Globalization and the global poverty era in developed and developing countries

Globalization and the global poverty era in developed and developing countries

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Researcher Shatha Khalil *
The global economy witnessed many transformations in the 1980s. The most important of these changes was the strong concentration on the financial capital, the expansion of multinational transnational corporations, the collapse of the Berlin Wall, the fall of the socialist camp in the early 1990s, the erosion of the national liberation system, the horrible withdrawal of the ideological and intellectual structure of socialist and liberal parties, technological development of communications and the digital revolution.
These variables created a historical reality that upset the balance of interests and power that prevailed throughout the period following the end of the Second World War and led to a Unipolar or globalization phase that enabled the United States to dominate the world political, economic and cultural landscape as the victorious party with the right to determine the pattern of international relations according to the concepts of neo-liberalism.
The world and the global economy have witnessed a wave of global trade liberalization in all its aspects, commodity, intellectual property rights and global trade investment. It has become a single market in which the circle of competition among the players in this market is expanding, they become not only countries and governments but global economic organizations and multinational corporations , and giant economic blocs that are countless .
Some economists have defined “economic globalization” as the integration and interdependence of national, regional and local economies, almost all over the world, by intensifying the cross-border movement of goods, services, technologies and capital.

It creates opportunities for economic growth at the local and global levels, increases global trade, revitalizes the global economy, and draws global trends closer to the liberalization of trade markets, capital, mega-money and giant corporations.

Economic globalization is aimed at the increasing integration of the world’s economies, as the economies of countries have shifted from a centrally planned economy to a market economy, where the internal reforms have helped companies adjust more quickly and exploit the opportunities created by major technological developments.

Multinational corporations have reorganized their productive process to take advantage of these opportunities, leading to increased migrations of labor and capital into areas characterized by low labor costs.

In recent decades, we note the integration of developed economies with less developed economies, the reduction of trade barriers among them, the imposition of low tariffs and the curbing of government support for locally manufactured goods. This is seen through FDI, the reduction of trade barriers, and prior arrangements were made under the General Agreement on Tariffs and Trade (GATT), which was formed in 1947 and evolved into what is now the World Trade Organization (WTO), the other side of globalization, there are those who believe that advances in communications and transport technology in addition to the establishment of ideology of the free market have divided the world into two poles, a rich north and a cheap or poor southern, giving unprecedented freedom to move goods, services and capital across borders , the wealthy North countries want to open world markets to commodities to take advantage of cheap labor in the South, and to achieve this , rich countries use international financial institutions and regional trade agreements to force poor countries to “integrate” into the global market by lowering tariffs, privatizing state-owned enterprises, and reducing environmental and labor standards, maximizing their profits at the expense of workers and their living causing strong reactions from civil societies .

Capital Globalization:
Global capitalism has been freed from the constraints of proliferation and expansion due to the huge qualitative development of technologies and the information revolution, and because of the establishment of huge global economic conglomerates, so it has to be accompanied with these important variables, the development of cognitive, political and economic systems that would strengthen the control of this new unipolar world order.
A new world in which a single force imposes its conditions, style and vision on everyone in the name of globalization, which has not been addressed by any one, especially in the affected dependent developing countries that have obeyed the new trend in order to preserve their interests and responded to globalization through trade liberalization, economic restructuring, , adoption of the privatization system and to adjust with variables.

Globalization has emerged as a result of international and regional conditions. It is a historical, political and economic extension of the evolution of capitalism, which has not ceased to grow since it was a fetus in the fifteenth century, then it was born in the eighteenth century and capitalism became imperialist at the end of the nineteenth century.

The global imperialist capitalist system in the stage of globalization has reached a stage in which it seeks to use force, to restore the peoples of the world to the rules that governed the first period of the emergence of capitalism, the destructive bases that were based on the savage competition that ensured the domination of the most powerful nations on the fate of week countries and people, thus , dominance is the centerpiece of the activity of capitalist centers in the robe of globalization in modern times , and the continuation and expansion of control, either through the use of military force, or through the subordinate regimes under the influence of the West.
This is the nature of capitalism in the phase after the imperialism , what imperialism is trying to create is not a new system of the universe, but what is happening is a natural extension and a historical continuation of the development of capitalism, which is based primarily on expansion, proliferation and accumulation of capital. The Imperialist capitalism is benefiting – the US in particular and the European less – from the international variables to impose more tyranny on other countries, and the main victims here are the developing countries and their peoples.

Globalization and its negative impact on developing countries:
Developing countries have made no significant improvement in financial and trade liberalization, with the bulk of foreign investment going to developed countries.
The economic globalization, especially the financial aspects, have had negative economic effects on the economies of developing countries, such as sudden fluctuations in capital, where the flow of these funds has increased significantly, banks have been exposed to crises and speculation led to the escape of national capital abroad , and money laundering which form a large proportion of the world, in 2018 exceeded (8) billion dollars, while the size of this type of financial crimes between (2-1.5) trillion dollars, equivalent to (5-2) percent of world GDP.
The dirty money generated by illegal sources, which cause financial crises, the problem of national sovereignty in the area of economic and monetary policy, and the ongoing deception that it is exposed to by providing capital to it.
The developing countries are characterized by many features such as small of the size of the market, weak liquidity and high volatility in prices and others.

These economic impacts on developing countries can be summarized as follows:
• The widening of the incomes gap and increasing wealth between countries and population within one state, impoverishing the poor and enriching the rich. This is what warned by the well-known authors Hans Martin and Harald Schumann in their book “The Trap of Globalization” , the expected gains from deepening globalization are not shared equally among the nations and peoples.
• Globalization of poverty is that poverty becomes universal in the world.
• Global poverty rates have increased, due to the development of human relations resulting from the phenomenon of globalization, economic openness, and financial, economic and commercial liberalization and the poverty has become a global phenomenon. Among the most prominent global phenomena are pollution and others. Some economists use the term “the era of global poverty” with the emergence of widespread famine, poverty and malnutrition, with both developed and developing countries accounting for more than 20% of the total population of about 7 billion, of whom about 1.3 billion live below the poverty line.
• Globalization has led to an increase in global poverty, as if its goal is the globalization of poverty, the increasing negative effects of poverty due to the malnutrition, diseases and inability to develop human capacities, low human resource capacity and the difficulty of rehabilitation and training. This is evidenced by the continuous increase in poverty rates and the failure of International organizations in their plans to curb poverty
• The spread of the phenomenon of unemployment, which hit many economies and societies, especially with the outbreak of economic crises where unemployment rates rose in the advanced capital centers and formed large numbers that exceeded (25%) in countries such as Greece, Spain and some EU countries although economists in their previous assumptions considered the unemployment rate in the economy was estimated to be 5% , this is normal rate . However, its rise above this rate means that it is a real and structural crisis affecting the foundations and method of capitalist production. This is due to the technological and scientific progress that led to saving in many elements of production.
• Cheap labor is another aspect of this global impoverishment crisis where the cheap labor in densely populated countries, such as China and Bangladesh, whose workers earn wages and salaries less than others , has prompted European and US multinationals companies to direct their investments and industries to them which caused the deterioration of the problem of unemployment and poverty in the light of the decline in the level of investments in many other countries.
• Financial globalization has increased and deepened poverty in the world until poverty has become common because of the growth of multinational corporations.
• Globalization tools are numerous, including the International Monetary Fund, the World Bank, the World Trade Organization and multinational corporations and the communications and informatics revolution has also helped spread this phenomenon for the time being.
• There is a significant expansion in technological and economic gaps between developed and developing countries alike.
• Liberalization of financial services and deregulation of financial transactions have exposed banking systems to financial crises, speculations, the influx of black money, money laundering and the flight of local capital.
• Financial liberalization and the spread of globalization have proved that developing countries, including Arab countries, suffer from an unequal situation with the developed countries, which confirms the structural imbalance in the structure of the economy.
• The increase in unemployment rates at more than 5% and the increase in the number of the poor by 150 million after the crisis confirms the weakness of the existing system and its inability to solve existing problems.
• The phenomenon of globalization has taken place in earlier periods, but at present it is characterized by the strength of its spread and sphere of influence.
• The uniqueness of the United States at the global level and the use of force to impose its various policies, some have called the phenomenon of globalization the name of America.
• Globalization has different fields, the most important of which is the economic sphere, in addition to the financial, political and cultural fields.
• The phenomenon of globalization led to the increase in the volume of poverty on the global level as a whole, and even the countries that sponsor this phenomenon have suffered from the increase of this phenomenon, which led to the increase in the volume of unemployment in all countries of the world, including sponsoring countries where they resort to reduce the interference of the state in economic life through the process of privatization, and helped the spread of organized corruption, crime, the drug and arms trade, and the collapse of many economies in the world through financial speculation.
• Globalization is marginalizing national and cultural identity as a prelude to achieving economic goals.
• Globalization has a great impact on human resources by influencing the development and growth of these resources by reducing spending on public services such as health and education, as well as by reducing wages, in addition to weakening trade unions defending the rights of these resources, the globalization also leads to the need to pay attention to the rehabilitation of human resources commensurate with the knowledge and communication revolution, so that most of the skills and knowledge possessed by human resources are not commensurate with the requirements of globalization.

Translated by : mudhaffar al-kusairi

Economic studies Unit
Rawabet Center for Research and Strategic Studies