Sunday, 1 February 2015

Lesson 4 : Inequalities caused by globalization : the forgotten countries

Cf. pages 78 and 79 of your textbook.


“Heterogeneity in the South” means that many of the regions that make up the “South” (i.e. the LEDCs which are found mostly in the southern hemisphere) have not benefited equally from globalization.

The impact of globalization on poorer countries can be seen as positive: it has brought them greater wealth.

The impact can also be seen as negative: it has only brought wealth to a small percentage of these countries’ populations, sometimes creating or exacerbating social inequalities (between rural and urban areas, and within urban areas).

Document 1 is a photo of Baku, capital of Azerbaijan, in Central Asia. The urban landscape has been transformed by the impact of recent increased wealth (due to the post-1991 oil boom): modern housing and offices are being built. Poor housing still exists however (note the slum-like dwellings). This photo illustrates the fact that globalization results, at a local level, in increased wealth only for a privileged few (or the fact that “trickle-down” of wealth from the wealthy to the less wealthy is very slow…).

Document 2 is a World Bank graph showing gross capital formation (i.e. spending to improve a country’s infrastructure) in the South from 1980 to 2003. East Asia and Pacific countries show the greatest increase (especially since 2000) in investment. Investment in Latin America and the Caribbean increased slowly. Investment in South Asia was low in 1980 and only increased a little by 2003 (it has increased much more since). There has been virtually no investment in the countries of Sub-Saharan Africa. These figures are a good indication of a region’s integration into the globalized economy. We can say that South Asia has, up to recently, been excluded from the globalization process, and Sub-Saharan Africa continues to be excluded (it has been “forgotten” according to the lesson title). LEDCs have little money to invest in improving their facilities (e.g. factories) and transport networks (e.g. roads) and this results in an inability to exploit natural resources, transport and sell goods abroad.

TNCs prefer to invest (FDI) in countries which are not too risky (i.e. that are politically stable, with an abundant and competent workforce, not subject to extreme weather conditions, etc.). For example, a company will probably choose to invest in India rather than Pakistan. The result is that some LEDCs develop faster than others, hence the heterogeneity of the South.

Map showing that the South is less well served by air routes than the North

Document 3 is a table that illustrates the unequal benefits to destination countries of international tourism. The flow of international tourism has virtually doubled since 1990. All regions of the world are now tourist destinations, but it is the areas that are safe, easy to get to, and with decent tourist facilities that are preferred (tourists prefer Europe to Africa for example). Globalization includes the movement of people (for work, tourism, emigration), but the statistics show that the flows of travellers are concentrated between wealthier parts of the world with efficient transport hubs; poorer countries are not primary destinations and therefore do not benefit from increased immigration or from tourist money as much as the wealthier countries, thus accentuating income differences between the countries of the world.

Documents 1, 2 and 3 show that globalization has succeeded in increasing wealth generally (especially for those countries that have something to sell abroad), increased investment by TNCs in foreign countries, encouraged increased investment in infrastructure, and increased population flows. However, disparities between the MEDCs and LEDCs, and between rich and poor areas within regions, notably in the South, still remain.

There is a North-South divide still in the world (“North” means “wealthy countries”, most of which are indeed in the northern hemisphere, and “South” means “poor countries”, mostly in the southern hemisphere). Is it possible to balance this divide and if so, how? After all, the globalized economy is controlled by the powerful economies of the world to their advantage…

Document 4 is a cartoon which illustrates the absurdity of “free trade” between the North and the South. The man on his pallet truck carrying big boxes overflowing with consumer goods (symbolizing the great wealth of rich countries) seems very satisfied, whilst the woman, carrying a cooking pot on her head filled with fruit and vegetables (symbolizing the subsistence economy of the poorest countries) is at a loss as to how to react; she does not have anything with which to “trade”… The cartoonist is condemning the so-called “free trade” of the globalized economy which favours rich countries and excludes the poorest countries. Free trade is not an economic system that benefits countries that have insufficient resources with which to compete on a worldwide market. The differences between North and South rests on economic strength (the MEDCs are able to produce and trade vast amounts of goods, unlike the LEDCS) and political power (international trade agreements rarely favour poorer countries and TNCs can exploit the resources of poorer countries mostly to their advantage, cf. as an example the practices of several TNCs in Africa).

Document 5, a 2003 article from The Guardian, demonstrates how the “rules” of the globalized economy are biased in favour of the wealthy and powerful countries. The farmer in Benin produces plentiful crops of good-quality cotton. The Texas farmer’s cotton crops are poor because there is not enough rainfall. However, this is not a problem for him because cotton production is subsidised by the US State (he is guaranteed an income even if he does not manage to produce any cotton). Surplus American cotton is sold on the world market more cheaply than the African cotton. The result is that the African cotton farmers are put out of business (they do not get any help from the State) and the economy stays poor.

The USA is a proponent of “free trade”, in other words it is supposed to be against protectionism. Direct government subsidies to farmers are, however, a protectionist policy; it would appear that the USA is not playing by its rules… The WTO is also supposed to favour free trade but is still very much controlled by the most powerful countries to their advantage; the poorer countries are not so much “forgotten” but excluded from the global marketplace. Anti-globalization activists point to these unfair practices as proof that globalization actually creates poverty…

Documents 4 and 5 tend to prove that the globalization process is biased in favour of the rich and powerful countries, with little hope of breaching the divide between the North and South because poor countries are too weak to compete and are even excluded.

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