First Draft

Comments are Welcomed

The Dark Side of the Moon:

Globalization and Poverty as a Global Problem

Arie M. Kacowicz, Ph.D.

Department of International Relations

Hebrew University of Jerusalem

Mount Scopus, Jerusalem 91905

Israel

e-mail: mskaco@mscc.huji.ac.il

fax: 972-2-5882989

July 2001

Paper prepared for delivery at the 2001 ISA Hong Kong Convention, Hong Kong,
July 26-28, 2001. I would like to thank the Leonard Davis Institute of International
Relations at the Hebrew University of Jerusalem for its support.
ABSTRACT

This paper attempts to assess in a preliminary way the complex relationships between

the phenomena of globalization and poverty as a global problem in international

relations. First, I define the two concepts in conceptual and theoretical terms.

Second, I assess the possible complex links between globalization and poverty, by

pointing out alternative and paradoxical relationships between these two. Finally, I

illustrate my arguments by looking at examples drawn from Latin America and

Africa.

INTRODUCTION

Is globalization a force for equity or for exploitation? Can globalization bring

about progress or backwardness, development or under-development, poverty or

affluence? Beyond the shining and transparent aspects of globalization, what is the

dark side of the moon with reference to the possible linkages between globalization

and (in)equality in general, and between globalization and poverty in particular?

The widespread social and political movements against globalization have

become fashionable in the last two years, as we witnessed during the violent

demonstrations at Seattle in 1999 and at Prague in 2000. Although it is not entirely

clear what the vociferous opponents of globalization really want, they are right to

point out that Third-World poverty has become one of the most pressing moral,

political, and economic issues in the political agenda of this new millenium (see The

Economist, September 23, 2000, 17).

To illustrate this assertion, we can briefly refer to the following facts, some of

them compiled by the Human Development Report 1998 of the United Nations

Development Program, with reference to the years 1997-1998:

* In 1997 31 million people around the world were living with HIV, up from

22.3 million the year before (UNDP 1998, 34).

* About 109 million primary-school age children (or 22%) were out of school

(UNDP 1998, 49).

* About 885 million adults (age 15 or more) worldwide were illiterate (UNDP

1998, 49).

* About 841 million people worldwide were malnourished (UNDP 1998, 49).

* The three richest people in the world had assets that exceeded the combined GDP

of the 48 least developed countries (UNDP 1998, 30). A total of 358 people owned as

much wealth as 2.5 billion people own together nearly half of the worlds population

(Martin and Schumann 1997, 23).

39 of the 59 countries reporting poverty information had more than 10% of their

population earning less than $1 a day. They included: Guinea Bissau, 87% (of its

population); India, 53%; Kenya, 51%; Lesotho, 51%; Niger, 62%; Peru, 50%;

Senegal, 54%; Uganda, 50%; and Zambia, 87% (Nagel 2001, 2).

* Among the 4.4 billion people in developing countries around the world, 3/5 of

them lived in communities lacking basic sanitation; 1/3 went without safe drinking

water; lacked adequate housing; 1/5 were undernourished; and 1.3 billion people

lived on less than $ 1 a day (UNDP 1998, 49; Speth 1999, 14).

In addition to the grassroots organizations, NGOs, and fringe groups, mainstream

international institutions and organizations have recognized the reality of global

inequality and Third-World poverty as a pressing issue. Thus, the official institutions

of the Bretton Woods post-World War II liberal regime, the International Monetary

Fund and the World Bank, have recently focused their discussions and operative plans

on the eradication of poverty, or at least its reduction, as the single greatest challenge
of the century. Speaking at the plenary session of the 2000 Annual Meetings of the

IMF and the World Bank held on September 26-28 in Prague, the governors

representing the IMFs 182 members acknowledged that although globalization has

brought opportunities for growth and development to both rich and poor countries, not

everyone has been able to take advantage of the new opportunities. The task facing

the international community, the governors agreed, was to build a successful, truly

global economy that works well for all people and addresses the widespread poverty

that remains the unacceptable face of the global economic situation, the truly dark

face of the moon (IMF 2000, October 23, 341). Similarly, the World Bank President,

James D. Wolfensohn characterized globalization as an opportunity, and poverty as

our challenge, though recognizing that globalization can relate to risks as well as to

opportunities (Wolfensohn 2000, 308).

At this rhetorical level, we can quote a myriad of additional declarations by

political leaders worldwide emphasizing the link between globalization and poverty,

and the positive role globalization should fulfill in diminishing inequality and

reducing poverty. For instance, at the meeting in Okinawa, Japan, on July 23, 2000,

the leaders of the G-8 group of industrialized countries issued the following

declaration:

During the last quarter of the twentieth century, the world economy has achieved
unprecedented levels of prosperity, the Cold War has come to an end, and
globalization has led to an emerging common sense of community. Driving these
developments has been the global propagation of those basic principles and values
consistently advocated by the summiteers democracy, the market economy,
social progress, sustainable development, and respect for human rights. Yet we
are keenly aware that even now in many parts of the world, poverty and injustice
undermine human dignity, and conflict brings human suffering.
We must tackle the root causes of conflict and poverty. We must bravely seize the
opportunities created by new technologies in such areas as information and
communications technology and life sciences. We must acknowledge the
concerns associated with globalization, while continuing to be innovative in order
to maximize the benefits of globalization for all (quoted in IMF 2000, July 31,
245).
 Interestingly enough, the leaders of the G-8 found within their busy agenda a

(rhetorical) place to address issues of poverty in general, and the difficult situation in

certain areas of the Third World, especially Africa, in particular. Within this same

trend that crosses the divide between North and South, we can find an identical

agenda with the heads of state and government from all around the world, who

gathered together to participate in the United Nations Millenium Summit at New York

in September 2000. Among the values and principles mentioned in their United

Nations Millenium Declaration, the link between globalization and poverty was

again emphasized:

The central challenge we face today is to ensure that globalization becomes a

positive force for all the worlds people. Its benefits are uneven shared, while its
costs are unevenly distributed (quoted in IMF 2000, October 23, 351).

Furthermore, in a show of unguarded optimism about translating rhetorical

intentions into an operative plan for development and poverty eradication, the

leaders of the world committed themselves to the following deadline:

We further resolve to halve by 2015 the proportion of the worlds people who earn
less than one dollar a day, who suffer from hunger, and who lack access to safe
drinking water (quoted in IMF 2000, October 23, 351).

This brief sample of declarations of good intentions demonstrates that there is

an emerging (rhetorical) consensus within the international community that there is a

clear, robust, and certain link between globalization and poverty. Furthermore,

globalization should fulfill a positive role in reducing and eradicating poverty. At the

same time, there is disagreement whether the link between globalization and poverty

is a positive or negative one (i.e., more globalization leads to more or less poverty)?

Moreover, it is not completely clear whether globalization can reduce poverty. After

all, different interpretations stem from divergent ideological and philosophical

approaches, such as the easy-going optimism of Liberals in contrast to the radical

views of Marxists and especially (vulgar) neo-Marxists. The assumption that the

invisible forces of globalization, including the market, science, and technology, will

resolve the problems of inequality and poverty as they appear is not very reassuring,

considering the lingering reality of a billion people living (or better, surviving) in

absolute poverty. Conversely, left-wing activism, from the discredited approaches of

dependencia to the romanticism about the universe of the marginalized, has still to

offer a serious answer to the possible links between globalization and poverty (see

Nurnberger 1999, 5).

This paper is a preliminary exercise in assessing the complex relationships

between the phenomena of globalization and poverty as a global problem in

international relations. First, I define the two concepts in conceptual and theoretical

terms. Second, I assess the possible complex links between globalization and

poverty, by pointing out alternative and paradoxical relationships between these two.

Finally, I illustrate my arguments by looking at examples drawn from Africa and

Latin America.

DEFINING THE TERMS: GLOBALIZATION AND POVERTY

Globalization

What is globalization? There is a lot of confusion about the term, and about

the rhetoric of globalization and the new world order following the end of the Cold

War. Hence, globalization can be conceived as a myth, a rhetorical device, a

phenomenon, an ideology, a reality, an orthodoxy, and a rationality. In both academic

and popular discourses, globalization has become one of the catchwords for the new

millenium. In fact, globalization is a short form for a cluster of inter-related changes:

economic, ideological, technological, and cultural. Economic changes include the

increasing integration of economies around the world, particularly through trade and

financial flows (see IMF, September 2000, 4). This takes place through the

internationalization of production, the greatly increased mobility of capital and of

transnational corporations, and the deepening and intensification of economic

interdependence. The economic manifestations of globalization include the spatial

reorganization of production, the interpenetration of industries across borders, the

spread of financial markets, the diffusion of identical consumer goods across distant

countries, the massive transfers of population, people, and knowledge moving across

national borders, and the extension beyond national borders of the same market forces

that have operated for centuries at all levels of human economic activity village

markets, urban industries, and financial centers (see Mittelman 1996a, 2; IMF,

September 2000, 4). Ideological changes include investment and trade liberalization,

deregulation, privatization, and the adoption of political democracy in the institutional

realm. Technological changes refer to information and communications technologies

that have shrunk the globe, shifting from goods to services. Finally, cultural changes

involve trends toward a harmonization of tastes and standards, epitomized by a

universal world culture that transcends the nation-state (Li 1997, 5).

Globalization can thus be defined as the intensification of economic, political,

social, and cultural relations across borders. In this sense, it involves more than the

geographical extension of a range of phenomena and issues. It implies not only a

significant intensification of global connectedness, but also a consciousness of that

intensification, with a concomitant diminution in the significance of territorial

boundaries. Globalization is pushed by several factors, the most important among

them being technological change. The process of globalization is uneven in both its
intensity and geographical scope, as well as in its different domestic and international

dimensions and effects. Hence, we might obtain different types of globalization,

across a rich regional variation (Holm and Sorensen 1995, 1-7).

It is important to draw a distinction between the qualitative and the

quantitative dimensions of globalization: more of the same (quantitative change), or

qualitative shifts (quantum leaps). For instance, true economic globalization invokes

a qualitative shift toward a global economic system that is no longer based upon

autonomous national economies, but relocates production, distribution, and

consumption of goods in a consolidated global marketplace.

To sum up, the concept of globalization is frequently used (and abused) but

seldom clearly defined. It means many different things for different people. Among

the possible definitions we might include the following:

* intensification of economic, political, social, and cultural relations across

borders;

* the historical period (or historical epoch) since the end of the Cold War;

* the transformation of the world economy epitomized by the anarchy (literally

defined) of the financial markets;

* the triumph of U.S. values, through the combined agenda of neoliberalism in

economics and political democracy in politcs;

* an ideology and an orthodoxy about the logical and inevitable culmination of

the powerful tendencies of the market at work;

* a technological revolution with social implications;

* the inability of nation-states to cope with global problems that require global

solutions, such as demography, ecology, human rights, nuclear proliferation, and

poverty (see Cox 1996, 23; Reich and Higgott 1998).

 We can cluster these different definitions around three types of globalization:

market(economic); communication (technological); and direct (global problems).

While there is much dispute about whether the volume of certain economic measures

relative to national and world economic products exceed past levels, there is a

consensus that the contemporary economic exchanges, involving trade, financial

flows, and the role of the MNCs are quite unique and influential in our contemporary

age (Kudrle 1999, 3). Global warming and the destruction of the rain forest can be

considered as a phenomena of direct globalization, or what economists might call

international externalities. In this regard, poverty in itself can be categorized as a

global problem (externality). Finally, communication globalization refers to the

technological changes associated with technological discovery and its easy

disponibility. Thus, globalization is driven by technological innovation, and by the

rising speed and falling costs of communication and transportation (Weede 2000, 12).

Hence, communication globalization has facilitated market globalization while

possibly intensifying as well direct globalization (Kudrle 1999, 4).

The economic side of globalization, which receives most of the scholarly attention

to the subject, is found in that loose combination of free trade agreements, the

Internet, and the integration of financial markets that is erasing borders and uniting

the world into a single, lucrative, but brutally competitive, marketplace (Friedman

1996, 30). It is a small world, after all, and that global world is a MacWorld with

MTV, CNN, PCs, and Macintoshes. Beyond this economic dimension, we might

study globalization in the political and sociological senses, as a qualitative shift in the

conditions of peoples lives, for better or for worst.

 Neoliberals believe that globalization has been the inevitable result of

technological change; moreover, from their perspective, global economic

liberalization will strengthen and lead to political democracy. Globalization will open

up societies to democratic tendencies, while economic liberalization will provide the

material bases for subsequent democratic consolidation. Even if this assertion is true,

it conceals a conceptual and normative trap: paradoxically, the economic forces of

globalization, by definition, are undemocratic, if not antidemocratic. The lack of

accountability of global economic forces poses a serious political problem, for both

states and individuals alike. By condensing the time and space of social relations,

economic globalization transcends territorial states and is not accountable to elected

political officials (Mittelman 1996b, 197). The only form of feedback mechanism is

given to unelected market forces, regulated by the logic of economics, which

resonates with a Darwinist tendency of the survival of the fittest. In this (vulgar)

Darwinian world, povery can be considered as an unintended consequence, or

collateral damage, of the market forces of globalization.

Poverty

Like globalization, poverty is a loaded concept in the social sciences that

can be understood in at least eleven different definitions, which somehow overlap and

complement each other. According to Spicker (1999, 151-157) those definitions

include:

*Need: Poverty can be understood as a lack of material goods or services, such as

food, clothing, fuel, and shelter, that people require (need) in order to live and

function properly in society (Spicker 1999, 151). In this regard, we can find two

categories of poverty: (a) extreme poverty, and (b) overall poverty. Extreme
poverty ( or primary poverty) implies a lack of income necessary to satisfy

basic food needs, usually defined on the basis of minimum calories requirements.

In this case, the total earnings are insufficient to obtain the minimum necessities

for the maintenance of merely physical efficiency, as in the case of starvation and

famines (see Sen 1981, 11). Conversely, overall poverty refers to the lack of

income necessary to satisfy essential non-food needs, such as clothing, energy,

and shelter (UNDP 2000, 20).

*Standard of living: In this sense, poverty does not refer to specific forms of

deprivation, but to the general experience of living with less than others (Spicker

1999, 151). A related definition refers to poverty in terms of relative deprivation,

as a situation in which income meets basic essentials but not the level of social

expectations, or in comparison with other social groups (Nurnberger 1999, 61; see

also Sen 1981, 17).

* Limited resources: Poverty implies the circumstances under which people lack

the income, wealth, or resources to acquire or consume the things that they need

(Spicker 1999, 152).

* Lack of basic security: Poverty can be regarded in terms of vulnerability to

social risks, as equivalent to need (Spicker 1999, 152). As related to a low

standard of living and to limited resources, we can then define human poverty in

terms of a lack of basic human capabilities. In other words, illiteracy,

malnutrition, an abbreviated life span, poor maternal health, illness from

preventable diseases, as well as lack of access to goods, services, and

infrastructure such as education, communication, and drinking water all of them

indicate a lack of basic human capabilities (UNDP 2000, 20).

* Lack of entitlement: Both deprivation and lack of resources reflect lack of

entitlements, rather than the absence of needed items in themselves. The lack of

entitlement then becomes a political and juridical sine qua non condition for

poverty; hence, people who have the necessary entitlements are not longer poor

(Spicker 1999, 153; see also Sen 1981). In this sense, poverty derives from the

relationship between ownership and exchange.

* Multiple deprivation: According to this definition, poverty implies long-

extended circumstances in which people suffer from a constellation of

deprivations experienced over a period of time (Spicker 1999, 153). For

developing countries, three dimensions of human poverty in terms of deprivation

include: (a) deprivation from a long and healthy life, as measured by the

percentage of people not expected to survive the age of 40; (b) deprivation from

knowledge, as measured by adult illiteracy; and (c) deprivation in economic

provisioning, from private and public income, as measured by the percentage of

people lacking access to health services, safe water, and the percentage of children

under five who are moderately or severely underweight (UNDP 2000, 22).

* Exclusion: In the sociological sense, poverty can be seen as a set of social

relationships in which people are excluded from participation in the normal

pattern of social life (Spicker 1999, 154).

* Inequality: In relative terms, people may be held to be poor because they are

disadvantaged vis-a-vis others in society. In a basic structure of inequality, it is

clear that transfers from the rich to the poor can make a substantial dent on

poverty in most societies. In this sense, poverty reflects inequality, though the

two concepts are not completely equivalent (Spicker 1999, 155; Sen 1981, 14-15).
* Class: If inequality is considered a function of the social structure, hence

poverty can be associated with a given social class or position (Spicker 1999,

155).

* Dependency: According to this definition, poor people are those who receive

social benefits as a result of their lack of means; hence, they are dependent

(Spicker 1999, 156).

* Serious deprivation: From a normative (moral) perspective, people are held to

be poor when their material circumstances are deemed to be morally unacceptable.

Hence, poverty is considered as something that is disapproved of, the elimination

of which is regarded as morally good (Spicker 1999, 157; Sen 1981, 17). In this

view, poverty is regarded as a social fact and as part of the normative

conventions of society.

Although some of the definitions of poverty include a clear normative or

moral (ethical) dimension, the measurement of poverty should be considered as an

exercise of description (facts) rather than an ethical or value judgment (what to do

about poverty?) (Sen 1981, 21). In this sense, we should first identify who the

poor are, and then aggregate their poverty characteristics into an overall measure

of poverty.

Once we have identified and measured poverty, we can then turn to the

theoretical and policy-oriented debate about its causes, and concomitantly, the

possible mechanisms for its reduction and eradication. The theoretical and policy

debate has tended to polarized around two explanatory models, the structural

(political) and the behavioral (economic) approaches. The structural model

emphasizes institutionalized systems of inequality, macro-economic impacts, and

political strategies of exploitation and exclusion. Conversely, the behavioral

model focuses on the personal attributes and behavior of poor people in economic

terms (Pinker 1999, 1-2). In ideological and paradigmatic terms, the structural

model can be linked to Realist and Marxist approaches; the behavioral model, to

the Liberal paradigm.

From a structuralist point of view, the extremes of inequality that cause

poverty can be tackled only by the intervention of states and governments in the

free play of competitive market (global) forces, through radical policies of

redistributive justice and the provision of international aid. Alternatively, from a

behavioral standpoint, the solution to poverty lies in encouraging the action of the

free forces of globalization, including the growth of competitive markets and the

reduction of the role of governments and international aid. This is the Liberal

interpretation and faith on a general harmony of interests that will generate wealth

and general prosperity through the invisible hand of the market. Eventually,

affluence and prosperity will trickle down to the poor (Pinker 1999, 2).

The application of these two distinctive models depends upon different

approaches to poverty as a social and political problem, both at the domestic and

the international and global levels. In this regard, considering poverty as a global

problem can imply three complementary but different concepts: (a) poverty as a

national (domestic) problem of under-development, to be resolved within the

borders of a given society and state; (b) poverty as an international problem, as

part of the agenda in the relations between states; and (c) poverty as a global

problem, in terms of world order and (re)distributive justice.

Poverty as a National (Domestic) Problem of Under-Development

 In one of the most significant shifts in the setting of development

goals, poverty alleviation became a defining feature of development in the late

1960s and 1970s. Poverty moved from being a simple condition of states to a

condition of (poor) people within states (Finnemore 1996, 89-90). Thus, poverty

came to be considered, first of all, as a domestic problem of

(under)development having international and global implications, though the

mechanisms for its reduction and eradication remained foremost a domestic

social, economic, and political issue. As stated recently by the president of the

World Bank, poverty is about a lack of voice as well as a lack of income within

states. Market-oriented reforms can deliver economic growth, but growth in itself

is not sufficient to eradicate poverty. According to this view, the poor must be

able to build up assets of their own through access to education, health, and land,

so that deep-seated gender, ethnic, social, and racial inequalities should be

confronted. Thus, development needs to be comprehensive, and it cannot be

imposed from the top; it should be homegrown and home-owned. (Wolfensohn

2000, 308).

Strategies for effective poverty reduction were addressed, at least at the

rhetorical level, by the IMF and the World Bank at their joint meeting at Prague

in September 26-28, 2000. The Commission of the International Monetary Fund

(IMFC) emphasized that a lasting breakthrough in combating poverty would be

achieved only if the poorest countries were able to build the fundamentals for

sustained growth by themselves. It stated that the Poverty Reduction and Growth

Facility (PRGD) initiative provided an essential framework for supporting

countries growth strategies and for enabling debt relief under the enhanced
Heavily Indebted Poor Countries Initiative to be translated into poverty reduction

(McDonald 2000, 302).

The center piece of these initiatives focuses on the country

ownership of the strategies to reduce poverty, and on the issue of effective

governance. In other words, borrowing countries should prepare poverty

reduction strategy policy papers in a process involving the active participation of

their civil societies, nongovernmental organizations, donors, and international

institutions. To be effective, the recommended policies should emerge out of

national debates involving the voices of the poor and marginalized sectors (IMF,

September 2000, 16).

In addition to designing national strategies to eradicate poverty, the

issue of effective (domestic) governance should be stressed. Effective governance

is often considered the missing link between national anti-poverty efforts and

poverty reduction. For many poor countries the external assistance needed is not

only on economic aid for development, but on how to improve governance and

build stable political and economic institutions that will reduce, if not eradicate

poverty (see UNDP 2000, 5-8)

Poverty as an International Problem (in the Relations between States)

The international society does not regard poverty only as a domestic

issue of national development or under-development, but as one of the major

issues in the agenda of international relations. In this sense, the problem of

poverty is associated with international and civil wars, flows of illegal and legal

migrations, refugees, environmental degradation, and threats to the existing

international order emanating from demands of international and global justice

instrumented ocasionally through terrorist and guerrilla activities.

It should be emphasized that the Bretton Woods institutions traditionally

regarded poverty as national, or at most international problem, rather than a global

one. Thus, the poverty relief measures favored by the World Bank and also by the

United Nations Development Program (UNDP) make provision especially for

international coordination and cooperation, and for economic assistance to the less

developed countries on an inter-state basis (see Lumsdaine 1993, 5). Yet, it

remains an open question whether the national and inter-national focus of the

World Bank and the UNDP allows for the creation and sustaining of a supra-

national or global burden-sharing facility that would facilitate the convergence of

local policies and practices (Nel 2000, 3). The answer seems to be, so far, a

negative one.

Poverty as a Global Problem

Why should the rich countries help the poor ones? Why should the

international institutions and organizations the UNDP, the World Bank, and the

IMF assist poor people in developing countries? If the answers to those

questions are not framed only in prudential terms of rational cost-benefit

calculations, then we can move our analysis from the rational to the normative

dimension, and from the international to the global realm. In this sense, normative

considerations such as (re)distributive global justice complement (rather than

replace) referrring to poverty as a global problem: First, it is a national, domestic

problem of under-development. Second, poverty becomes an inter-national

problem, as a serious issue in the agenda of inter-state relations. Third and

foremost, poverty is a global problem since it has implications and ramifications

for the human community as a whole, similarly to the evolution of political and

human rights in the direction of universal jurisdiction for international law when

there is a gross violation of those rights. In this sense, there is an international, or

even global responsibility for the worlds poor, as there is a universal promotion

of human rights of various kinds (Finnemore 1996, 126). Poverty is then linked to

the more general issues of equity, equality, and distributive justice both within and

across borders (see Nel 2000, 1-2).

Furthermore, as an international externality, poverty can also be considered

in rationalist and positivistic terms as a global problem, to the extent that it can

disrupt and derail the forces of globalization. As one of the senior officials of the

IMF recently acknowledged, growing inequality poses the greatest risk to the

future of the global economy. If the majority of the worlds population is

increasingly marginalized and economically disenfranchised, then globalization

will fail (Manuel 2000, 306). Thus, the eradication of poverty should be

regarded as a global project.

POSSIBLE LINKS BETWEEN GLOBALIZATION AND POVERTY

Once we have clearly defined globalization and poverty, we can turn now to

the crux of this paper. What are the possible links between globalization and

poverty? Does globalization lead to equalization or to polarization? Does

globalization tend to level upward or downard? (Therborn 2000, 33). What are

the intended and unintended consequences of globalization upon poverty, and

viceversa?

It is becoming more and more clear, both in rethorical terms and in the actual

practice of states and international institutions, that there are tangible and

substantial links between globalization and poverty. For instance, the UNDP

recognizes (and even suggests) that countries should link their (anti) poverty

programs not only to their national policies, but also to their international

economic and financial policies. Thus, in a world of increasing economic

integration and globalization, this link can be crucial. For instance, since the debt

crisis of the 1980s it is evident that there is a direct link between external debt and

poverty (UNDP 2000, 10).

At the same time, what remains ambiguous is the character and direction of

these possible links, ultimately interpreted according to divergent paradigms of

international political economy and world views, such as liberals versus radicals.

For instance, the liberal view of global economic relations, which is based on

mutual (even complex) interdependence, regards international economic

relations between developed and developing countries as mutually beneficial and

benign. In this view, the forces of globalization will eventually stimulate the

economic growth in the developing nations, thus reducing and even eradicating
poverty. In contrast, the radical view sustains that the global economic relations

between North and South are asymmetrical and approximates a type of zero-sum

relationship, according to which the forces of globalization exacerbate inequality

and poverty (see Kim 2000, 1).

In logical terms, we can speculate about the following possible links: (a)

globalization causes and deepens poverty, according to a radical and normative

perspective; (b) globalization reduces and even resolves the problem of poverty,

according to a Liberal logic; (c) there is no necessary link between globalization

and poverty, from a Realist perspective; and (d) the link between globalization

and poverty is complex and ambiguous. In this sense, it is a two-way street: not

only globalization affects (somehow) poverty; in turn, poverty might determine

the fate of globalization.

Globalization Causes and Deepens Poverty

According to its critics, globalization leaves the poor behind; it causes

and deepens poverty. This is due to several and inter-related reasons. First,

without capital, you cannot gain from integration. The poor have next to no

capital, partly due to lack of entitlement rights. Second, due to uneven

development, globalization exacerbates social and economic gaps within and

between states by reinforcing creative destruction (Weede 2000, 9).

Globalization requires economies and societies to adapt. Since economies almost

never succeed equally, some nations will grow faster than others, so that

globalization will increase inequality. Third, from a structural point of view,

dependency theorists argue that the poverty of the developing countries is directly

related to the affluence of and exploitation by the rich ones. According to this
logic, the very structure and processes of globalization perpetuate and reproduce

the unequal relations and exchange between the core of the international

economic system and its periphery (see Gordon and Spicker 1999, 35; and

Ramaswamy 2000, 4-9). Finally, globalization has increased inequality, by

having significant effects on various types of social stratification, including class,

country, gender, race, the urban/rural divide, and age, both between and especially

within nations (Stewart and Berry 1999, 150). In this view, altough contemporary

globalization has helped to narrow social hierarchies in certain respects (such as

opportunities for women to engage in waged employment), it has tended on the

whole to widen gaps in life chances. This is due to the uneven distribution of

costs and benefits, which tends to favor the already priviledged and further

marginalize the already disadvantaged (Scholte 2000, 1-2). Overall, globalization

is exacerbating inequalities of resources, capabilities, and even of the power to

make and break rules in the international arena (Hurrell and Woods 1999, 1).

How does globalization produce and reproduce poverty? From a

dependency or radical perspective, the adoption of the Liberal ideology of

globalization, and the restructuring of the world economy under the guidance of

the Bretton Woods (Liberal) institutions increasingly deny developing countries

the possibility of building their national economies. Thus, the internationalization

of macro-economic policies transforms poor countries into open economic

territories, and their national economies into reserves of cheap labor and natural

resources (Chossudovsy 1997, 37). For instance, since the early 1980s, the

macro-economic stabilization and structural adjustment programs negotiated

among the IMF, the World Bank, and the developing countries (as a condition for

the renegotiation of their external debt), have led to the impoverishment of

hundreds of millions of people (Chossudovsky 1997, 33). In addition, the

multinational corporations (MNCs), as carriers of technology, capital, and skilled

labor between states, have reinforced the negative effects of foreign capital

penetration, enlarging the gap between the rich and poor. Thus, the MNCs have

contributed to the development of the so-called enclave economies within the

host countries, which are characterized by small pockets of economically

developed regions, while the rest of the larger peripheral areas exhibit extreme

indices of poverty and very little progress (Kim 2000, 1-2).

Globalization Can Reduce and Resolve Poverty

From a Liberal and neo-Liberal perspective, there is a direct and

positive relationship between globalization and poverty. At the same time, there

is a growing recognition that globalization does not progress evenly, despite its

overall positive effects for worldwide development (IMF, September 2000, 4).

According to this view, those countries that became integrated into the global

economy more quickly than others grew faster and managed to reduce poverty.

For example, outward-oriented (export-led) economic policies brought dynamism

and greater prosperity for much of East Asia, transforming it from one of the

poorest areas of the world forty years ago into the most dynamic one. In contrast,

where countries pursued inward-oriented economic policies (such as ISI, Import

Substitution Industrialization) their economies stagnated or declined, as it

happened in much of Latin America and Africa in the 1970s and 1980s. In sum,

adopting and joining into the process of global economic integration,

interdependence and globalization can reduce and resolve the problem of poverty,
both within and between nations (IMF, September 2000, 4). Thus, globalization,

through the promotion of free trade that sustains high-quality growth, holds the

promise of improved living standards for all the peoples of the world (Camdessus

1999, 386; see also UNDP 2000, 48). In this sense, economic opportunities in the

Third World would be far greater, and poverty therefore vastly reduced, expect for

the barriers to free trade that is, restrictions on economic freedom which are

erected by rich- and poor-country governments alike (The Economist, September

23, 2000, 17).

In addition to free trade, technology, as the main driver of globalization,

can be considered as essential in alleviating and reducing poverty, if properly and

effectively disseminated and adopted. Thus, the advances achieved in computing

and telecommunications in the North offer enormous opportunities for raising

living standards in the Third World. The adoption of liberal economic policies

and the right technologies have brought substantial benefits to all, both increasing

the profits of Western corporations, and raising the productive employment and

higher incomes for the worlds poor. In terms of relieving want, globalization is

the difference between South Korea and North Korea, Malaysia and Myanmar, the

North and South (The Economist, September 23, 2000, 17-18).

For globalization to reduce and even resolve poverty, its technological

forces should reach the more than two billion people who live in the

technologically-excluded countries, so they can reap as well its economic and

social benefits. For this to happen, there is an urgent need to reform, to re-direct

and to humanize the forces of globalization. According to Jeffrey Sachs, three

major things need to happen for globalization (and technology) to help the poor
countries: First, geography, public health, and ecology must be brought into the

analysis of technological change and economic growth. Second, governments

need to change their approach to aid; they should spend more, and more wisely.

Third, participation in international assistance needs to be broadened and recast.

Thus, multinational firms and first-world universities and scientific establishment

should be part of the common effort of technological promotion and

dissemination, and the official agencies charged with global development, such as

the World Bank, the IMF, and several UN agencies, should be reformed (Sachs

2000, 99-101)

There Is No Necessary Link between Globalization and Poverty

A third view, neither radical nor liberal, but agnostic or Realist, does

not identify a necessary or clear link between globalization and poverty. For

instance, Robert Gilpin (2000, 293-324) argues that many of the problems

associated with globalization are linked to other factors, though related, which are

not part and parcel of the phenomenon of globalization. In other words, by

adopting a minimalist definition of globalization in economic terms (i.e., trade,

investment, and financial flows) technological changes, the third industrial

revolution, the digital revolution that led to the digital divide between those who

use computers and those who do not are not directly associated with globalization

itself. Thus, one cannot bless or blame globalization for having positive or

pernicious effects upon poverty and inequality, since it is a much more limited

phenomenon that we thought initially.

 Moreover, this agnostic approach will suggest, serious problems that

affect the fate of peoples and states, such as poverty and environmental

degradation, are first of all directly related to national governments and to national

policies, rather than to the supranational or supra-territorial forces of the global

market. Thus, the principal culprits (and saviors) of increasing (or reducing)

poverty, of abusing (or keeping) the environment are the national governments

themselves, through their decision-making procedures and implementation.

The Link between Globalization and Poverty is Complex and Ambiguous

In logical terms, a fourth possibility regarding the links between

globalization and poverty is that the relationship is complex and ambiguous and

runs both ways. In other words, the links are open-ended and undetermined.

Globalization might mean at times global integration or global polarization and

conflict, the global extension of opportunity structures or the exacerbation of

unequalizing effects (Therborn 2000, 46). In this context, Richard Falk has

recently compiled a comprehensive list of detrimental and beneficial impacts of

globalization, which illustrates this point (Falk 2000, 371-375).

On the negative side, Falk refers to the following effects. First, as a

result of globalization, there has been a widening gap between winners and losers,

rich and poor, both between and within nations. Second, the logic of global

markets imposes a new orthodoxy and harshness that constrain the role of the

welfare state in relation to the losers (the poor and marginalized). Third,

globalization has encouraged comprehensive privatization, again affecting

especially the most disadvantaged sectors in society. Fourth, as mentioned above,

there has been a diminution in the effectiveness of traditional modes of political

participation through such means as parties, elections, and legislative institutions.

Thus, globalization is inherently non-democratic (if not utterly anti-democratic)

(see Falk 2000, 371-373).

On the positive side, globalization has significantly contributed to the

realization of human governance, thus helping to reduce poverty and inequality in

the following ways: First, the economic (Liberal) logic of globalization has

diminished the traditional incentives to wage war associated with the acquisition

of resources and territory. Second, the mobility of capital, the encouragement of

economies of scale, and the dissemination of technological innovation have

enabled some of the poorest and most populous countries of the world, first of all

China and India, to achieve high rates of economic growth over significant

periods of time. Third, the embedded logic of globalization has turned poverty

into a global problem, thus making the reduction and eradication of absolute

poverty in the Third World not only a regional problem, but a serious global

problem that might affect the richer countries as well, through the global effects of

environmental degradation and ecological disasters, the spread of infectious

diseases as AIDS, illegal migration waves, terrorism and destabilizing backlash

politics (see Falk 2000, 373-374).

According to this approach, the links between globalization and poverty

are complex and ambiguous due to the potential mutual effects of the relationship

(see Kofi Anan 2000, 22). In other words, it is not only globalization that might

affect poverty in positive or negative direction. The reality of poverty and

inequality, in itself, might be a serious cause for the growth of social violence,
ethnic conflict, civil and international wars. Poverty and immiseration, directly

linked to over-population, resource scarcity, and environmental degradation as

witnessed in many areas of sub-Saharan Africa are a direct source of social

conflicts, civil wars, and the generation of refugee flows (Hurrell 1999, 260). As

Robert Kaplan argued, Precisely because a large part of Africa is staring into the

abyss, it gives a forestaste of how wars, frontiers and ethnic politics will look a

few decades from now (quoted in Martin and Schumann 1997, 25).

Nowadays, a considerable portion of the trade of the United States is

geared towards the developing countries, where most of the population of the

world live. The costs of neglecting the rapidly growing international class divide

and social and economic gaps will be immense for the entire humankind, reaped

in environmental harm, humanitarian disasters, and lack of economic growth

(Speth 1999, 17). Hence, both in prudential and normative (moral) terms we

should be aware of these complex links between globalization and poverty. It is a

small world after all.

 EXAMPLES FROM AFRICA AND LATIN AMERICA

We should briefly turn to the examination of the links between

globalization and poverty in empirical terms, by looking at some facts in two

regions of the world seriously affected by poverty and inequality: Africa and Latin

America.

The Situation in Africa

All the bottom places in the world league of economic performance are

filled by African countries, and the gap between them and the rest of the world is

widening. According to Paul Collier of the World Bank, only 15% of Africans

today live in an environment considered minimally adequate for sustainable

growth and development. At least 45% of Africans live in poverty, and African

countries need growth rates of 7% or more to cut that figure in half in 15 years

(The Economist, May 13, 2000). The average life expectancy in 1999 was 52

years, 34% of the African children under age five suffered from malnutrition, and

43% of its adults were illiterate (UNDP 2000, 47). Progress in combating many

endemic diseases has been slow in the continent, especially regarding the spread

of AIDS and malaria and their devastating impact on the continent (IMF, January

24, 2000, 18).

As compared to other regions of the world, sub-Saharan Africa (perhaps

with the partial exception of South Africa ) has been marginalized in terms of its

participation in the global economy. At the same time, in the last two years we

have noticed, at least at the rhetorical level, a lot of concern with the

catastrophical levels of absolute poverty in Africa. From the point of view of the

Liberal financial institutions, first and foremost the World Bank and the IMF, the
reduction of poverty in Africa has been targeted as a priority policy goal. How

can globalization forces help to reduce poverty in the continent? As mentioned

above, the IMF and the World Bank have adopted a new framework for their

concessional lending policies, particularly the introduction of country-owned

poverty reduction strategy (policy) papers (PRSPs) and the transformation of the

Enhanced Structural Adjustment Facility into the Poverty Reduction and Growth

Facility (IMF, January 24, 2000, 19). The results of these program are still up

for grabs.

The (Improving?) Situation in Latin America

In the mid-1970s, a study of the World Bank estimated that 40 per cent of

the families in South America were living under conditions of poverty. Poverty

was defined as not being able to acquire a minimum basket of goods to satisfy

basic needs. Moreover, twenty per cent of all the families were in a condition of

misery (absolute poverty), i.e., they could not afford to buy the minimum diet

food (Gordon and Spicker 1999, 18). In the 1980s, as a result of the debt crisis

and the subsequent structural adjusment economic reforms, the situation was

even more aggravated. Stagnation swelled the ranks of the so-called informal

sectors of the regions economies, with the proportion of the poor rising from 40

per cent to over 44 percent, affecting the living conditions of about 183 million

Latin Americans (Iglesias 1997, 235).

In the 1990s, after the lost decade of the 1980s, the macro-economic

situation of the countries of the region vastly improved. Most of the countries

registered in the 1990s a net transfer of funds from abroad and steady indexes of

economic growth. At the same time, during this period of liberalization (from the
1980s on), there has been a further deterioration in the income distribution and

income gaps within the different countries (see Stewart and Berry 1999, 168).

Thus, paradoxically, while the overall economic situation of countries such as

Argentina and Peru have steadily improved, the fate of many of its citizens,

especially the poor and disadvantaged, has steadily deteriorated. It is clear that

the debt crisis of the early 1980s and the ensuing economic stagnation were the

primary responsibles for worsening poverty and inequality during the 1980s.

However, although the resumption of economic growth in the 1990s resulted in

some progress in reducing poverty (particularly in urban areas), poverty and

inequality remained high, even above the levels reached prior to the debt crisis.

The ranks of the poor in the mid-1990s numbered about 210 million in Latin

America, some 50 million more than the average of the 1980s (Korzeniewicz and

Smith 2000, 15).

In the case of Latin America, in contrast to the African situation, we have

witnessed a clear transition towards integration into the global economy, with

serious pernicious effects in terms of social welfare, more poverty and more

inequality, at least in the short term. Whether the exacerbation of poverty should

be causally linked to the forces of globalization or to the (ir)responsibility of the

national governments remains a question to be tackled.

CONCLUSION

In this paper, I have attempted to assess in a preliminary way the different

and alternative relationships between the phenomena of globalization and poverty

as a global problem in international relations. After defining the two concepts of

globalization and poverty, pointing out the different meanings and

interpretations, I have suggested four logical links between these two. First, from

a radical perspective (dependencia, neo-Marxism, or vulgar Marxism), one can

argue that globalization causes and deepens poverty and inequality both between

and within nations, due mainly to structural reasons. Second, from a Liberal

perspective, as epitomized by the Washington consensus, the forces of

globalization are considered to be the potential solution to the problem of poverty,

by reducing and eventually eradicating poverty, at least at its absolute levels.

From this perspective, the reduction and eradication of poverty can be done

eventually and especially by promoting free trade and disseminating in a wiser

way the technological impacts of the information revolution. Third, from a

Realist or agnosticview, it might certainly be the case that there is no necessary

linkage between globalization and poverty. The argument here, based on a

minimalistic version of what globalization is, points in the direction of the

national governments and states as the potential culprits (and saviors) for the

problem of poverty. Finally, the fourth alternative offers probably the most

accurate picture of reality, but the most undeterminated as well: the links between

globalization and poverty are complex and ambiguous; globalization might have

both detrimental and positive effects. Moreover, this is a two-way relationship:

poverty substantially affects globalization; hence, it is a global problem that

should be tackled by the agents of globalization. This might sound tautologically

in logical terms, but the most serious financial institutions of the world think

otherwise, at least in rhetorical terms.

The complex relationships between globalization and poverty have been

briefly illustrated with reference to two regions of the world affected by high

percentages of poverty, Africa and Latin America. We can learn from those cases

that the dark side of the moon remains to be explored for both prudential and

normative (moral) reasons. In practical terms, poverty remains a global issue in

international relations that is affected and affects in turn globalization (see Woods

1999, 14-17). Moreover, in normative terms, international cooperation to resolve

issues such as inequality and poverty does not reflect only incentives and cost-

benefit analysis, but also the underlying attitudes and values of human society

(Lumsdaine 1993, 29). In this sense, the links between globalization and poverty

should be also studied in terms of distributive justice and the quest to reduce

inequality.
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