Taking an Easier Path: Globalization and Government Intervention Essay Example

struggle to compete globally due to trade barriers like transportation costs and brand name effects. Therefore, they are unable to enjoy the benefits of free trade.

Globalization poses challenges to local markets as they face competition from multinational corporations. Moreover, in less affluent countries, prices of goods are anticipated to rise at a faster rate compared to developed nations due to a higher percentage of GDP being generated by the latter. Consequently, this increase in prices adversely affects unskilled and illiterate workers whose wages lag behind, resulting in a decline in their effective purchasing power. Conversely, globalization results in elevated wages for skilled workers owing to an augmented demand for their particular expertise and abilities. As a consequence, income inequality expands.

Although there are negative consequences associated with increasing globalization and trade liberalization, it is crucial to consider the long-term benefits as well. The global integration of commodities, technology, and economies has resulted in significant growth in impoverished nations. This period of globalization has been widely acclaimed as a golden age for development. During the 20th century, there was an unprecedented surge in economic growth, leading to a nearly fivefold increase in global per capita GDP. This rapid economic expansion serves as compelling evidence for the positive impact of globalization on a worldwide level. In fact, between 1981 and 2001, China, India, and Indonesia experienced a substantial decline in the proportion of rural individuals living below $1 per day.

Although there is a significant level of inequality, the given data shows an overall improvement in everyone's economic position. It is undeniable that globalization generally leads to lower poverty rates as interconnected economies experience faster growth, benefiting a wide

range of individuals (World Bank, 2002). It should be noted that not all issues mentioned in the previous paragraph, such as declining wages, are permanent or irreversible. In particular, underdeveloped nations struggle to compete on the global market due to barriers to free trade imposed by developed nations who aim to protect their own economy through measures like tariffs and subsidies that should not exist.

The issue of the US agricultural business causing harm to small farmers in Mexico is not a problem resulting from globalization, but rather from incomplete globalization. The farm subsidies and tariffs in the United States and Canada, which will become even more significant under the new US farm policy, play a large role in Mexico's problem. This is distinct from globalization (Bardhan, 2006a).

In relation to wages falling behind rising prices, it is a temporary period of hardship that occurs during the transition. However, the long-term benefits of increasing global trade will eventually catch up (Basu, 2006).

While it may seem harsh to suggest that the short-term issues mentioned earlier are less significant due to our awareness of the favorable long-term outcome of globalization in terms of poverty reduction and overall improvement in living standards, unfortunately, a phase of temporary suffering is inevitable.

However, it is evident that this is not sufficient. Despite the potential benefits, governments must consider the immediate difficulties in order to create government interventions that protect the poorest individuals during times of change (Basu, 2006). It is crucial to combine the liberalized global trade market with effective government policies to safeguard those living in poverty during transitions. Additionally, governments should strive to catch up with infrastructure development and regulations to

shorten these transition periods. To accelerate the progress of poor countries, several measures can be implemented, such as stabilizing the economy and promoting trade and investment through policies, encouraging domestic competition through structural reforms, and enhancing productivity through education (IMF, 2000).

In Van Dijk’s (2006) study comparing the effects of globalization in China and India, it is concluded that China's government policies are more effective than India's. This is evident through higher economic growth, poverty reduction, and wages. China's success can be attributed to a combination of factors including sound fiscal policies, openness to foreign technology, minimal government involvement in industrial sectors, investment in education, birth control, and control of inflation rate, exchange rate, and currency convertibility. Many of these suggestions were recommended by the IMF for LEDCs. Additionally, implementing social programs that redistribute wealth and income can contribute to overall improvement and ensure that the benefits of globalization are shared among winners and losers (Bardhan, 2006b). It is important to note that while globalization is inevitable due to increased integration between nations and trade liberalization, the absence of effective government policies can lead to negative consequences such as high poverty rates, inequality, and potential starvation.Upon examining the various advantages and disadvantages of globalization, it becomes evident that although it can lead to adverse effects such as lower wages and inequality, there is substantial proof indicating its potential to alleviate poverty and enhance overall welfare over time.

In addition to government support through policies and social programs, there is a possibility to shorten and alleviate the arduous and difficult journey towards complete adaptation of free trade and reaping the advantages that globalization may offer. It is of

utmost importance that these policies and social programs are implemented as the adverse effects of globalization, even if temporary, have the potential to damage vulnerable economies and escalate poverty and hunger. Globalization holds potential benefits for all, and by implementing supportive policies and social programs, it can effectively combat poverty. Bibliography - Work Cited Bardhan, P. (2006a).

Globalization and its impact on rural poverty has been extensively discussed in two publications. The first one is "Globalization and rural poverty" published in World Development (Bardhan, 2006a), and the second is an article titled "Does Globalization Help or Hurt the World's Poor?" published in Scientific American (Bardhan, 2006b). Both sources provide valuable insights into the topic.

The text comprises two citations enclosed within HTML paragraph tags.The text discusses the book "Imagine There’s No Country: Poverty, Inequality and Growth and the Era of Globalization" by the Institute for International Economics. It also mentions a report by the International Monetary Fund (IMF) titled "Globalization: Threat or Opportunity?" which can be accessed at http://www.imf.

org/external/np/exr/ib/2000/041200.tm Van Dijk, M. P. (2006). Comparing countries, cities, and ICT clusters: Different effects of globalization for workers and the poor in China and India. Tidschrift voor Economische en Sociale Geografie, 97(5), 503-514.

Wade, R.H. (2004). "Is Globalization Reducing Poverty and Inequality?" World Development, 32(4), 567-589. World Ban, Collier P., & Dollar D.

(2002). Globalization, Growth, and Poverty: building an inclusive world economy. New York: Oxford University Press. ----------------------- 1