Globalization and Poverty: An Ecological Perspective

Book excerpt

By: Roldan Muradian and Joan Martinez-Alier

Date: 2001

Source: Muradian, Roldan, and Joan Martinez-Alier. Globalization and Poverty: An Ecological Perspective. Heinrich Böll Foundation, 2001.

About the Author: Roldan Muradian is a Venezuelan biologist. He holds an M.S. in Ecological Economics, has been a research fellow at the Universite de Versailles (2000–2002), and as of 2006 was a Ph.D. candidate at the Universitat Autonoma de Barcelona. His main area of research involves the relationship between trade and the environment. Joan Martinez-Alier is a professor at the Universitat Autonoma de Barcelona. He is a founding member of the International Society for Ecological Economics, a member of the Scientific Committee of the European Environment Agency, and a member of the Green Academy of the Heinrich Böll Foundation. He is the author of Ecological Economics: Energy, Environment and Society (with Kalus Schluepmann); Varieties of Environmentalism: Essays North and South (with Ramachandra Guha); and The Environmentalism of the Poor: A Study of Ecological Conflicts and Valuation.

INTRODUCTION

Since the 1950s, the world has experienced an unparalleled movement of currency, capital, trade, and human resources between countries. This flow across borders, called globalization, has fueled debates regarding development and economic theory, largely due to its impact on workers and the environment in low-income countries. Supporters of globalization believe that this free flow of trade and currency has facilitated the expansion of economic growth and opportunities globally. Dissenters in the globalization debate assert that globalization has promoted unfair labor practices and environmentally detrimental policies in low-income countries, as well as an increase in the income gap between high-income and low-income nation-states. In the globalization discourse, low-income and developing nations are referred to as the South due to their geographic location south of the equator and include areas in Latin America, Africa, and Asia. Likewise, developed countries are referred to as countries in the North. This difference in globalization experiences in the North and South embodies the globalization debate.

What is globalization? Globalization implies a global economy where goods and services move across borders without difficulty. This movement across borders includes investments, capital, labor, and technology. Globalization also includes the advances in technology that allow the flow of knowledge, investment, and trade. The emergence of globalization reflects an increased integration of global economies in the form of advanced world trade and vibrant international financial markets. Although globalization suggests a movement toward a one-world economy, national interests and sovereignity continue to play a role in international transactions. Supporters of globalization assert that globalization has also facilitated the spreading of knowledge and democracy, which facilitates a stronger, more widely employed workforce and therefore a peaceful future. At the helm of the globalization movement are multi-national corporations (MNCs) and trans-national corporations (TNCs). Dissenters in the globalization debate suggest that these corporations are the cause of a decline in standards in developing countries. The dissenters assert that the integration of global markets has allowed MNCs and TNCs to pressure low-income countries in the South to relax environmental regulations and labor standards or risk losing jobs and international investment.

Globalization in the form of movement of trade, labor, and capital is not a phenomenon that is exclusive to the latter half of the twentieth century. At the end of the nineteenth century, the world also experienced a similar flow of resources and information, particularly from 1870 to 1913. The flow of information was facilitated by the telegraph, which sped communications, and the flow of human resources and trade was facilitated by the railroad and steamship, which made transportation cheaper and faster than before. During this period, immigration relocated waves of people in unprecedented numbers. However, the Great Depression, followed by periods of economic isolation and war, brought this wave of globalization to a halt.

At the close of World War II, the members of the international community met in Bretton Woods, New Hampshire to create a global financial system. The system that emerged included the International Monetary Fund (IMF) and the World Bank. The IMF was created with the purpose of creating policies that would reestablish the economies of the world that had been destroyed by war and by poor economic policies in the 1930s. Members of the IMF were voluntary donor nations and lent money to member states and others who agreed to undertake economic policy changes. On the other hand, the World Bank was established to undertake programs that would eradicate poverty throughout the globe. The World Bank membership consisted of developing and developed nations and is a source for funding development projects globally.

As a result of the increased cooperation and integration, global exports rose from 12 percent in 1965 to 22 percent in 2000. Although detractors of globalization have submitted that policies and treaties of cooperation create unemployment, employment has actually been affected by the reallocation of jobs from one industry to another. However, countries with higher trade levels have higher employment than those countries with low trade levels. Likewise, Southern countries whose trade levels are low continue to maintain high unemployment.

The increased flow created by globalization has created an unprecedented openness by countries. As a result, the international community, in the form of inter-governmental organizations like the United Nations and Bretton Woods organizations, as well as non-governmental organizations, has placed pressure on Southern countries to adopt high environmental standards and fair labor practices. Northern countries assert that the creation of an international fair labor stand, to include the freedom of association, the freedom to organize and bargain collectively, the freedom from forced labor, child labor and job discrimination, is needed to affect the quality of life in the South. Many countries in the South reject the imposition of regulated environmental and labor standards in order to remain competitive. Those who support the implementation in international fair labor standards and environmental regulations believe that the lack of such standards and regulations propels the low-income countries of the South toward lower wages and declining environments.

PRIMARY SOURCE

GLOBALIZATION AND POVERTY: AN ECOLOGICAL PERSPECTIVE

1. Introduction Does increasing integration into the world economy represent an engine for development, no matter how countries choose to achieve this integration? How will the economic and environmental costs and benefits of globalization be allocated internationally? Which policies are suitable for correcting global income inequality? This paper examines these questions from a political ecology perspective. Our analysis is very broad in scope, and several matters are covered (not always in complete depth). We revisit the structuralist paradigm of development, taking environmental issues into consideration and providing relevant empirical data. In addition, we introduce a general framework for addressing distributional issues within North-South economic and environmental relations. The paper begins by discussing the vision of Bretton Woods institutions on the subject of international economic integration. Subsequent sections (2-5) argue that the Bretton Woods approach can be contested if one takes into consideration both income inequalities as well as the peripheralization of the environmental burdens of global-level material consumption. Section 6 discusses the environmental and developmental consequences of policies that expand natural resource exports as a means for achieving increased integration into the world economy. The case of Latin America is discussed in some detail in Section 7. Section 8 focuses on the role of transnational corporations and financial flows in the distribution of profits in a context of economic liberalization. The paper concludes with alternative policy suggestions that maintain the goal of preventing increased income inequality and environmental burden displacement as consequences of globalization.

2. Bretton Woods Optimism, Southern Pessimism? At least until September 2001, it appears that the Western world has entered the 21st century with a sense of optimism. Several facts support this optimistic sense of prosperity and are largely related to the economic and technological performance of the industrialized world in recent decades. During this period, affluent countries have witnessed almost relentless economic growth. New inventions and discoveries, such as the Internet and the human genome, have paved the way to a "new economy." Capitalism has consolidated its position as the leading economic system, and gross world product has grown rapidly since 1986, a fact which is explained by increasing global trade liberalization and capital migration. Moreover, since the Second World War, there have been no violent conflicts between former enemies in Europe and Asia, and authoritarian governments seem impossible in the capitalist core of the world. Furthermore, environmental issues, which three decades ago constituted the main point of criticism to the idea of limitless growth, are nowadays viewed as fully compatible with market-based economic expansion. Economic growth is seen as the best cure for the environmental consequences of economic growth. Based on empirical evidence, most economists perceive trade and global economic integration as engines of growth (Edwards, 1993). Therefore, globalization and free trade policies are compatible with sustainable patterns of development (Bommer and Schulze, 1999). Even if export expansion entails the increasing exploitation of natural resources, mainstream thought views export promotion as desirable because it allows both (1) the use of resources that would remain idle in the absence of trade and (2) the establishment and enlargement of backward and forward links between primary and other sectors of the economy. These processes are believed to induce higher rates of aggregate income growth and a progressive shift toward economic activity based on manufacturing and the provision of services (Xu, 2000). Classic examples of this kind of development based on natural resource exports include Australia, Scandinavia, and Canada, as the "staple" theory of growth proclaimed long ago.

The market is generally viewed as the most appropriate arena for resolving environmental externalities that arise precisely due to "market failures." Thus eco-efficiency can be reached through economic growth and market liberalization. Furthermore, material scarcity is no longer perceived as a threat to the global economy. First, the material and energy intensity of economic output has decreased in industrialized nations due to technological innovation. Second, sufficient mineral reserves have been identified, at least for the next century (Hodges, 1995). Third, technological improvements in recent decades, which have enabled the development of substitutes for relatively scarce minerals, warrant the optimistic idea that mineral constraints on production can be overcome for an indefinite period (Mikesell, 1994).

Neoclassical theory predicts that rates of return to capital diminish as it becomes more abundant relative to labor. Since capital in developing countries is in scarce supply, its rates of return should exceed that in industrial countries. Thus, in the absence of barriers, capital will migrate from rich to poor regions in search of higher rates of return, raising growth rates in developing countries and closing the income gap between the developing and industrialized worlds (UNCTAD, 1999a). Therefore most of the benefits of globalization will be located in developing countries because a convergence of income at a global level is expected (Park and Brat, 1995). A reduction of income inequality within poor countries is also expected due to an expanded supply of workers possessing basic skills (Williamson, 1997). This optimistic vision of future global economic and environmental performance, which has been labeled the "Bretton Woods paradigm" (Therien, 1999), is shared by many politicians (in the North and South), mainstream economists, and international institutions such as the World Bank, the WTO, and the IMF. This vision has also determined the tone of globally influential documents on the economy-environment relationship, such as the Brundtland report (Doyle, 1998).

Nonetheless, this optimistic vision is challenged by several remarkable facts. First, the gap in per capita income between the world's poorest and wealthiest populations, and between developed and developing geographic regions, has increased continuously since the 1970s (UNDP, 1997; WRI, 1999). Second, most developing countries are experiencing economic decline, stagnation, or slower growth than industrialized nations (Broad and Landi, 1996). Income inequality is increasing not only at the global level; it is also increasing within many developing nations and, surprisingly, even within industrialized countries such as the United Kingdom and the United States (Atkinson, 1999). Third, violent conflicts, famines, and autocratic governments are still common in the Third World. Fourth, while forested areas are generally expanding within developed countries, the rates of species extinction and deforestation are considerably high in poor regions of the world. Fifth, the AIDS epidemic has assumed dramatic and unpredicted dimensions in Africa, partly as a consequence of property rights on medical products in developed countries. Finally, international aid is decreasing, and recurrent economic crises have occurred in the semi-periphery of the world economy, affecting "emerging" countries such as Mexico, Argentina, Brazil, Turkey, Indonesia, Korea, Malaysia, Philippines, Thailand, and Ecuador.

Most of these economic problems are viewed by the optimistic mainstream as the result of misguided economic policies implemented in the past, such as import substitution and inward-oriented development strategies. Hence the "Washington consensus"—adjustment reforms promoting market liberalization and increasing integration into the world economy—is proposed as the best path available to developing countries (Baer and Maloney, 1997). The generalized application of this strategy, it is believed, will generate a new world order of widespread prosperity….

SIGNIFICANCE

An IMF study in 2000 found that per capita income globally rose during the twentieth century. However, the study revealed disparity among countries. This disparity identified that income distribution had become more unequal among countries than at the beginning of the century. The quality of life in developing countries revealed the abject poverty and poor living conditions of those in the South. In addition, the study found that the spread of AIDS demonstrated a need for policies to alleviate poverty in the South. The IMF study asserts that developing countries in the South should be assisted by developed nations through policies of financial and technical assistance, as well as debt relief. According to the study, these policies promote trade, encourage the flow of private capital into Southern countries, and provide debt relief.

FURTHER RESOURCES

Periodicals

Ross, Robert. "From North-North to South-South." Foreign Affairs (September 2002).

Taylor, Timothy. "The Truth About Globalization." Public Interest (April 2002).

Web sites

International Monetary Fund. "Globalization: Threat or Opportunity." 〈http://www.imf.org/external/np/exr/ib/2000/041200.htm〉 (accessed January 30, 2006).