More, not less, economic integration is good for the world, according to a worldwide poll, conducted
by the Pew Global Attitude Survey. David Dollar, Director of Developmental Policy at the World Bank,
cites findings from the survey to support the argument he has made in the past that globalization
indeed helps reduce poverty and inequality. He points to a significant decrease in the number of the
world’s extreme poor since 1980. But globalization has also been received with great distrust,
particularly among anti-globalization activists who argue that global economic integration favors the
already wealthy while hurting the poor from developing nations. Contradicting the anti-globalization
movement’s claims, Dollar says that most “striking in the survey is that views of globalization are
distinctly more positive in low-income countries than in rich ones.” For example, in Sub-Saharan
Africa 75% of households thought that multinational corporations had a positive influence on their
country, compared to only 54% in rich countries. Of the 38,000 people in 44 nations surveyed, those in
the developing world generally blamed their local governments, not globalization, for their country’s
ills. There is, however, no ground for complacency. With 1.2 billion people still living below the
poverty line, Dollar says , the world needs more “international and national actions – including
enhanced market access for developing countries, improved investment climates, and effective
delivery of health and education.” – YaleGlobal
The Poor Like Globalization
But institutions and policies are needed to deliver the hoped for results
David Dollar
YaleGlobal, 23 June 2003
WASHINGTON: A recent worldwide poll may have
come as a shock to those who view the antiglobalization demonstrations as emblematic of a
general souring mood about global economic
integration. The Pew survey found that not only was the
attitude generally positive but there was more
enthusiasm for foreign trade and investment in
developing countries than in rich ones.
A close look at the economies of those countries shows
why: the fast-growing economies in the world in this
era of globalization are developing countries that are
aggressively integrating with the world economy.
However, the survey also found common anxieties
around the world that protesters often highlight but a
The world is welcome to a market in Beijing: Chinese
customs move goods faster than India, Pakistan or
majority of the polled did not blame economic
Bangladesh. (Photo: Nayan Chanda.)
integration for it. It is increasingly clear that while this
integration brings benefits, it also requires complementary institutions and policies in order to enhance the
gains and cushion some of the risks of greater openness.
The Pew Center for the People and the Press surveyed
38,000 people in 44 nations, with excellent coverage of
the developing world in all regions. In general, there is a
positive view of growing economic integration
worldwide. But what was striking in the survey is that
views of globalization are distinctly more positive in lowincome countries than in rich ones.
While most people worldwide viewed growing global
trade and business ties as good for their country, only
28% of people in the U.S. and Western Europe thought
that such integration was "very good." In Vietnam and
Uganda, in contrast, the figures for "very good" stood at Chart 1. Source: The Pew Global Attitudes Project Enlarged
image
56% and 64%, respectively. Although these countries
were particularly pro-globalization, developing Asia (37%) and Sub-Saharan Africa (56%) were far more
likely to find integration "very good," than industrialized countries. Conversely, a significant minority (27%
of households) in rich countries thought that "globalization has a bad effect on my country," compared to
negligible numbers of households with that view in
developing Asia (9%) or Sub-Saharan Africa (10%).
Developing nations also had a more positive view of the
institutions of globalization. In Sub-Saharan Africa 75%
of households thought that multinational corporations
had a positive influence on their country, compared to
only 54% in rich countries. Views of the effects of the
WTO, World Bank, and IMF on their country were nearly
as positive in Africa (72%). On the other hand, only 28%
of respondents in Africa thought that anti-globalization
protestors had a positive effect on their country.
Protesters were viewed more positively in the U.S. and
West Europe (35%).
Chart 2. Source: The Pew Global Attitudes Project Enlarged
This Pew attitudes survey is consistent with the findings image
from World Bank and other research on globalization. In
general, the developing countries that have increased
their participation in trade and attracted foreign
investment have accelerated growth and reduced
poverty. Uganda and Vietnam are two of the best
examples, so it is not surprising that integration is
viewed positively there. More generally, globalizing
developing countries are growing significantly faster
than rich ones. In a paper for the World Bank , "Trade,
Growth, and Poverty," Aart Kraay and I define the top
third of developing countries in terms of trade
integration as the "more globalized" countries. This
Chart 3. Source: The World Bank Enlarged image
group has seen an acceleration of its per capita growth
rate, reaching a population-weighted average of 5% annually in the 1990s. By contrast, rich countries grew at
2%, and the rest of the developing world, at - 1%. Over 3 billion people are included, for Bangladesh China,
India, Brazil, and Mexico are part of this category.
The anti-globalization movement often claims that integration leads to
growing inequality within countries, with no benefits going to the poor.
Generally, this is not true. There are certainly some countries in which
inequality has risen, like China and the U.S., but there is no worldwide
trend. Most important, in the developing countries that are growing well
as a result of integration and other reforms, rapid growth translates into
rapid poverty reduction. The total number of extreme poor (living on less
than $1 per day measured at purchasing power parity) increased
throughout history up to about 1980. Since 1980 that number declined by
200 million, while world population increased by 1.8 billion. The progress is heartening, but there are still 1.2
billion people living in poverty
Notwithstanding the positive views of globalization in the developing world, the survey shows that there are
common anxieties around the world concerning the availability of good jobs, job insecurity, old age support,
and other quality of life issues. Interestingly, people tend not to blame globalization for lack of progress in
these areas, but rather poor governance in their own countries. World Bank research shows that openness to
trade alone is not going to have much impact if that openness is not complemented by other factors like a
sound investment climate - meaning the environment of regulation, infrastructure, and financial services and effective provision of basic services, especially for the poor.
Reforming the investment climate is thus a front-burner priority in many locations. A major new initiative at
the World Bank consists of helping countries carry out systematic surveys of firms in order to measure the
investment climate, relate it to investment and productivity at the firm level, and identify priority areas for
reform.
Investment climate surveys have been completed recently in Bangladesh,
China, India, and Pakistan. The surveys covered firms in tradable sectors
such as garments, textiles, electronics, pharmaceuticals, etc. The surveyed
firms had an average of 75 workers. For such firms, weaknesses in
governance and infrastructure services are among the main problems that
hold back productivity and growth. For example, reliability on power
supply is a big issue in all of the South Asian countries. In our China
sample, firms estimate losing 2% of sales to power outages, compared to 3.3% in Bangladesh and 5.4% in
Pakistan.
On many of these regulatory and infrastructure issues, China looks quite
good compared to other developing countries. For example, how long does
it take a firm to get its last shipment of materials through customs. Firms
in garments and electronics that are trying to compete on the world
market typically import materials on a regular basis, making customs
efficiency very important. Firms in China were able to get their most
recent shipment of imported materials through customs in 7 days,
compared to 11 days in India, 12 in Bangladesh, and 17 in Pakistan. Such
delays result in firms having to hold higher inventories and are therefore less reliable suppliers on the
international market. Another good investment climate indicator is how many days it takes to get a telephone
line The wait varies from 16 days in China, to 42 in Pakistan, to a whopping 130 days in Bangladesh. Though
not the only factor, good investment climate has allowed countries to benefit greatly from globalization,
creating jobs and rapidly reducing poverty.
In summary, globalization can support poverty reduction, but it requires
international and national actions - including enhanced market access for
developing countries, improved investment climates, and effective
delivery of health and education.
David Dollar is Director of Development Policy, World Bank. The views
expressed are those of the author and do not necessarily represent
official views of the World Bank or its member countries.
Rights:
YaleGlobal Online © 2003 Yale Center for the Study of Globalization
Accessed on line at: http://yaleglobal.yale.edu/display.article?id=1934&page=1, on 20-10-2003.