Poverty and Globalization
India embraced liberalisation, privatisation, globalisation (LPG) in 1991. Embracing globalisation has been a mixed experience for India.
Poverty & Globalization
It is observed that Poverty rates around the world have decreases as more countries continue integrating into the global economy.
Globalization opens markets, spreads the use of new technology, and expands division of labour. Division of labour helps societies grow economically. When countries become a part of a more globalized economy, they are able to more finely tune their comparative advantage. This leads to greater productivity and unlocks flourishing in the long run as countries are able to trade goods and services with one another freely. Large numbers of people have been raised out of extreme poverty over the past few decades, particularly in India, China, and Indonesia. Between 1981 and 2001 the percentage of rural people living on less than $1 a day decreased from 63 to 42 per cent in India. Globalization has helped these countries develop by integrating their economies with the rest of the world. The openness of these countries has provided their poor with greater access to capital, knowledge, and opportunities.On the positive side, Globalization gives rise to the creation, production, distribution and consumption of goods and services on an unprecedented scale. That process is meant to increase economic activity for people, enterprises and countries through free international trade, direct foreign investment, and capital market flows.
For a capital deficient economy globalisation means opening up new avenues of investment and utilization of untapped natural resources and latent energies.
Globalization makes the world closer and creates a lot of opportunities for many people.
However, industries and jobs may be displaced in the short run as a result of globalization and trade as economies begin to experience growth, but, in the long run, both employment opportunities and consumption will increase.
On the flip side, globalization created opportunities only for the skilled or wealthy people. This increases the inequality between the rich and poor. This has made urban poor lives much harder, and caused the creation of slums. On top of that, unhealthy process of urbanization is causing the deficiencies in the basic services such as housing, water supply, sanitation. This eventually made the poor as worst victims.
With globalisation, a trend of establishing industries in the rural areas has started as the availability of land is cheaper as well as unorganized labour. This may sound fruitful but because of the pollution from the industries, lives of the rural people have deteriorated.
On the whole, globalisation has a lot to offer especially for the developing countries due to it providing more job opportunities and experience has shown that countries which take part in the global economy are experiencing more economic growth and poverty reduction than those countries which remain in isolation.
