Economic globalization benefits worldwide poverty reduction
By Hao Fan
02/20/2016

Globalization, the integration of economic networks that span multiple countries, influenced people in many aspects. If you go to a supermarket and able to buy French wines African coffee beans as well as Germany sausages, you are enjoying the convenience of globalization. According to Reem Heakal who wrote What Is International Trade?, he said “International trade allows us to expand our markets for both goods and services that otherwise may not have been available to us. It is the reason why you can pick between a Japanese, German or American car. As a result of international trade, the market contains greater competition and therefore more competitive prices, which brings a cheaper product home to the consumer.” As it does more than this, the economic globalization largely benefits the world wide poverty reduction.
The first reason that globalization helps reduce poverty is based on one of the most essential economics concept-comparative advantage. Basically it means when countries are trading with others, they are allowed to specialize in the areas they good at and therefore allocate the resources more efficiently which will result in more benefits for every party involved in trades. Take China and United States as an example, given that china has relatively low cost of labor and the US is more sophisticated at advanced technology, it is natural or beneficial for Apple company to choose design and programming the Iphone in US however let Foxconn, a Chinese electronics contract manufacturing company, to produce it. And when China sold its labor and the US sold its intelligence, everyone gets better-off through this trade, since it will cost much more for both party to produce the opposite product.

This benefits the poor because multinational companies could directly invest into third world countries and bring in capital and increasing tax revenue. And this view is well-supported by evidences. By a research conducted by David Dollar and Aart Kraay -the managers of World Bank developing department , focusing on the experiences of developing countries that have seen large increases in trade over the past twenty years, it shows that those countries experienced a major increase in overall GDP due to the international trades.

In addition, economic globalization brings third world countries new technology, human capital development and integration. All these factors help reduce poverty. They allow countries to develop and increase living standards through the resources they make from international trade. Taking China as an example, it shows better living standards , improvement in technology, productivity, and economic environment as soon as Beijing decided to open its market to all over the world. And by the year of 2010, the Chinese government claims the whole population of china is out of extreme poverty and that is roughly 1.3 billion people. More than that, China has developed from once one of the least developed country in the world to the second largest economy in the world, having a significant position over the global society. So the globalization could really help the countries to develop better.

Last but not the least, the economic globalization creates more jobs for the poor. A very notable trend during globalization is that multinational corporations start to build factories in all over the world especially in developing counties. Nevertheless, Globalization critics often uses sweatshops as a major example of downside of the economic globalization. They accuse that these factories built by big companies only offer the minimum wage and most basic workplace facilities. However, the truth is, workers at so-called sweatshops normally own higher salaries than the national average. A research conducted by Benjamin W. Powell and David B. Skarbek which focused on the heavily­criticized clothing industry in several countries confirms this point. It shows that multinational firms tend to pay their workers more than domestic firms in the developing countries and workers are much better-off than most of people in their countries. That is to say, contrary to what people normally think, sweatshops offer, as Kristof Nicholas wrote on New York Times, an improvement over subsistence farming and other back-breaking tasks, or even prostitution, trash picking, or starvation by unemployment. Admittedly, overall standards of living conditions in developing countries where sweatshops are built do need to be improved. Opposing sweatshops, yet, is never a solution to this problem. By giving poor people jobs that pay better is, globalization which create all the sweatshops undoubtedly helps the third world countries to fight with poverty.

Acknowledgedly , globalization alone could never solve the poverty since it is a intricate problem that not only economics factor involves. Several factors interact and influence the poor. So, it requires efforts from different groups to solve it. Global society should demand countries to adapt laws to protect basic human rights; economists should work on more accurate models to describe global economy; political scientists should study on better philosophy to distribute the wealth. And more importantly, everyone should care about the poor, pay enough attention to it and take really actions like donating and taking volunteer jobs or more basic but equally matter one-supporting international trade.

From what have discussed above, we may reasonably conclude that economic globalization though could not end the poverty alone, largely benefits the poverty reduction by assisting economic growth, creating jobs and bringing new technology.