ISSUE46: JUNE-AUGUST 2007
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New study highlights risks of globalization for world's poor
There are both winners and losers in globalization, says a new study from UNU World Institute for Development Economics Research (UNU-WIDER). While globalization offers new opportunities for accelerating development and poverty reduction, it also poses new challenges for policy makers, warns the study, The Impact of Globalization on the World's Poor, released in New York May 16.
The study, co-authored by professors Machiko Nissanke of the University of London and Erik Thorbecke of Cornell University, points out that the risks and costs brought about by globalization can be significant for fragile developing economies and the world's poor.
The downside of globalization is most vividly epitomized at times of global financial and economic crises. The costs of the repeated crises associated with economic and financial globalization appear to have been borne overwhelmingly by the developing world, and often disproportionately so by the poor who are the most vulnerable, the study notes.
On the other hand, benefits from globalization in booming times are not necessarily shared widely and equally in the global community. The investigation of global value chains – horticulture, garments and textiles – in Bangladesh, Kenya, South Africa and Vietnam provides evidence on the impact of globalization on employment and economic opportunities for poor people.
According to the study, this analysis makes a clear conceptual distinction between "non-globalize" and "unsuccessful globalize" countries. Kenya is categorized as an unsuccessful globalize, while Vietnam is considered to have been successful in integrating into the world economy in terms of outcome though remaining relatively closed in terms of policy.
Further, the impact of increased exports on
employment has been much more significant in Bangladesh and Vietnam, where
unskilled labour-intensive industries accounted for 90 percent and 60
percent of manufactured exports in the late 1990s, respectively, than in
Kenya and South Africa, where the corresponding figures were 16 percent
and 10 percent, respectively.
In these two African countries, the study says, skilled workers benefited
from globalization while unskilled workers were adversely affected.
"The bottom line is that globalization has been a qualified success," said Thorbecke, the H.E. Babcock Professor of Economics, Emeritus, and former director of the Programme on Comparative Economic Development at Cornell University in the United States.
At the same time, said the study, it is easy to blame the globalization process for domestic institutional failures that could at least partially be remedied through an attack on corruption and insisting on greater accountability by domestic institutions.
© 2007 United Nations University