GLOBALIZATION

Globalization and Poverty

Globalization and Poverty

Introduction

The most commonly used definition of poverty is a lack of income; more specifically, having an income below an amount (the poverty line) deemed necessary for a minimum acceptable level of material well-being. Income is just a means to an end, however. There are more direct measures of the quality of life, such as health, education, and possibly freedom of expression. Poverty estimates also regularly make reference to mortality rates, schooling, and literacy.

Globalization is a term that has, in many instances, come to replace the older and no less complex notion of “development.” In fact, globalization, has replaced the term development as the new action word of contemporary international governance discourse. Not simply a term that describes an inevitable process that is shaping the modern world, globalization, when conflated with development, is a meta-policy guiding the way to social and economic well-being in the global community.

Poverty may be defined and measured in either a relative sense (deprivation compared to societal norms) or an absolute sense (deprivation compared to being able to afford “objective” basic needs of food, clothing, and shelter). Discussions of global poverty have settled on an absolute definition of poverty, implicitly relegating concerns about income distribution to secondary importance. Doing so has deflected attention from redistribution and the role it can play in poverty reduction. Since the World Bank's 1990 World Development Report, “a dollar a day” has become the standard international poverty line—a level based on an average of the poverty line being used in 10 developing countries at the time, although more recent estimates also use two dollars a day, which is a more relevant poverty line for middle-income countries such as those in Latin America.

Poverty estimates using the dollar-a-day line are made using “purchasing power parity,” meaning they allow for differences in purchasing power as many items cost less in developing countries than in developed ones. The most commonly reported measure is the poverty headcount (the percentage of the population below the poverty line), but the same data can be used to calculate the poverty gap, which is a summary measure of the average distance of the poor below the poverty line, and the poverty severity index, which gives greater weight to the poorest. The poverty measures used in health and education are also absolute; that is, they do not base well-being on a comparison of the same indicators for the better off at either the national or international level.

Patterns of Poverty

Estimates of dollar-a-day poverty are calculated only for the developing world. The proportion of absolutely poor in developed countries by this measure is nil or negligible. However, the most striking trend is the dramatic fall in poverty in East Asia, powered largely by reductions in the number of poor in the world's most populous country, China, but assisted by more recent declines in neighboring Vietnam. There has been a slower, but still marked, decline in the poverty headcount in South Asia, including in the world's second largest country, ...