JAN DENVER AGUSTIN

~How is it related to globalization? How does it lead or yield to poverty?

Globalization promotes the standardization of national and international trade with little
to no restrictions and regulations between different countries. On the other hand, poverty is a
social phenomenon that is experienced on a global level, especially by developing countries – a
global challenge that is mainly reflected by a country’s economical state. In correlation,
globalization is mainly considered as a major driving factor of a country’s economy and therefore
can be viewed as an indirect factor to poverty in a country. According to one research conducted
by A. Harrison in 2006, studies that are conducted in India and Colombia have suggested that the
absence of trade reforms that are needed to be implemented and the unreduced constraints to
the progress and movement of labor are some of the obstacles that are likely to limit
globalization’s benefit for the poor.
The rising inequality in income distribution is indeed associated to globalization and has
been suggested by many researches, moreover, the gains from trade are not always part of the
poor’s share. (Harrison, 2006). While the big players in the economic aspect of globalization are
benefited by it, the countries that reside within the lower bracket of the trading ranks are badly
affected by unequal distribution of income and tax. The rich become richer and the poor become
poorer is quite a precise analogy as the economy slowly leans towards the idea of capitalism.
According to Milanovic and Squire as cited in Harrison, 2006, the increasing openness and lack of
regulations to trade in countries is greatly associated with the rising inequality in poor countries.
As cited in H.L. Rahim et.al, the United Nations (2005) released a statement that though
a definite number of countries in different parts of the world have experienced unprecedented
growth and improvement in living standards in recent years, poverty remains unshakable and
much of the world is trapped in an inequality situation. In J. Heinze’s “The Impact of Globalization
on Poverty and Inequality in The Global South” in 2020, she stated that Globalization has
promoted neoliberalism that created a circumstance where while the poor benefits, the rich still
get richer and the gap between them is not really necessarily becoming smaller. If looked upon
more generally, while other countries are reducing poverty at certain levels, the other countries,
especially the developing ones are still left behind. In the whole process of the global economic
integration, these countries are not often positioned as equal participants.

References
Harrison, A. (2006). Globalization and Poverty. Retrieved from NBER:
http://www.nber.org/papers/w12347
Rahim, H. L., Abidin, Z. Z., Ping, S. D., Alias, M. K., & Muhamad, A. I. (2014). Globalization and its
Effect on World Poverty and Inequality. Global Journal of Management and Business, 1 (2), 8-13.
Retrieved from https://repository.upenn.edu/bepp_papers/70