Poverty and Inequality
In the current day and age poverty is still very apparent, and one of its main causes is globalization. But first we must define the word poverty in order to understand it better. “Poverty” is defined as ‘the state of being inferior in quality or insufficient in amount’. But there are two types of poverty which are absolute poverty and relative poverty.
Absolute Poverty is defined by a fixed value or the ‘poverty line’. The international standard of extreme poverty are those who survive on USD 1.90 a day.
While relative poverty is defined by a value in relation to others or having the poorest shares in the population.
Key Trends in Global Poverty and Inequality
Since 1990, the amount of people who live in extreme poverty have halved. Extreme poverty has reduced but, 10% of the world still lives in the state of extreme poverty.
Over one fifth of the world now remains below the USD 3.20 poverty line, and almost half the global population live below the USD 5.50 poverty line. The number of people who lived in those poverty lines increased between 1990 to 1999, but have now decreased since then.
Developing countries have common characteristics. These characteristics include having lower levels of absolute productivity or labor and capital, increase in population, and are often rich in agriculture.
Increase in population causes less job opportunities making it difficult to earn thus causing poverty. Most countries also have low labor cost, the workers earn little compared to the profit the companies earn. This is especially common in agricultural countries.
Capitalism Creating Inequality
The rich become richer, while the poor remains poor. Production is not owned by those who work under an employer, but production is owned by a ‘capital’. The workers do labor but are only paid by a wage.
For example in the coffee industry farmers usually make only 10% of the prices it’s sold for. It is a huge industry yet the farmers who are doing all the labor aren’t rich. This is one clear example of inequality due to capitalism.
This can also be seen due to the fact that in the USA the richest 1% already owns 34% of the world’s wealth while the richest 10% own 74%.
Globalization: Increase or Decrease Poverty?
It is quite difficult to say exactly if globalization causes increase or decrease in poverty. It is somewhat a complex study of its nature.
Globalization means that we are connected, which is not bad per se. Globalization has both ‘winners’ and ‘losers’. People lose some, people win some.
Even then globalization is also proven to decrease poverty rates as trade grows. The growth in trade can produce more jobs for people, which could reduce poverty rates.
But due to globalization and increase in trade, this can also increase the standard of life. This can also cause increase of poverty rates on the other hand. This also proves that globalization increases poverty on the other side of the spectrum.
