United
Nations treaties prohibiting such work conditions," he says.
Anyone who blocks such products from home markets is bound to face WTO arbitration procedures. "And it's along
this logic that things constantly happen which allegedly no one wants," Radermacher argues.
With governments’ interests consistently weighted toward economic growth, other treaty-based
obligations wind up falling through. The issue is then of the weight of the tradeoff being made under the
scenario described in this card.
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Implementing free trade responsibly has been thus far voluntary and unsuccessful. DAT
Becker, Andreas. “Globalization Comes at the Cost of Human Environment.” Deutsche
Welle. 11 July 2012. WEb. 4 January 2014. http://www.dw.de/globalization-comesat-the-cost-of-humanity-environment/a-16088505 DW is Germany's international
broadcaster. The service is aimed at the overseas market. It broadcasts news and
information on shortwave,Internet and satellite radio in 30 languages.
More than 8,000 firms have meanwhile joined the Global Compact with a view to shaping globalization along
socially just and environmentally friendly lines. But the results achieved so far leave much to be desired.
Participation is voluntary and not more than a declaration of intent. There is no system of checks and sanctions in
place, and a UN commission in 2010 criticized the vague concept of the program, its lack of a mandate and the lack
of control.
Outside the UN framework, governments are increasingly banking on getting the private sector involved. "That's a
development which can be witnessed across the European continent," says Michael Assländer, an expert in business
ethics with the International Graduate School in Zittau, Germany.
He adds that the European Commission laid down its thoughts on corporate social responsibility in a government
green paper. "It's all about environment protection and social standards, on a voluntary basis," Assländer
says. "I assume there's also a hidden agenda of trying to cut public spending and letting private companies step into
the breach."
Between a lack of national commitments and the nonbinding nature of private agreements, there’s no
assurance of any kind of responsibility—social, environmental—in international dealings, relatively
speaking. For debaters accustomed to debating the merits of business practices in a regulated
environment, this is opens up new avenues of attack to any Pro advocacies assuming adequate regulation.
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Economic benefits of trade are not guaranteed and depend on what is being traded. DAT
Fosu, Augustin Kwasi and Andrew Mold. “Gains from Trade: Implications for Labour
Market Adjustment and Poverty Reduction in Africa.” United Nations University.
October 2007. Web. http://www.wider.unu.edu/publications/workingpapers/research-papers/2007/en_GB/rp2007-65/
Augustin Kwasi Fosu is deputy director of UNU-WIDER, UNU’s Finland research center.
The Birdsall and Hamoudi result suggests that the composition of exports matters. Would primary exports generate
as much growth as manufacturing exports, for example? According to Fosu (1990b, 1996), for example, the answer
is no. Manufacturing exports apparently drive the export effect, especially as far as diffusion to the non-export sector
is concerned. Using panel data for a sample of 41 African countries, Baliamoune (2002) also identifies the
existence of certain ‘convergence clubs’ within Africa, and concludes that openness helps ‘relatively rich’
countries in Africa more than it does poor countries. Thus greater openness to international trade may actually be
harmful to economies with very low per capita income. To benefit from international trade, a country apparently has
to reach a certain threshold in terms of income and human capital.
An additional concern about the above findings of the positive impacts of trade expansion is the issue of causality. In
a study of 47 African countries, for example, Ahmad and Kwan (1991) find no evidence of a causal link running
from exports to growth. Indeed, the only evidence that they uncover of a causal relationship runs in the opposite
direction, from growth to exports. Nonetheless, reviewing the literature, Fosu (2001: 595) concludes that ’the issue
of causality may not by itself be that important’, after all, as long as the relevant variables similarly affect both
exports and domestic output.
It’s commonly sssumed that free trade drives some sort of economic growth (whose benefits are subject to
separate debate), but this card flips the premise: growth drives trade, and manufacturing trade is
primarily accountable for perceptions of a trade effect to begin with.
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Global Inequality Is a Deceptive Measurement
The world has become more unequal, not less, as globalization has sped up. DAT
“For Richer, For Poorer.” The Economist. 13. October 2012. Web. 4 January 2015.
http://www.economist.com/node/21564414
The Economist is an English-language weekly newspaper owned by The Economist Newspaper Ltd and
edited in offices in London.
Income gaps have also changed to varying degrees. America’s Gini for disposable income is up by almost 30% since
1980, to 0.39. Sweden’s is up by a quarter, to 0.24. China’s has risen by around 50% to 0.42 (and by some measures
to 0.48). The biggest exception to the general upward trend is Latin America, long the world’s most unequal
continent, where Gini coefficients have fallen sharply over the past ten years. But the majority of the people on the
planet live in countries where income disparities are bigger than they were a generation ago.
That does not mean the world as a whole has become more unequal. Global inequality—the income gaps between all
people on the planet—has begun to fall as poorer countries catch up with richer ones. Two French economists,
François Bourguignon and Christian Morrisson, have calculated a “global Gini” that measures the scale of income
disparities among everyone in the world. Their index shows that global inequality rose in the 19th and 20th
centuries because richer economies, on average, grew faster than poorer ones. Recently that pattern has
reversed and global inequality has started to fall even as inequality within many countries has risen. By that
measure, the planet as a whole is becoming a fairer place.
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Global inequality is better to compare economies, not the conditions of people inside each individual
nation. When this is taken into account, the world has become a more unequal place. Con teams don’t
need to agree with the general premise that inequality is down as a condition for debate.
In Brazil, trade liberalization decreased inequality by lowering skilled wages. DAT
Ferreira, Francisco H.G. et al. “Trade Liberalization, Employment Flows and Wage
Inequality in Brazil.” United Nations University. September 2007. Web. 7 January
2015. http://www.wider.unu.edu/publications/working-papers/researchpapers/2007/en_GB/rp2007-58/
The author is an economist with the World Bank’s Research Department.
Our main findings are, first, that trade liberalization in Brazil did in fact contribute to the observed reduction in wage
inequality in the entire Brazilian economy—and not just in manufacturing. As argued by Gonzaga, Menezes-Filho
and Terra (2006)—and unlike in Chile, Mexico and Colombia—Brazil’s pre-liberalization tariffs (adjusted by import
penetration) were highest for skill-intensive goods. These tariffs fell by more than those for other goods, leading
to a decline in their relative prices. Consistent with the simple Stolper-Samuelson theorem, this decline led to
a decline in skilled wages, relative to those of unskilled workers, and to a movement of workers away from
previously protected industries. As Pavcnik et al. (2004) find, other channels of impact through industry-specific
wage and skill premiums were unimportant.
This card helps Con teams challenge the assumption that inequality reduction and poverty reduction are
linked. In the case of Brazil, lowering inequality was a function of decreasing skill positions’ wages, not of
bringing up the wages of unskilled workers.
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Globalization Doesn’t Reduce Poverty
Poverty numbers are misleading, Fj
Martell, Luke. “Sociology of Globalization” Polity Press. 2010.
But despite this improvement the picture is still bleak and there are some especially bad sides to it. The number of
people below the $1 a day poverty line exceeds 1.2 billion. More than 1 in 5 people in the world are in poverty on
this definition. 2.8 billion live on less than $2 a day (UNDP 2003). In 2005, 36 per cent of people in less developed
countries were living on less than $1 a day and 76 per cent on less than $2. The proportion of people living in
poverty is falling slowly but the numbers living below the $1 and $2 lines was larger in 2005 than in 2000
(UNCTAD 2008a: 2). It is difficult to see the attitudes of many in the rich world as reflecting any noticeable
awareness, real concern or willingness about this fact.
The population of developing countries is getting poorer, even if less of them fall below the “official”
poverty line. Once the poverty line is adjusted to $2 a day, then the numbers actually show and increase.
Rising Food Prices mean more hungry people, Fj
Martell, Luke. “Sociology of Globalization” Polity Press. 2010.
Many of the 1.2 billion at the $1 level spend about half their income on food, a much greater proportion than the
rich, leaving half for water, education, health and shelter. Between 2006-8 the price of basic food rose by 28%
leading to 40 million more people suffering from hunger. There are 963 million people, 14% of the world’s
population, who do not have enough to eat (UNFAO 2008).
East Asian countries skew the statistics, Fj
Martell, Luke. “Sociology of Globalization” Polity Press. 2010.
If you leave out China and other growing East Asian countries the proportion of the world’s population living below
$1 a day stayed stable and the absolute numbers grew (because of the growing world population). The picture is
especially terrible in sub-Saharan Africa where poverty below the $1 line increased from the already high position of
53.3% to 54.4% between 1985 and 1990. Between 1990 and 2002 there was no significant improvement in this
region (UNDP 2007: 11). 74 million more people in this region were in poverty at the end of the 1990s than at the
start (UNDP 2003: 41). This does not mean that the improvement in China and parts of Asia is not a success worth
investigating for lessons on how it can be done. But it does mean that the picture is a mixed one and that in some
parts of the world an already very bad situation has got worse.
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The number of poor countries is increasing, Fj
Martell, Luke. “Sociology of Globalization” Polity Press. 2010.
There are about 195 countries in the world. 54 countries were poorer in 2003 than 1990. In 21 more rather than less
people were going hungry and in 14 the number dying before the age of 5 had increased. In the 1980s 4 countries
experienced reversals in the UN human development index (which measures life expectancy, health, education and
standard of living) but this went up to 21 getting worse in the 1990s. In the 1990s development assistance from the
rich declined, debt in poor countries increased and the price of primary commodities, which many poor countries
export, continued to drop.
Globalization has not helped Sub-Saharan countries, Fj
Martell, Luke. “Sociology of Globalization” Polity Press. 2010.
A half of Africans live on less than $1 a day, one third in hunger, about one-sixth of children die before the age of 5,
something which is not improving. In 1990 you were 19 times more likely to die before the age of 5 in sub-Saharan
Africa than in a rich OECD country. By 2003 this had increased to 26 times more likely. Because of population
growth the numbers in these situations are growing. In 2000 4.5 million children died before the age of 5 in SubSaharan Africa and 3.6 million in South Asia – making up 76% of global mortality by 5 that year. Life expectancy at
birth is 49.6 in sub-Saharan African countries and 79.4 in high income OECD countries with a world average of
68.1. It is in the low 40s for countries like Sierra Leone, Zambia, Mozambique, the Central African Republic,
Angola, Zimbabwe, Lesotho and Swaziland. In some of these countries 70% of people do not live until 40 and in
many Sub-Saharan African countries life expectancy is on the decline because of HIV/AIDS, other diseases and
factors such as injury (UNDP 2003 and 2008a).
Globalization creates more climate change, Fj
Martell, Luke. “Sociology of Globalization” Polity Press. 2010.
Climate change is a globalised phenomenon that accentuates poverty. It is caused by carbon emissions
predominantly from some of the most industrialised and large growing countries but has damaging effects especially
on the lowest emitters, particularly sub Saharan African countries. The latter are the poorest and most vulnerable and
rely most on fertile land and water and are where such resources are most scarce. Loss of land or water as a result of
climate change undermines development and leads to conflict over the scarcer resources, for instance in Sudan. This
is bad in itself but also for growth. The 21 least developed countries, mostly in Sub-Saharan Africa, produce less
than 0.5% of the world’s carbon emissions but suffer the effects especially harshly. The USA, China, Russia, India,
Japan, Germany and Canada produce up to 60% of the world’s emissions. The USA produces 20.9% of the world
total. China and India as more recent developers have not historically been principle contributors to carbon
emissions that have led to the current situation and their output is partly a product of the sheer scale of their
population (UNDP 2008a: 310-13, UNDP 2008b: 5). Solutions to climate change need to be global with as many
countries as possible, especially the carbon emitters, agreeing together to limit emissions.
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Methodology flaws in pro-globalization studies. DAT
Lee, Eddy, and Marco Vivarelli. “The Social Impact of Globalization in the Developing
Countries.” Institute for the Study of Labor. January 2006. Web. 4 January 2015.
http://ftp.iza.org/dp1925.pdf The Institute for the Study of Labor (IZA) in Bonn is a
local and virtual international research center and a place of communication
between science, politics and business.
To conclude, nothing can assure that the relationship between globalization and poverty alleviation has a 1 to 1
nature as implied - for instance, - by the optimistic slogan by Dollar and Kray (2001a and 2001b) when they state
that “trade is good for growth, growth is good for the poor and so trade is good for the poor”.
Focusing on the empirical studies, the above mentioned Dollar and Kraay (2001a and 2001b) classify countries into
globalizers and non-globalizers according to their performance in raising their trade openness (export + import over
GDP) and show that the former group has experienced higher growth rates during the period 1977-97. Then they
show that the incomes of the poor rise proportionally with average incomes and that globalization does not have any
systematic effect on domestic income distribution. They therefore conclude that growth is good for the poor. A
summary of the most pertinent criticisms of these papers can be found in Rodrik (2000): the author does not agree
with Dollar and Kraay's exogenous definition of globalizers and challenges Dollar and Kraay's arbitrary exclusion of
some countries and their use of different base years moving from one country to another. Replicating their empirical
exercise, Rodrik finds no support for the hypothesis that globalizers do significantly better in terms of economic
growth.
This card gives a case study when the methodology used by a pro-globalization study was found to not
support the pro-poor benefits of globalization when using a wider data set. This card is helpful for Pro
teams who need pointed questions on methodology in CX; it’s also a good reminder that economic studies
are not infalliable, especially if the debaters using them do not understand their methodology.
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Case study in sub-Saharan Africa: Recent empirical data and justification of findings. DAT
Hisako Kai and Shigeyuki Hamori, (2009) ''Globalization, financial depth, and inequality
in Sub-Saharan Africa '', Economics Bulletin, Vol. 29 no.3 pp. 2025-2037. 18 August
2009. Web. 5 January 2015.
http://www.accessecon.com/Pubs/EB/2009/Volume29/EB-09-V29-I3-P51.pdf
Shigeyuki Hamori is a member of the Economics faculty at Kobe University.
As such, the results of our empirical analysis found that globalization is worsening inequality in sub-Saharan Africa.
To the best of our knowledge, a positive significant correlation between globalization and inequality in sub-Saharan
Africa has not been confirmed previously. This is the first research work that could confirm such a relationship on
the basis of relevant data. It was found that there is a disequalizing effect in globalization up to a certain level of
economic development. In order to expect globalization to reduce inequality, a certain minimum level of economic
development is necessary. Hence, when promoting globalization in poor countries, additional consideration to the
poor (e.g., strengthening safety nets) is probably necessary. Moreover, it was confirmed that financial deepening
helps to reduce inequality in sub-Saharan Africa. However, it was also confirmed that globalization reduces the
equalizing effects of financial deepening, and it can be analyzed that financial deepening through globalization leads
to the formation of a financial system that benefits the rich. Domestic financial markets should be cultivated first in
order to mould their development such that inequality is reduced. Credit constraints on the poor form an important
issue in developing countries. It is possible that financial services to the poor are provided not by attracting foreign
funds through globalization, but by cultivating domestic financial markets. As such, it has been confirmed that
globalization is worsening inequality in sub-Saharan Africa. Further, globalization may be forming a society where
the rich are becoming richer and the poor are becoming poorer. Probably, there is a need for countries to avoid
relying solely on the markets and implement market intervention to reduce inequality, such as strengthening safety
nets and financial access for the poor.
Financial deepening refers to the development of the finance sector. Their findings support the brunt of
analytical evidence on Africa, and to a lesser extent the developing world: before globalization can have
positive outcomes, internal mechanisms are necessary to prevent abuse and rampant inequality. The Con
can stay away from nasty economics debates by establishing this premise and then presenting a case
based on evaluation of internal mechanisms in the developing world as the criterion for judging
globalization’s merits.
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The benefits of free trade don’t reach the generally poorest nations (sub-Saharan Africa).
DAT
Fosu, Augustin Kwasi and Andrew Mold. “Gains from Trade: Implications for Labour
Market Adjustment and Poverty Reduction in Africa.” United Nations University.
October 2007. Web. http://www.wider.unu.edu/publications/workingpapers/research-papers/2007/en_GB/rp2007-65/
Augustin Kwasi Fosu is deputy director of UNU-WIDER, UNU’s Finland research center.
We first note here the relatively small size of the welfare gains for especially SSA. For total world gains, with world
GDP in 2001 of US$ 31,022 billion and the predicted welfare increase of only US$ 94.25 billion, the gains from
complete liberalization amount to mere 0.3 per cent of world GDP.11 However, the gains for SSA are even
smaller – as a region with a total GDP of US$311.10 billion (i.e., approximately 1 per cent of world GDP), the
estimated welfare gain of US$259 million is equivalent to only 0.08 per cent of SSA GDP. In per capita terms,
this represents a welfare gain for SSA equivalent to 36 cents per capita on a one-off basis.12 Moreover, even these
results hinge on the inclusion of South Africa within the group of 12 SSA regions. Excluding South Africa, the
welfare result is a loss for SSA of US$ 579 million.13
If, as our results suggest, SSA stands to gain very little from multilateral liberalization, who does? Table 4 shows the
top ten ‘winners’ from multilateral liberalization, on the basis of the computations for EV. This throws up the
typical, but still somewhat surprising and counterintuitive, result that the largest single gains accrue to the
‘Rest of North Africa’ region, a composite aggregation of the Egyptian, Algerian, and Libyan economies. All
three countries are large net-food importers, so a priori there would be an expectation of losses (as in the case of
SSA) from the increased cost of food imports after liberalization. The only real explanation, though, resides in the
degree and structure of the distortions of the domestic economies; the largest gains from multilateral liberalization
are likely to occur in those sectors and economies where the distortions are highest. In relative terms the
liberalising effect is strongest for those countries exhibiting highly uneven initial protection patterns, such as
Korea, AESEAN countries, and the Maghreb (Bchir, Jean, and Labourde, 2005).14 At the same time, members
of the Cairns group of countries, such as Brazil and Argentina, reap benefits from the agricultural liberalization.
This card helps to weigh the positive impact of globalization on poverty reduction: given that the world’s
poorest regions see the smallest gains, any positive impact elsewhere is still minimal with respect to the
resolution.
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Globalization Slows Technological Progress
Schumpeter’s Theory AMS
The University of Queensland. January 2008. “Cost-Benefit Analysis of Economic
Globalization.” Web. 5 Jan 2015.
http://ageconsearch.umn.edu/bitstream/90614/2/WP%2045.pdf The University of
Queensland (UQ) is a public research university primarily located in Brisbane,
Australia. Founded in 1909, UQ is the oldest, most selective and largest Queensland
university in Australia.
Thus, Schumpeter believed that under highly competitive market conditions technical progress is retarded. In effect,
this is because there is a lack of protective niches for businesses (Tisdell and Seidl, 2004). Therefore, in those
industries which become much more competitive as a result of growing globalization, the rate of technological
progress and innovation would be predicted to decline. Schumpeter also argued that very large firms are likely to
become bureaucratic and less conducive to technical progress. As discussed above, processes of globalization will
allow some firms to become very large. This will also not be favourable to technical progress. Only those
industries in which firms remain of moderate size and retain some market power as globalization proceeds
would maintain a high rate of technical progress and innovation. On the whole, Schumpeter’s theory casts
doubts on the proposition that growing globalization will have positive long-term effects on the rate of
technical progress and innovation.
Economic Globalization’s Impact on Progress AMS
The University of Queensland. January 2008. “Cost-Benefit Analysis of Economic
Globalization.” Web. 5 Jan 2015.
http://ageconsearch.umn.edu/bitstream/90614/2/WP%2045.pdf The University of
Queensland (UQ) is a public research university primarily located in Brisbane,
Australia. Founded in 1909, UQ is the oldest, most selective and largest Queensland
university in Australia.
While growing globalization increases the variety of products available in a country initially and possibly for some
time, it could result in a reduction in the long term. Variety might, for example, peak after a time and then decline
but not become as limited as when international trade was very restricted. Consumers might still be better off
(despite the reversed-U-trend in the availability of varied products locally and eventually reduced global variety of
products) than would be the case with restricted scope for international trade and investment because the latter
involves even less variety locally. However, in the light of Schumpeter’s theses and evolutionary considerations
discussed, growing globalization may reduce the global rate of new product development and innovation.
There is a strong possibility that this rate will decline in the long-term. This is likely to be assessed as a
negative impact.
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Con Counters:
Domestic Resources Can Eradicate Poverty
Case study: African nations have internal funding for substantial anti-poverty measures.
DAT
“The New Role of Safety Nets in Africa.” World Bank. n.d. Web. 4 January 2015.
http://www.worldbank.org/en/region/afr/publication/the-new-role-of-safety-nets-inafrica
Well-targeted safety nets are affordable in Africa, especially if inefficient public spending can be better targeted to
the poorest and if programs can be better harmonized to reduce redundancies. However, donor funding remains
important in low-income countries.
With the exception of universal programs such as old-age benefits and general subsidies, donors finance a large
share of safety nets in Africa‒–over 80 percent in Burkina Faso, Liberia, Mali, and Sierra Leone.
Going forward, the discovery and exploitation of natural resources such as oil, gas and minerals in many African
countries could mean greater domestic support for safety nets.
In Tanzania, for example, where there have been major discoveries of natural gas, the government is scaling up its
cash transfer program to benefit as many as 900,000 households. This is expected to sharply reduce poverty.
Middle income countries can already scale up safety nets largely with their own resources. For instance, in
Cameroon, which is now investing more in social protection, it would cost only an estimated 0.5 percent of GDP to
provide a strong safety net that reaches at least half those living in chronic poverty.
An effective tactic, on top of demonstrating the drawbacks of globalization, is to show a lack of necessity,
in an absolute sense. It’s more difficult for Pro teams to justify the gains from globalization if they are
unnecessary.
China’s poverty reduction was not wholly dependent upon globalization, Fj
However, trade reform in China must be seen in the context of the many other factors that helped reduce poverty.
Here the time profile of China’s poverty reduction is instructive. As can be seen in Table 1, there was a dramatic
decline in poverty in the first few years of the 1980s; the rural poverty rate fell from 76 per cent in 1980 to 23
per cent in 1985. The late 1980s and early 1990s were more difficult periods for China’s poor. Progress was
restored around the mid-1990s, though the late 1990s saw a deceleration (Figure 2). The early 1980s saw high
growth in agricultural output and rapid rural poverty reduction in the wake of de-collectivization and the
privatization of land-use rights under the ‘household responsibility system’. (Agricultural land had previously
been farmed by organized brigades, in which all members shared the output more-or-less equally.) The
literature has pointed to the importance of these reforms in stimulating rural economic growth at the early stages of
China’s transition (Fan 1991; Lin 1992; Chow 2002).
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Con Counters:
Case study: globalization can exacerbate poverty at the local level. DAT
Onyeiwu, Steve, et al. “Distributional Impact of Globalization-Induced Migration.”
United Nations University. October 2007. Web. 5 January 2015.
http://www.wider.unu.edu/publications/working-papers/researchpapers/2007/en_GB/rp2007-66/
The corresponding author is faculty at the Allegheny College Department of Economics.
Rather than treating the poor as a homogenous group, policymakers should identify those poor households that are
unlikely to benefit from, or even be hurt by, the globalization process. These include women and uneducated
individuals. To prevent the widening of the income gap between migrant and non-migrant villagers, policies
should be focused on how to promote and stimulate economic activity at the village level. Government and
development agencies should focus on projects that favour women because they appear to have been disfavoured by
the globalization process. To head off the increasing feminization of poverty in Africa, women should be given a
priority in the allocation of economic development resources.
One of the implications of the paper is that the benefits of globalization do not accrue passively and automatically to
the poor. The poor must be proactive and adventurous in order to take advantage of the opportunities created by
globalization. Also, the fact that poor households have to move from their villages in order to internalize the
benefits of globalization implies that the gains from globalization have not been equitably distributed among
the various regions of Nigeria. This is very problematic, as the quest for the villagers to reap the benefits of
globalization through migration may deprive the village of human capital that is essential for local economic
development. The quest to take advantage of the globalization process outside of the village also weakens village
institutions by disrupting social interactions and norms. For globalization to benefit the village poor, it must promote
economic activities and generate economic opportunities within the village.
Globalization as a general phenomenon applied to local system runs the risk of “centralizing” economic
growth at population hubs, thus diverting it from rural areas, instead of providing it everywhere.
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Con Counters:
Response to Technological Globalization
Technological globalization drives up inequality in developing countries. DAT
Lee, Eddy, and Marco Vivarelli. “The Social Impact of Globalization in the Developing
Countries.” Institute for the Study of Labor. January 2006. Web. 4 January 2015.
http://ftp.iza.org/dp1925.pdf The Institute for the Study of Labor (IZA) in Bonn is a
local and virtual international research center and a place of communication
between science, politics and business.
However, Birchenall (2001) concludes that, in the case of Colombia, liberalization interpreted as a skill-biased
technological change induced wage inequality, polarization and higher labour mobility. Pavcnik et al. (2003) show
that trade reform in Brazil has contributed to the growing skill-premium through SBTC instigated by
increased foreign competition (even though the overall effect on wage differentials is relatively small). Finally,
Vivarelli (2004) does not find any significant distributional effect of trade openness and FDI inflows; however, in his
study some evidence emerges that, in the early stages of openness to trade, importation may imply an increase in
WCII (possibly via SBTC).
SBTC is skill-based technological change; WCII is within-country income inequality. This card provides
multiple economic country studies demonstrating statistically significant changes in inequality due to
trade liberalization, with reference to technologically-intensive sectors.
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Con Counters:
Foreign Direct Investment Is Not A Guaranteed Success
There is still no empirical way to validate the use of FDI. DAT
Contessi, Silvio, and Ariel Weinberger. “Foreign DIrect Investment, Productivity, and
Country Growth: An Overview.” Federal Reserve Bank of St. Louis. March/April
2009. Web. 4 January 2015.
http://research.stlouisfed.org/publications/review/09/03/Contessi.pdf Silvio Contessi
is an economist in the Research Department of the Federal Reserve Bank of St.
Louis.
The contributions that multinational firms make toward economic growth of the host econ - omies have been studied
extensively, but little consensus has emerged as to whether FDI is boon or bane for a country as a whole. Quite
simply, the evidence is as mixed now as it was when Rodrik (1999) wrote the line quoted at the beginning of this
article. Lacking unambiguous empirical evidence, it is difficult to formulate solid expectations on how
proposed FDI policies will affect the entry of foreign firms. Current empirical evidence provides little
guidance as to whether one should support or oppose policies. As we have discussed in this article, studies that
use a growth regression approach and aggregate data are not likely to help researchers sort out the growth
effect of FDI because of methodological problems and huge heterogeneity hidden by the data. The prior 10
years of research have confirmed that the (aggregate) evidence is still sobering.
However, a large body of empirical research that uses firm- and plant-level data has documented that multinational
firms and their affiliates (compared with domestic firms) are larger, are more capital intensive, make more abundant
use of skilled workers, invest more in physical and intangible capital, and pay higher wages (Barba Navaretti and
Venables, 2004). Because the evidence based on microdata shows that firms investing and producing in foreign
countries have superior productivity at home, foreign affiliates should also enjoy a productivity advantage
compared with local firms in the host economy. Indeed, we have discussed some of the evidence that reveals
such an effect in aggregated data.
The farthest that empirical studies can go is essentially to assume that companies’ production abroad is
likely higher than their local counterparts. This, however, is not nearly enough of an evidentiary link to
either economic growth or poverty reduction to be tenable under scrutiny in round.
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Con Counters:
Globalization doesn’t exist in a vacuum; local policies often negate gains. DAT
Onyeiwu, Steve, et al. “Distributional Impact of Globalization-Induced Migration.”
United Nations University. October 2007. Web. 5 January 2015.
http://www.wider.unu.edu/publications/working-papers/researchpapers/2007/en_GB/rp2007-66/
The corresponding author is faculty at the Allegheny College Department of Economics.
Since globalization is often touted as a welfare-enhancing phenomenon, one wonders why it failed to significantly
lift the migrating villagers out of poverty. Therefore, the underlying mechanisms within the globalization process
that limit the ability of potential beneficiaries to extricate themselves from the shackles of poverty must be
examined. As mentioned earlier, structural adjustment is one of two key drivers of the globalization process in
Nigeria. While structural adjustment has promoted some macroeconomic stability in Nigeria, it has also
caused economic hardships for the poor, particularly those in urban areas.15 A major component of
structural adjustment in Nigeria is the removal of government subsidies on goods and services like fuel,
imported food, education, health care, and transportation. To reduce government budget deficits, another key
objective of adjustment, taxes were imposed on workers.16 The overarching effect of structural adjustment
policies has been a change in the relative prices paid by urban dwellers for food, housing, transportation, education,
health, etc. In describing the shifts in relative prices against urban dwellers, Kolb (undated: 14) observes that ‘SAPs
have narrowed the rural-urban wage gap and shifted the balance of trade against the urban wage earner. Wage
freezes in the context of currency devaluation mean that real wages are actually declining’. This change in relative
prices has the effect of reducing the real incomes of the migrant villagers, making their economic welfare no
better (in a significant sense) than the nonmigrant villagers.17 Easterly’s (2001) contention that structural
adjustment makes it difficult for the poor to benefit from economic expansion (and in effect from
globalization) further supports this claim.
Con teams, in guiding their research, would be well-served by looking at country-specific studies of
policy, such as this one. Every nation accommodates globalization in some way; Con teams can show that
most national accomodations have a negative impact on wages, thus establishing a causal linkage to
poverty exacerbation.
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Cases
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Pro Contentions
Pro Case
Introduction:
The benefits of financial globalization are rarely disputed by leading economists. However, there are those that argue
that developing countries, or countries with a significant degree of poverty, would do well to advance more
protectionist policies. Today my partner and I will demonstrate that economic growth leads to poverty reduction and
then go on to show that the surest path to steadfast economic growth for developing countries is financial
globalization.
Contention One: Economic growth leads to poverty reduction.
According to John Hopkins’ University’s Professor Micheal Klein:
Economic growth remains a necessary ingredient for poverty reduction. Recent studies suggest that growth tends to
lift the incomes of the poor proportionately with overall growth (Dollar and Kraay, 2000). FDI as a key vehicle to
generate growth is thus a most important ingredient for poverty reduction.
This chart demonstrates the validity of Klein’s argument:
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Pro Contentions
My partner and I will demonstrate in this course of this debate that the best way to expand the economies of
developing countries is to open these nations’ economies to financial globalization.
Contention Two: Developing Countries Benefit from Freer Trade.
The potential for growth in global trade with developing countries is huge. According to an analysis by The
Guardian: “ In terms of income, trade has the potential to be far more important than aid or debt relief for developing
countries. For example, an increase in Africa's share of world exports by just 1% could generate around
£43bn - five times the total amount of aid received by African countries.”
According to a study by the International Monetary Fund, a correlation of some 188 countries dedicated to securing
sustainable economic growth and reducing poverty around the world:
Per capita GDP growth in the post-1980 globalizers accelerated from 1.4 percent a year in the 1960s and 2.9 percent
a year in the 1970s to 3.5 percent in the 1980s and 5.0 percent in the 1990s. This acceleration in growth is even more
remarkable given that the rich countries saw steady declines in growth from a high of 4.7 percent in the 1960s to 2.2
percent in the 1990s. Also, the nonglobalizing developing countries did much worse than the globalizers, with the
former's annual growth rates falling from highs of 3.3 percent during the 1970s to only 1.4 percent during the 1990s.
This rapid growth among the globalizers is not simply due to the strong performances of China and India in the
1980s and 1990s—18 out of the 24 globalizers experienced increases in growth, many of them quite substantial.
Clearly developing countries benefit from recent financial globalization. Let’s explore some more examples of
success.
Contention Three: Examples of success in developing countries.
Developing countries stand to gain a lot by entering global markets freely, and those that do have experienced
tremendous success. According to Aruni Mukherjee of the University of Warwick, since opening up to global trade:
“Czech Republic, Poland and South Africa have emerged as competitors for an estimated $356 billion worth
of jobs, and western companies are now switching to Eastern Europe due to closeness in terms of distance
than India. One could argue, though, that increased free trade leads to enhancing competition and greater
efficiency for the companies and a good deal for the consumers of the country. For instance, Nepalese and
Pakistani competition has led to Indian textile exports to the US to fall in the last financial year, yet the Indian
companies could boost their sales by tapping the European market. Similarly, opening up Jamaican markets to
American milk imports has led to overrunning of domestic companies yet enabled the consumers to get a cheaper
product. The incidents which have been pointed out by left wing critics as monopolistic behaviour by MNCs are
likely to become rarer due to the rapidly increasing number of competitors and owing to a high price elasticity of
demand of their products in most developing countries.”
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Pro Contentions
Thus, we see that in general reduction in trading barriers has indeed helped developing countries attract investment
and improve growth prospects, and in some cases, even expand their own corporate sector. However, it can be
argued that free trade, in its current form, has been harmful for developing nations in cases where the developed
world has actually refused to follow the norms of free trade.
In conclusion, because freer trade laws and economic globalization have benefitted and continue to benefit
developing countries, and because this growth unequivocally leads to a reduction in poverty, my partner and I affirm
the resolution that: On balance economic globalization benefits worldwide poverty reduction.
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Con Contentions
Con Case
Introduction:
Between cheap labor, a resulting greater emphasis on skill premiums, the opening of new markets for exporters, and
a host of other factors, globalization has been a force for positive change in the developed world. Therein, however,
lies the catch. A majority of the world’s poor live in countries classified as “developing”; these regions include subSaharan Africa, Latin America, southeast Asia, and even Eastern Europe. My partner and I will reiterate
throughout this debate that we do not believe, nor is it our intent to prove, that globalization does net harm to
the world economy or economic growth. However, by showing that globalization fails to empower developing
nations and their corresponding poverty-stricken populations, we will demonstrate that globalization has had
a negative impact on poverty reduction.
Contention One: Globalization reduces equality of income
Poverty, fundamentally, is a function of income. The poverty line, as defined by the World Bank, is a cutoff for daily
income; around $2 for poverty, $1.25 for extreme poverty. Pro-globalizers typically look at globalization and the
corresponding economic growth as the tide, which brings up all ships as it rises. On a nation-by-nation basis,
however, this simply is not true. As put by Shangquan Gao of the United Nations,
First of all, economic globalization has in fact expanded rather than reduced the gap between the North and South.
According to some report published by UN in 1999, the number of developing countries that have benefited from
economic globalization is smaller than 20. The difference of income per capita between the richest country and
poorest country has enlarged from 30 times in 1960 to the current 70 times.
What we see, then, is economic growth affecting the countries which least need it, while the developing world
(“poor countries”), in this case, are relegated to far lower rates of growth. The picture doesn’t get any better for
individuals in every nation. According to Gerry Mander of the International Forum on Globalization,
Even with the dot-com crash and the current global financial slump, Merrill Lynch predicts that wealth controlled by
millionaires will continue to increase by 8 percent a year, reaching $40 trillion by 2005.
Contrary to its claims, wealth generated by globalization does not trickle down. Rather, the rules lock the wealth at
the top, removing from governments and communities the very tools necessary to redistribute wealth, protect
domestic industries, workers, social services, the environment, and sustainable livelihoods.
We do not wish to contest the inevitability of economic growth in the age of globalization. However, this resolution
pertains exclusively to the poor. And as trade liberalization and foreign investment ramp up, it is corporations and
the already-welathy who are most primed to cash in. The poor get left behind, anchored in place as other ships rise.
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Con Contentions
Contention Two: Globalization reduces equality of economic
opportunity
Income inequality does not have to be the death knell for economic advancement. Even if economic inequality
continues to grow, this is acceptable so long as there are still means for individuals, particularly in developing
countries, to pull out of poverty. Unfortunately, globalization has also helped to close this door. While economic
growth in a technical sense has failed to help alleviate poverty, the physical presence of economic activity is a
prerequisite to poverty reduction. Without steady incomes and job opportunities, it is functionally impossible,
on an individual level, to alleviate poverty. The United Nations Department of Economic and Social Affairs
explains how globalization has had a negative impact in this arena as well:
Recent estimates by the International Fund for Agricultural Development (IFAD) indicate that 75 percent of the poor
work and live in rural areas. Rural poor have restricted access to and control over assets - land, water, credit,
information, technology, health, education and skills - and to markets. As such their lives have limited links to the
macro-economic environment in which globalization takes place.
With limited physical and financial resources, the poor—in this particular case, specifically the rural poor—have
limited access to the global market upon which economic opportunity is generally reliant. As the global economy has
become increasingly reliant on trade and international opportunity, it has thus shifted its priorities away from profriendly growth in the process.
Contention Three: Without income and opportunity, poverty worsens
Even as incomes and opportunities stagnate under globalization, this does not actively worsen the situation. By
allowing these two to stall simultaneously, however, globalization has opened the world’s poor to unconscionable
amounts of fiscal risk. This, in turn, is the real blow for any hopes of comprehensive or impactful poverty reduction.
Using sub-Saharan Africa as a case study, Geoff Handley explains:
Market fragmentation – inadequate institutional and infrastructural linkages (e.g. railway, roads, landline and mobile
telecommunications) between local, national and international markets – means that markets are poorly integrated,
over both time and space. This not only affects physical markets but reduces producers’ and traders’ access to
information that signals price changes, which limits their ability to change their patterns of production and
trade to avoid economic shocks.
My partner and I have established that, aside from the reality that it has increased economic growth, globalization
had placed a limit on both income gains and the potential for income gains. On the other side of the coin, we can see
that globalization has also increased opportunities for income losses, for companies and individuals alike. Poor
nations and the companies to which they are host have spent decades seizing on trade liberalization as a means to
increase market share and create viable consumer markets. However, without the adequate infrastructure to do so,
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Con Contentions
developing nations are left at a disadvantage compared to developed ones. This winds up contributing further to the
prior points my partner and I have made: lower incomes, fewer opportunities.
The major impact of globalization, then, is the creation of economic well. While globalization has repressed income
and opportunity growth, it is also the fundamental economic force of the modern era. This has led the developing
world to seize on it, thus opening itself up to excess risk, which throttles the consistency of economic growth and
poverty reduction initiatives. Poverty is often described as cyclical; globalization has been a factor which,
worldwide, has helped perpetuate the cycle on a national and individual basis.
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