Globalization and Poverty

Globalization and Poverty

For many years, globalization has been embraced by many developed as well as developing countries. This has been largely due to the fact that globalization has been viewed as a historically transformational process that has seen the integration of the world markets, economies, technology among other aspects. The issue as to whether globalization has had an overall positive impact on people’s lives in the developing countries especially those with poor economies has been a field of debate. Poverty has been used as a major indicator in trying to establish the effect of globalization in developing countries. While some developing countries have reaped the positive fruits of globalization, some have seen it as a contributory factor to the increase in poverty levels among people in such countries. Poverty indices from the Federation of St. Kitts in the Caribbean islands supports the argument that globalization can indeed increase poverty.

There are several reasons as to why globalization can cause poverty in developing countries; key among these is the fact that it brings unfair competition from big and well established blue chip multinational companies as they try to establish their businesses in the developing countries. For a country with a small population like St. Kitts, the effect of this competition can be far reaching since these multinationals possess most of the assets hence dominating the market while pushing the domestic companies out of business. This will make the local citizens poor since the major share of their economic activities is controlled by foreigners. In the case of St. Kitts whose economy is controlled by only a few sectors, this has overburdening of the very few economically viable activities available for locals hence majority remaining poor.

Due to the downward pressure on government spending for redistribution and welfare and owing to the fact that governments in underdeveloped countries do not have enough money, less money is spend on the welfare of citizens hence further increasing the poverty index of the country as a whole. This has further been fueled by the fact that international organizations such as the IMF and World Bank usually impose strict guidelines on government so as to reduce on spending, selective social services and private control. These factors put together have led to the increase in poverty levels in St. Kitts Island.

As a result of globalization, there is a widening gap between the rich and the poor in underdeveloped countries. In St.Kitts, there is low level of education and with increasing demand for highly skilled labor in the world market; the few skilled laborers have moved to seek greener pastures in other countries leaving the majority unskilled population unemployed. This has further widened the gap between the rich and the poor which is a major drawback to poverty reduction efforts. Further due to globalization, there has been increased trade between the state and the developed countries; this has phased out local commodities from the market which has in turn left the country with no alternative but top rely on borrowing from the international money lending institutions. Over reliance on foreign borrowing has further deteriorated the economy and hence increasing the poverty levels in this Caribbean state. While it may be tricky to directly attribute poverty increase to globalization, many studies have indicated that the challenges in implementing poverty reduction programs have been associated with globalization.

c