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Globalization and Its Effect on Poverty Printable Version PRINTABLE VERSION
by Shakti, United Kingdom Aug 28, 2003
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Globalization has helped raise the standard of living for many people worldwide. It has also, however, driven many deeper into poverty. Small businesses and third world countries are not capable of updating their technology as often as their larger, wealthier counterparts. Unable to compete with multinational firms and wealthy nations, small businesses and third world countries and forced to do business locally, never growing and reaching their full potential.

Technological advances are made daily throughout the world. However, it is expensive to rapidly make and transport these advances globally. This high production cost causes the consumer’s price to be unnecessarily high. Today, there are many countries in the world that cannot afford to pay such a high price for the latest technology, and by the time they can afford to pay, newer, more advanced technology exists. The democratization of technology benefits mainly the wealthier countries.

Technological advances not only benefit wealthy countries, but also wealthier companies. Technological advancements allow countries and their company's worldwide publicity when they are successful. Because investors are able to easily invest on the Internet, on the telephone, and through facsimile machines, the profits of companies have increased greatly. Currency traders all over the world have also been able to update exchange rates and notify the public of the updates more rapidly. This has led to more desire to finalize deals because companies are able to be sure that they are receiving competitive exchange rates. Swissair, an airline based in Switzerland, even moved its entire accounting division from Switzerland to India simply because the accountants in India are among the best in the world. They were able to do this because all of the information from their new office halfway around the world was transmitted through the use of technologically advanced devices. Because labor is cheaper and the workers are more skilled in India, the company benefited in two ways. For the same reasons as in India, Thailand has moved from being primarily a rice-producing nation, to the world’s second largest producer of pickups and trucks.

As far back as the invention of the telephone, the countries with the best economies were the most technologically advanced. The invention of the telephone by Alexander Graham Bell in 1876 allowed information to be sent around the world considerably more rapidly than ever before. Before the invention of the telephone, it might have taken days, weeks, or even months to courier documents around the world. Today, however, Electronics, a company in Delhi, India takes doctors dictation from a toll-free number in the United States, transcribes the recordings, and sends the text back to a U.S. HMO. With the invention of the telephone and its spread to the world’s wealthier countries also came increased growth in the wealthier countries’ economies.

The global marketplace is based on a winner take all system. The wealthy, “winning” companies and countries are able to sell their goods and services to a global market, while the “losing”, poorer countries and businesses are limited to their local markets. Massive global markets also create huge incentives for businesses and nations to market products internationally. The National Basketball Association, for example, in 1998 sold more than five hundred million dollars in licensed merchandise worldwide. The NBA owes this huge source of income to advances in technology. Basketball organizations in other countries that cannot afford to market their organizations globally, however, are forced to sell licensed merchandise only in their countries, substantially lowering potential profits. In the past fifty years, global capitalism has raised the living standards of more people higher and faster than the previous five hundred years. Increasing the number of “haves” in the world has also dramatically increased the number of “have-nots”. It has also driven the poor further into poverty making it more and more unlikely that they will ever recover.

Globalization creates tensions, especially within nations and companies, between those who have the skills and resources to compete in the global market and those who do not. When the Internet was first introduced to the public, the wealthier countries in the world were able to incorporate it into their economies before the poorer countries. The wealthier countries had already established a strong hold on the Internet by the time the poorer countries were able to buy computers and pay for Internet access. According to one prediction, “by 2001, two hundred sixty-eight million computers will be connected to one another”. However, the great majority will be purchased and connected to the Internet by people in wealthy countries. The wealthy countries control most world-renowned businesses and services on the Internet. They also control the registration of domain names on the Internet, forcing the poor countries to pay the wealthy countries for the rights to names to create e-companies. The Internet “instantly link[ed] retailers to suppliers”.Through digitization, voices, sounds, pictures, and documents can by turned into computer bits transferable on the Internet. Federal Reserve Chairman Alan Greenspan even “linked . . . upturn[s] in productivity to massive investments . . . in computers and other technology (Workers). By the time the poorer countries were able to benefit from the use of the Internet, the wealthy countries had only increased their wealth. Technological advances in the transportation industries have also benefited wealthy countries more than poor countries. As the use of automobiles and airplanes spread throughout the world, the poorer countries were forced to use standard horses and buggies and ships because the price of automobiles and airplanes were too high.

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