Globalization: is the current model working?

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Poverty is not just a phenomenon reserved to developing countries, in fact 16.4% (80 million people) of European population live below the poverty threshold. [1]

Economic globalization consists on the creation of a world market where tariff barriers are suppressed and capitals moves freely however what it has really achieved is a segmented market divided by regions, that prevent countries to achieve a goal of real integration as a consequence of different factors.

Globalization has no reported big benefits for developing countries and few for developed ones on relation to poverty reduction and economic growth. That “market liberalization leads to poverty reduction” is not correct or at least, not enough. It has not addressed significant changes to specific parts of the world, in fact they have worsen their conditions or just keep them in an stagnation state that only the work of humanitarian and foreign aid has  changed. It is important to mention that South-South and triangular cooperation is making the difference, but its success cannot be associated with a globalization system.

Inequality is the main concern that emergent and advanced economies are being suffering since 1990, paradoxically it have risen in countries where poverty has been reduced on line with MDG´s. There has been a reduction of extreme poverty from 47% to 22% in 2010. Despite all efforts there is still 1200 million people in the world that live with less than US$ 1,25 a day, a general concept of measure that only apply to developing countries without analyzing their economic context.[2] The reasons of this reduction depend in other factors than a globalization impact: the data come from two main countries: India and China (51% to 22% and 65% to 4% respectively) but the rest of poor countries in the world remain almost the same. In addition this two countries and Brazil, still concentrated the highest rate of poor population in the world. Currently are less poor but more vulnerable as the income inequality creates other categories of population on poverty risk.[3]

Clearly economic growth is not enough to eradicate poverty. The best example to illustrate this situation is Sub-Saharan African that have experimented important economic growth, but totally ineffective on relationship with poverty reduction. The elasticity of poverty in relation with income is nearly 1/3 in this region.

Economic growth and poverty reduction only works if it is focalized directly on the benefit of vulnerable sectors and population as we see in pro poor policies, that includes investment on open economic opportunities, strengths rights and promotes participation of woman in politics, as well as access to services, education and health [4]

The impact of globalization among developed countries has been substantially different, reshaping the international trade market and financial map particularly after the global financial crisis. Consequently the impact of debt, under corruption and wrong political decisions biases the road for a successful and effective economic growth.

In addition, new forms of exploitation of natural resources and fewer market and legal barriers create a negative impact on climate change contributing to more contamination especially in countries with lax law regulations.

In a context where national public policies should be more independent to face big challenges as unemployment, debt and inequality is it when it become more linked to foreign countries, in an unhealthy relationship of dependence under an important politic pressure and strong interference on its political-economic decisions, that make wonder if is real profitable to resign part of sovereignty on the sake of a globalized world.

Experts get to the paradoxical conclusion that after the financial crisis and despite being integrated to the euro zone, high financial dependence with the rest of the world makes Spanish economy one of the most vulnerable industrialized countries.

How far have we gone on efforts to globalize the market? However, how few efforts to share same conditions of labor market, trade, capital flow, employment opportunities, access to top technology or education equality. A globalize world suppose the total interaction among countries, sharing the same profits and losses.

Although there is no question about the benefits of international trade and free market it cannot be associated as a tool for poverty reduction.

Is this current economic model working? or are we facing new challenges that are forcing as to move beyond and take action in a more local perspective relying more on mechanisms like South-South and triangular cooperation and not get align with old schemes of financial support, centralized in a few international organisms.

We must move forward by changing the old model and adopt new codes of conduct on international behavior market to fulfill expectations of growth and prosperity to developed and developing countries.

In developed countries globalization have mainly done a change on consumption behavior but that nothing towards an important global reduction of poverty and economy growth, on the contrary it contributes to create more inequality and a general sense of lack of safety particularly on the labor market, scarcity of positions and proliferation of short term contracts with less labor guarantees.

We need to reshape  current model of globalization by creating new regulation and inclusive financial and labor policies as well to accompanied this changes by accountability and control from national and international organisms, focusing on national development growth and horizontal and triangular cooperation.

[1] http://bit.ly/1wCW6z5

[2] http://bit.ly/1aEBn4D

[3] http://bit.ly/1rT8jLj

[4] http://bit.ly/1IoKvu0

[5] http://bit.ly/1ziuwmJ

 

 

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4 thoughts on “Globalization: is the current model working?

  1. Globalization in it generic term is fraught with inequalities because of diverse national resource endowment, differential human capital capabilities among others…….Thank you so much for such a critical question and I wish well-suited approach to the quest for globalization becomes our priority

    Liked by 1 person

    1. Thanks so much for your valued contribution.
      I absolutely agree of seeing inequalities at the center of the inefficiencies of globalization, that´s the reason why we need to look for solutions that helps keep the balance, particularly among developed-developing countries and after the recent financial global crisis among developed-developed countries.
      It´s important to highlight that I am not align to an anti-globalization position, but to the idea of reshaping a new globalization model based on lessons learned and adapted to the new challenges.
      Regards,
      M.

      Like

  2. Though globalization has brought in efficiencies in the economies of some developing countries it has also impacted many economies especially local (within those economies) negatively because of inequalities due to diverse technology adoption, natural resource endowment and human capital capabilities. Without being anti globalization we can very well address the issue of alignment of “local” with “global” with local specific models. And also let us assume that globalization is solution for the ills of less developed/developing countries. Is it not that developed countries are in need of globalization (to expand their markets) than less developed/developing countries.

    Liked by 1 person

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