Globalization and Poverty

The increasing interdependence of world economies affects the standards of living greatly, but it can affect it positively. The standard of living is a measure of access people have to goods and services across the world. Quality of life is the conditions in peoples lives which is perspective. This paper will explain the importance of globalization in the developing world and how it can lead to open markets, taking millions out of extreme poverty and overall improving the standard of living across the world.

This is a greater concern in world as sectors such as Africa, where poverty has roughly doubled in recent years. Consequently, many of the extreme poverty rates where based on a $1.25 purchasing power a day cut off. If this number is adjusted in 2005 to just $2.00 a day the rate of people living in extreme poverty jumps to 51% (David Moss, 2011). These numbers show that billions of people are unable provide themselves with basics like food, clothing, or shelter. This is a serious problem as these are people who have potential are being left in poverty that kills. At the very least income inequality leaves people with basic necessities with a chance to

Globalization over the past twenty has become an issue in many countries. This industrialization of second and third world countries by Western Civilization creates many opportunities for the inhabitants. Not only does it expand trading markets, but also promotes productivity and efficiency; thus improving the country and integrating it into the industrial world. This process not only benefits third world counties, but also industrialized nations by allowing them to export goods to the developing world and increase their profit margin.

The market is a place where buyers and sellers can interact with one another to exchange goods and services. Markets facilitate trade between the consumer and producer to perform transactions free from government involvement, laissez-faire. In this case the market would be considered a free-market, the government would not intervene through use of taxes, price ceilings and more, unless the situation is dire. There are a variety of market types, there are physical consumer markets, physical business markets, virtual markets and financial markets. As of a study conducted by the SBA (The Small Business Administration), small businesses make up 99.7% of the

Their research finds that in 1820, only a small, exclusive amount of people lived comfortably while the majority lived in conditions similar to extreme poverty–or on less than $1

“220 million people in the region have neither been able to rise into middle class, nor are classified as poor. These are the vulnerable women and men in the region, living on slightly above a US$4/day poverty line but risk falling into poverty as soon as a financial crisis or natural disaster

The world is awash in cash – US companies alone have US$2 trillion stashed in cash and the amount of cash in the G4 economies of the United States, the euro zone, Japan and Britain has expanded five-fold since 2008. The reason, lack of investment opportunities and low returns in all asset classes. Yet, an estimated 4.5 billion people at the base of the pyramid are underserved in healthcare, education, sanitation, financial services, technology, transportation etc. Businesses aimed at serving this segment of the population would create significant social impact and may also get many of the sluggish economies moving again as many pockets at the base of the pyramid remain outside the economic system and with little hope of joining the ranks of global consumers.

Some of the advantages of globalization are growth in the economy and a decrease in poverty. Globalization according to P. Mourdoukoutas (2011) “businesses to communicate efficiently and effectively with their partners, suppliers, and customers and manage better their supplies, inventories, and distribution network”.

In one article, it is stated that nobody in the "developed world" even comes close to the "poverty level," with a poverty line of $63 a day for a "family of 4 (The Economist, 2013)." Some contributing factors to the extreme levels of poverty can be attributed to not only a lack of education, but health care, clothes, food and shelter (The Economist, 2013). Developed countries tend to take these simple necessities for granted, as well as tending to forget or ignore the needs of developing countries (The Economist, 2013). While the measures the world has gone to in order to reduce poverty is impressive,

Almost half of the world lives on less than $2.50 a day. The very poor suffer from lack of access to safe food and water, basic education, and medicine. For many of the world’s countries, poverty is prevalent. While almost half of the world lives in poverty, the rich continue to get richer. In 2005, the poorer 10% only accounted for 0.5% of the world’s share of private consumption, while the richest 10% accounted for 59% of consumption (Shah 1-4). There is an increasing inequality gap. The world has enough resources to feed and shelter the poor but people in the North consume so much. The rich benefit from this inequality while the poor suffer.

There are several types of poverty, the most appalling form of poverty is absolute poverty; this type of poverty can be defined as the inability to secure the basic necessities for physical survival (Richmond and Saloojee, 2005, p.35).This is usually measured by comparing income to expenses used to buy goods and services. Organizations usually define absolute poverty in terms of people who live on less than $1.25 a day, international organizations such as the World Bank use these types of monetary figures to measure poverty (Murray, 2011, p.245). Other organizations and economists, politicians and humanitarians think that living on less than two dollars a day is the indicator for living in poverty. It is believed that one billion people live on less than one dollar a day and that three billion people live off of less than two dollars a day (Seabrook, 2007, p.47). Regardless of the amount that is considered to be living in poverty most organizations have this perspective that poverty is about

Unfortunately, it was estimated that roughly 1.2 billion people in 1993 lived in extreme or absolute poverty, that which Robert McNamara regards “‘a condition of life so characterized by malnutrition, illiteracy, disease, squalid surroundings, high infant mortality and low life expectancy as to be beneath any reasonable standard of human dignity’” (Singer 219, 220). These estimates can be projected at nearly 2 billion today. A large majority of the people living in absolute poverty resides in underdeveloped countries. Among the nearly 4.4 billion people in these countries, “3/5 lives in societies lacking basic sanitation; 1/3 go without safe drinking water; 1/4 lack adequate housing; 1/5 are undernourished, and 1.3 billion live on less than $1 a day” (Speth 1).

“Globalization increases poverty” is a typical statement created by critics of globalization. In the past century, a substantial number of developing countries have struggled with economic growth. Globalization plays an essential role in the economy as it assists in elevating the GDP of the country in questions and consequently leading to the diminished poverty level. This research seeks to address the following fundamental concepts/ questions: what impact does globalization has in developing countries in matters pertaining poverty reduction? The paper's structure is as follows. The first section outlines the definition of globalization. The second section evaluates technological advancement through reduction of poverty on globalization. The third section explains the essential meaning of trade liberalization and the influence on development in Periphery countries. The fourth section presents foreign direct investment linkage in globalization and poverty. The fifth section explores the processes of development motives. The sixth section presents a case study that is primarily connected to globalization impact on developing countries. Lastly, the seventh section explains the impact of globalization on economic policy on developing economies.

The most common measure of poverty in the U.S is the “poverty threshold” set by the U.S government. Almost half of the world over three billion people live on less than $2.50 a day. The poorest people will have less access to health, education, and other services; such as: problems of

With that said, the United States Census Bureau published the official poverty level report of 2014 in which 46.7 million people are living below quality standard. This alarming fact of recorded data, has the number of poor people or people living in poverty ranked as one of the largest since the start of publishing poverty statistics. In 2014 the poverty rate was 14.8%, which was down from 15.1% recorded in 2010. Household cash income for families was “less than half of the poverty line, or about $10,000 a year for a family of four” (World Hunger Education Service, 2016). It represented 6.6% of all people and 44.6% of those in poverty.