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Autor: anton • December 15, 2010 • 1,567 Words (7 Pages) • 1,905 Views
Globalization is spawning a rise in living standards
The main focus in this article is to illustrate how globalization has improved the lives of many in developing nations. Globalization in of its self is the trading of goods and services of a local economy into an integrated global economy. Technological advances have made this practice more feasible with in the last 50 years. The major milestones were the development of the internet and increased transportation technology. These two advances made the world coined "flat" and set the stage for higher living standards.
Countries such as Asia and Latin America have really harnessed these technology advances. They have been exporting their products and services on to the world wide market at alarming rates. Due to increased productivity in there economy there overall score card "GDP" gross domestic output per person has increased significantly. The higher the GDP, the better off the country and its people are theoretically supposed to be. Asia has seen the most significant jump in GDP in the last 50 years. On average its people have seen a 5 times greater GDP per person due to an ever expanding economy.
Globalization is the driving force behind increased GDP per person. Evidence has been studied linking that countries that tend to globalize faster have a directly proportionate increase of GDP of 5%. This study was conducted by David Dollar and Aart Kraay of the World Bank. They studied the countries between 1960 and 1990. The worlds two largest developing countries India and China make a perfect example. India increases its GDP per person from 2% to 5% by encouraging foreign trade and investment. It lowered its tariffs by more than half in one year to encourage this.
It also has been shown that foreign companies who operate in developing nations pay there employee's higher salaries than domestic companies. The increase is typically 12%- 30% more. Foreign companies can afford to pay employees higher salaries because overall they are cutting their operating expense significantly by operating in a foreign country where taxes, wages etc are significantly cheaper.
Living standards can be calculated by literacy rate, life expectancy and school enrollment as well. Some believe that these truly measure how well peoples living standards are. The UN developed a study including all these variables and put them in an Index. Researchers then studied the comparison of these results with the GDPs of the seven largest emerging countries. The results showed that there is a direct relationship with the two. The countries with the highest GDP also had the highest Index ratings.
Increasing a countries average wage is thought to increase the poverty as well. Research has also proven this theory false. In India 16 states have seen dramatic average income levels rise. In all 16 states the poverty has shrunk. There is no conclusive evidence that higher average wages increases the poverty level.
Globalization has been proven to increase the standards of living in many developing nations. The Emerging economies have seen significant prosperity due to international trade that has trickled down to its citizens in the form of better education, living conditions and jobs.
Globalization in my opinion is the key to how this world must survive. It has the ability to stop wars, chisel away poverty and share all the unique products and services different cultures foster.
The internet has brought the ability for a small Moroccan leather shop to sale its merchandise to an infinite number of clients. Its potential for growth is virtually limitless. Globalization has allowed the world to experience the American Dream and given each person and country a fare shot at competing. As the ages roll on my belief is that each country will eventually have to begin specializing on the products and services they have the most utility in. Meaning, each country must export the products and services that they have an advantage in compared to other countries. Wither it is for geographical reasons, specialized work force etc, . For an example it makes sense that Saudi Arabia specializes in oil exporting. They have an abundant supply and a compatible work force. It would not make sense for them to export clothing. China would have the advantage due to its enormous work force. If each country could specialize in what they have an advantage in they would remain a constant force in the global economy. The countries would then have to trade for products and services that they do not have an advantage in producing. The overall global affect of this helps everyone. If each countries specializes the total number of good and services as a whole expands. This provides more goods at cheaper prices which ultimately puts more money back in the consumer's wallet. Or in another way, it raises the standards of living.
Globalization is a means to defuse war. The entrepreneurs of India are one of the most important factors in keeping peace with its rival Pakistan. The entrepreneurs diffused an uprising between the two nations when they went to the local government and expressed how they can't just shut down business for war. They expressed that they are part of the global economy now and that by shutting down for an extended period of time will cause irreversible consequences in the there countries economy. Globalization relies on each other to fulfill its duties. Besides religious believes many terrorist join terror organizations due to its wages paid and the lack of employment opportunities. Coca -Cola opened up a factory in Afghanistan and by doing so took former al quida soldiers and turned them into career men making an honest living. Call centers in India increased the average salary of young adults by 3 times. India is largely Hindu however they