NCPA - National Center for Policy Analysis

Globalization Improves the Lives of the Poor

May 13, 2004

Absolute poverty has fallen drastically in the past century. According to the World Bank, only 20 percent of the world's population lives on less than $1.08 per day compared to 65 percent 100 years ago. In fact, the proportion of the world's population living at a subsistence level has fallen more in the past 50 years than during the preceding 500.

According to Johan Norberg of the Liberales Institut, poverty reduction does not happen arbitrarily, but rather is a natural consequence of economic growth:

  • For every 1 percent of economic growth the poor increased their income by 1 percent.
  • On average, countries with open markets grow 3 to 5 times quicker than those with closed economies.
  • Multinationals continue to offer high wages and healthy work places for many third world countries.
  • Once-impoverished nations like Sweden, Taiwan and Vietnam have become wealthy through trade liberalization.

The World Bank studies conclude that 24 developing countries with a total population of 3 billion are integrating into the global economy more quickly than ever. Per capita growth in these countries has increased from 1 percent in the 1960s to 5 percent in the 1990s, while the industrialized countries grew by only 2 percent during this period.

Also, the underdeveloped world views globalization quite favorably: people in Sub-Saharan Africa are twice as likely to think globalization is a very positive force as compared to people in the United States or Western Europe. Moreover, as many as 75 percent of Africans think multinational corporations have a good effect on their country.

Source: Johan Nurberg, "Globalisation and the Poor," Occasional Paper 1, Liberales Institut, Switzerland, November 2003.

 

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