There’s a lot that’s wrong with globalisation. For instance, there’s the pressure that rich countries are putting on poor countries to abandon ‘trade distorting’ food security measures while they hypocritically throw much larger amounts of money at their own farmers.

However, there’s some broader context to consider here, which is that as the world economy has globalised, poverty has plummeted.

According to a thought-provoking article by James Rogers for First Things, poor countries have been getting richer despite the growth of their populations:

“…the World Bank noted that the reduction in extreme poverty occurred from 1981 to 2010 despite a significant increase in population over the same time period: ‘The number of people living on less than $1.25 per day has decreased dramatically in the past three decades, from half the citizens in the developing world in 1981 to 21 percent in 2010, despite a 59 percent increase in the developing world population.’ The numbers represented by the percentages are staggering, with the World Bank reporting that over 700 million people moved out of extreme poverty during this period.”

Clearly, we need to rethink our simplistic assumptions and seek a deeper understanding of what’s been going on:

“There may be less agreement on the causes of the transformation than the fact of the transformation. Most observers would likely concede that the decline in extreme poverty results from a combination of factors. But there remains disagreement over what is the main cause, or set of causes, of the decline.”

The growth of trade is surely one such factor. But while we in the West agonise about the terms of trade between rich and poor countries, we ought to remember that it’s not all about us:

“The movement of capital, people, and goods around the globe has increased dramatically over these decades. But trade occurs not only between developed and developing nations, and underreported story has been the remarkable increase in trade among developing countries themselves. The UN report observed that trade among developing countries constituted less than 10 percent of global trade in 1980, yet now constitutes over 25 percent of global trade.”

James Rogers reminds us of something else that can be easily overlooked – which is that for a developing country the most important thing about trade with the West is not the direct value of the trade itself, but the catalysing effect it might have on the development of the domestic economy:

“A related hypothesis also posits that markets are a causal driver for the reduction in poverty, but this hypothesis focuses on the development of internal markets in developing countries rather than focusing on development of international markets. The hypotheses are not in conflict, of course; both causes can contribute to the gains made among the world’s poor.

Indeed, one cause is linked to the other. By participating in international markets, developing countries gain experience and knowledge that they can apply domestically. However, this makes it all the more important that trade between the West and the developing world is both free and fair. For instance, if we only open our markets to the import of raw materials, then this will distort the development of the countries we trade with. Equally, if Western businesses connive in bribery and corruption, then this will help to spread and embed practices that might otherwise be rooted out.

Ultimately, each developing nation has to make its own decisions. However, it will do so not only with its own resources, but also with what it learns from global trade. For our part, we can decide whether we show them the best that Western capitalism has to offer or the worst.

10 comments for: Whatever the flaws of globalisation, let’s not forget that global poverty is falling fast

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