The Impact of Globalization on Poverty Reduction
Also, differences in political and economic institutions help us to comprehend poverty patterns through the lack of political transformation in middle-class economies, financial aid inefficiency, structural deficiencies and a lack of institutional reforms. Question One Globalization is promoting greater inequality at the global level. The increase in accessibility of markets at the international level has not reduced the gap between the poor and the rich in the world. Firstly, the countries which feature in the bottom billion do not profit much from globalization because of the dominance of the larger economies in the world market. For example, in Africa, countries which fall under the bottom billion have limited capital for investment in the trade industry. Despite an increase in trade through flexible trade policies, there is still limited economic development registered.
Although the rich countries trade with many countries in Africa, the productivity of African countries remains far from reaching the potential level (Crafts). Thirdly, despite the increase in the number of convergence clubs around the globe, the state of economic inequality persists. The formation of convergence clubs continues to increase the gap between the underprivileged countries who do not form part of the convergence clubs and those which have a membership in the clubs. The convergence clubs create an opportunity for financial growth and development through improved global transport and the openness of trade. The high costs of trading in the international front created economic inequality among nations since the high costs of trade made local traders recoil from globalization in trade. Consequently, only the rich and affluent countries in the west which had colonies could manage international trade through trade companies within colonies.
Fifthly, the decline in human capital in developing countries continues to create a problem of economic inequality in the world. With the current trends in globalization causing mass migration across countries, people seem to look for more job opportunities offering better remuneration and good working environments. For example, in Somalia, the more the environment seems hostile, the more educated people will leave the country to go to countries which offer better promise. Consequently, most of the foreign aid and tax revenues do not help in reducing poverty because the use of the money does not favor economic growth through the proper implementation of economically sound projects. Secondly, the question about the future of economic aid for countries creates a platform for discussing the patterns of poverty in the contemporary society. The goal set for the donation of aids seems to be the reduction in poverty levels.
Unfortunately, the donation of financial aid to many countries continues to compound the poverty problem because of the misuse of financial aid by political and economic institutions in recipient nations. Some of the donors who contribute financial aid encourage poverty reduction through financial aid instead of changes in the society; which would be a long-lasting solution for the menace of poverty. Fourthly, countries found within the bracket of developing countries would do well to consider taking a move to make the necessary reforms in various institutions such as financial and political institutions. The reason for many cases of poverty includes bad governance and poor policies which leave the country exposed to stunted economic growth patterns. It often takes the character of a few people within the nation to go against the train of routine and establish changes to benefit the interests of the greater public and not the interests of a small click of individuals.
For example, it took the courage of Charles Soludo to reform the banking industry to ensure that rent seeking was no longer happening. Although many rent seekers colluded to remove Charles from his position as a reformer in the industry, they failed in removing him from power because the man had intelligence and tact. The World Economy, vol 27, no. pp. Wiley, doi:10. j. x.
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