Friday, May 12, 2006

An Economist I Didn't Ignore

Blogging from the Old Dominion. Happy birthday, Mom.

I have a nasty habit of ignoring economics. Part of it is because I can't understand drivel like gross GDP as a percentage of my left foot on Tuesdays. I think when I listen to economists blather on, it makes me understand how most of the world feels when I discuss the effect of head block-head block interactions on the encapsulation of square-well spheres in a simulated block copolymer micelle.

So I was pleasantly surprised when I picked up April's Scientific American and found an article on globalization and poverty written by an economist that I found very easy to read. I can't figure out how to link to it, but if you can get your hands on the article, read it. It's titled "Does Globalization Help or Hurt The World's Poor?" and is written by Pranab Bardhan. It doesn't answer all your questions about the effect of globalization on world poverty, but it's a good starting place. The general argument: globalization can help alleviate poverty, but it's not the silver bullet. You need social programs too. The money quote (which comes after mentioning several pairs of similar countries that suffered diverging fates in the past half-century):

"The experiences of these and other countries demonstrate that antipoverty programs need not be blocked by the forces of globalization. There is no 'race to the bottom' in which countries must abandon social programs to keep up economically; in fact, social and economic goals can be mutually supportive. Land reform, expansion of credit and services for small producers, retraining and income support for displaced workers, public-works programs for the unemployed, and provision of basic education and health can enhance the productivity of workers and farmers and thereby contribute to a country's global competitiveness. Such programs may require a rethinking of budget priorities in those nations and a more accountable political and administrative framework, but the obstacles are largely domestic. Conversely, closing the economy to international trade does not reduce the power of the relevant vested interests: landlords, politicians, and bureaucrats, and the rich who enjoy government subsidies. Thus, globalization is not the main cause of developing countries' problems, contrary to the claim of critics of globalization - just as globalization is often not the main solution to these problems, contrary to the claim of overenthusiastic free traders."

Interesting stuff. I'd say it ignores the influence of the IMF and World Bank, which until recently made the elimination of social programs something of a requisite for aid if I'm not mistaken (though I very well may be). It also ignores the geopolitical power struggles occurring in the background and how taking the necessary domestic steps may be met with resistance by powerful governments. But it's a good starting point for discussion of the issue.

I'd be interested to hear the thoughts of the peanut gallery. If I find a link, I'll post it.

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