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The Pro is required to prove that economic globalization has resulted in a net reduction in poverty. While it appears more difficult to prove that the reduction has been a net reduction, it is actually easier to prove. The simple reason is that (almost) every study has reached the conclusion that while economic globalization may have increased poverty in some ways and in some areas, there has been an overall net reduction.

Globalization and Poverty reduction

The growth in globalization has been correlated with rapid poverty reductions.

Yale Global Online, July 5, 2011 “With Little Notice, Globalization Reduced Poverty,”http://yaleglobal.yale.edu/content/little-notice-globalization-reduced-poverty DOA: 1-1-15

A major success in a poverty-reduction goal for the new millennium – halving the proportion of people whose income is less than $1.25 per day – largely went unnoticed. The World Bank estimates poverty levels, but the most recent data is from 2005. By combining the recent country survey data of household consumption with latest figures on private consumption growth, Brookings Institution researchers Laurence Chandy and Geoffrey Gertz generated poverty estimates to the present day. They conclude that the world – even stubborn Sub-Saharan Africa – is in the midst of rapid poverty reduction; they credit economic growth and widespread development brought by globalization. Poverty reduction was one part of a key UN Millennium Goal, and global observers may sit up and take notice after two other key parts are achieved: full and productive employment for all and halving the proportion of people who suffer from hunger.This holds especially true when long-term results are considered.

Andres Bergh, Therese Nelson, October 2014, Lund University, Sweden, Research Institute of Industrial Economics (IFN), Stockholm, Sweden, Is Globalization Reducing Absolute Poverty? World Development, pp. 42-61

To capture the long-run effects of globalization, we estimate the relationship by considering the differences over a longer time period, by running the following regression: equation(2)

ΔPovertyi=α+β1(ΔGlobi)+β2(Xi)+εiΔPovertyi=α+β1(ΔGlobi)+β2(Xi)+εi

Turn MathJax on

In equation (2), ΔPovertyi and ΔGlobi refer to the change in poverty and globalization in country i over a longer time period. Following Ravallion (2006), we maximize the length of this time period for each country, and the dependent variable might consequently correspond to changes in poverty over different periods for different countries. In our setting we focus on changes that take place over 10 or 15 years, but exclude countries for which we only have information on poverty in two adjacent time periods. To minimize potential reverse causality, globalization is lagged by one time period. The spell length for poverty and globalization is the same, and a dummy variable is included to control for the spell length and to control for time effects. For example, in our sample there is information on poverty outcomes in Zambia for all four time periods of the panel. We therefore calculate the change in poverty by taking the poverty level in 2005 minus the poverty level in 1990. Likewise, we calculate the Zambian change in globalization using a 15-year time spell. In the Zambian example, this variable is thus derived by using data on globalization in 1985 and 1970. As a robustness test, we run the same regression on a sample of 15-year periods only, which means regressing the change in poverty during 1990–2005 on the change in globalization during 1970–85 for all countries included in the exercise. This first difference analysis bundles all time-invariant country characteristics into an error component, and estimates the relationship between globalization and poverty robustly to latent heterogeneity due to time-invariant effects. Specifications, however, include information on economic growth and initial poverty, referring to the poverty level in the earliest year in each country’s poverty spell.17 Table 5presents the results. The long-run first difference analysis confirms baseline panel findings. The results that trade restrictions and information flows matter for poverty are confirmed, while the positive poverty effect of cultural proximity appearing in some of the panel estimations disappears when applying a long-run perspective. Similarly, despite substantially reducing the country sample analyzed, results are also more or less the same when using only 15-year spells (columns 11–13).And even 2005 estimates put the reduction at half a billion

Gertz & Chandly continue:

Official estimates of global poverty are compiled by the World Bank and stretch back 30 years. For most of that period, the trend has been one of

slow, gradual reduction. By 2005, the year of the most recent official global poverty estimate, the number of people living under the international poverty line of $1.25 a day stood at 1.37 billion – an improvement of half a billion compared to the early 1980s, but a long way from the dream of a world free of poverty.And poverty is not just falling in China, but in other places in Asia and even Sub-Saharan Africa.

Gertz & Chandly continue:

. Unsurprisingly, the greatest reduction has occurred in Asia. But it’s not just the dynamic economies of East Asia, such as China, recording great feats in poverty reduction; South Asian giants including India and Bangladesh, and Central Asian economies such as Uzbekistan also make great strides. Even Sub-Saharan Africa is sharing in this progress. The region finally broke through the symbolic threshold of a 50 percent poverty rate in 2008 and its number of poor people has begun falling for the first time on record. This stunning progress is driven by rapid economic growth across the developing world. During the 1980s and 1990s, per capita growth in developing countries averaged just 1 to 2 percent a year, not nearly fast enough to make a serious dent in poverty levels. Since around 2003, however, growth in the developing world has taken off, averaging 5 percent per capita a year.Three decades of data prove a robust linkage between economic globalization and poverty reduction.


Using data from 114 countries (1983–2007), we examine the relationship between globalization and World Bank absolute poverty estimates. We find a significant negative correlation between globalization and poverty, robust to several econometric specifications, including a fixed-effect panel—a “long run” first difference—and a pooled OLS-regression. Introducing two instruments for globalization we also show that results are robust to correction for potential endogeneity. We motivate and test the instruments in several ways. In particular information flows and more liberal trade restrictions robustly correlate with lower absolute poverty.

It’s a 50% reduction since the 1950s.

Jan Cienski, 2011, Globalization Cures Poverty: Study,https://www.globalpolicy.org/component/content/article/162/27754.html DOA 1-2-15

Globalization is responsible for dramatically reducing the number of abjectly poor people around the world, according to a new study that contradicts the claims of skeptics who say it has worsened global poverty. “On average economic growth is good for the poor, and trade is good for growth,” said the study by the London-based Centre for Economic Policy Research. The study, prepared for the European Commission by a group of respected economists who surveyed existing literature and studies on globalization, was unambiguous in saying that almost every criticism levelled by free trade’s skeptics is wrong. Many globalization critics are “poorly informed about the historical record, and appear not to be aware of the contribution played by globalization in the struggle against poverty,” the study’s authors say. They say closer economic ties between countries, reduced tariffs and greater flows of investments have made the most startling impact on global poverty. While acknowledging the number of poor people in the world remains “disturbingly high,” the study says that in 1950 about 55% of the world’s population lived on less than US$1 a day (in constant, inflation-adjusted dollars). By 1992, only 24% of the world’s population had to make do with that tiny amount. During that time the number of poor remained static at about 1.3 billion people, while the global population grew rapidly.The effect can be seen in Nigeria.

Okungbowa, Florence. O. Ewere, Eburajolo, Ose Courage, Benson Idahosa University Department of Economics, Banking and Finance Benin-City, Nigeria, September 2014, International Journal of Humanities and Social Science, Globalization and Poverty Rate in Nigeria; An Empirical Analysis,http://www.ijhssnet.com/journals/Vol_4_No_11_September_2014/13.pdf DOA: 1-2-15

This study investigated the relationship between globalization and Poverty rate in Nigeria. The study employed the two basic channels theory to explain the relationship that exists between globalization and poverty rate within the Nigeria context. The study adopted a co-integration and error

correction modeling techniques on an annual time series data within the periods of 1981 – 2009.A unique co-integration between poverty rate and the explanatory variables in the study is found. In order to determine the short-run dynamics around the equilibrium relationship, we estimated an error correction model (ECM). The empirical findings in this study shows that an

increase in openness by (1) one unit will bring about a decline in poverty rate by 0.46209 percent in the current period showing a negative relationship. However, openness has a positive and significant impact on poverty in Nigeria during the period under study. Domestic investment (INV) was statistically significant and has a positive impact on poverty reduction, the current value of FDI responded negatively in terms of relationship and insignificantly to poverty in Nigeria, whereas, the first lagged FDI was statistically significant and also negatively related to poverty. This however shows delayed response. The results of the study suggest the need for

Government to encourage globalization, by embarking on trade liberalization policies in order to accelerate and sustain industrial growth and in turn reduce poverty also bearing in mind the growth and development of home industries which is also paramount to development, government should make sure that the globalization process is implemented in a gradual pace. As rapid globalization could be disadvantageous to industrial growth and this can in effect or breed more poverty.Controlling for Other Variables

While it is difficult to prove that it is globalization that has reduced poverty (there could be other reasons poverty decline), there is evidence that even when other variables are controlled for that poverty decreases.


To gain knowledge about potential mediators in the globalization-poverty relationship we add a number of control variables to the baseline regression: The average level of educationin the population over 15 years old, the share of the population residing in urban areas, and the government final consumption expenditure as a share of GDP

and inflation. While an expected negative effect of education on poverty is uncontroversial, there are different views on the poverty consequences of urbanization, as noted by Leon (2008) who describes the more recent view on urbanization as more optimistic for the poor than the older view. With regard to government consumption, there are several reasons to expect that states with larger welfare systems have lower poverty rates, but higher government expenditure does not necessarily imply a larger welfare state. For example, many developing countries allocate relatively large shares of public expenditures to defense activities, and as shown by Mosley and Suleiman (2007) such expenditures seem to hurt, not support, the poor. Inflation is generally assumed to be harmful to the poor, whose assets are typically less protected against inflation. Table 4 summarizes the results from regressions including control variables, starting with the baseline estimates to facilitate comparison. Next, we control for government consumption as a share of GDP. This variable is not significant and does not change other coefficients by much at all, suggesting that government size is not an important mechanism for poverty reduction. Urbanization, on the other hand, turns out to be negatively related to poverty, supporting the newer rather than the older view as described above, but the variable inclusion does not change the globalization coefficients. Surprisingly, education seems to be unrelated to poverty, and inflation associates with less poverty. Finally, including all the above control variables in the same specification changes little except for small reductions in the size of the globalization coefficients suggesting that there is something else in the globalization process benefiting the poor. One concern is that baseline results are driven by unobserved institutional changes, not captured by the country- and time-fixed effects, which are systematically related to globalization and poverty reduction. As a test of robustness we include information of a county’s legal structure and security of property rights, measuring the quality of the legal system, in terms of judicial independence, impartial courts, military interference, and integrity, and of the extent to which economic actors perceive the legal system to protect their property and contracts. The variable refers to the second area of the Economic Freedom Index (Gwartney, Lawson, & Hall, 2011).Reasons Globalization Reduces Poverty

The primary reason that globalization leads to economic decline is that trade increases economic growth. Countries can only growth with trade and there is NO evidence that trade increases poverty

Nina Pavcnik, Associate Professor of Economics, Dartmouth College, 2009, How Has Globalization Benefitted the Poor?, Yale Insights, http://insights.som.yale.edu/insights/how-has-globalization-benefited-poor DOA: 1-1-15

Economic growth is the main channel through which globalization can affect poverty. What researchers have found is that, in general, when countries open up to trade, they tend to grow faster and living standards tend to increase. The usual argument goes that the benefits of this higher growth trickle down to the poor. It has been a bit trickier, especially with aggregate data, to pinpoint how exactly the poor have been benefited. One challenge is that when trade or globalization happens, many other factors are changing, such as technology and macroeconomic conditions. Another challenge is that high-quality data on the well-being of the poor is often not available. It is thus really hard to tease out the effects of globalization on poverty in a broad sense But, that said, it is virtually impossible to find cases of poor countries that were able to grow over long periods of timewithout opening up to trade. And we have no evidence that trade leads to increases in poverty and declines in growth.Specifically, an increase in free trade benefits poor farmers.


Q: How do they end up being reached by globalization?For the rural areas, it really depends on how much globalization involves agriculture and that varies country to country. One example where the poor who were in agriculture benefited substantially was Vietnam. In the mid-1990s, Vietnam liberalized its trade. Prior to that, Vietnam limited the amount of rice that farmers were able to export abroad. When the government eliminated that quota, demand for Vietnamese rice increased and prices of rice in Vietnam increased. This led to higher standards of living for Vietnamese rice farmers. Globalization helped lift many of them out of poverty. Conversely, if you are a country that imports a majority of the food stock, farmers might be made worse off by trade liberalization because prices of agricultural products will fall. You can see how the result depends on the underlying structure of the economy prior to trade liberalization.

Third, access to technology lowers prices and that benefits consumers.

Stephanie Rugolo, May 30, 2014, CATO, “Globalization Eradicates Poverty,”http://www.cato.org/blog/globalization-eradicates-poverty DOA: 1-1-15

The Malaysia Chronicle and The Economist recently reported on how globalization is improving the lives of Chinese villagers. Consider this example:

Taobao is an online retailer like Amazon. There are few qualifications to open an online store with Taobao. Chinese villagers, having little more than their cheap labor to offer, sell handicrafts on the website. The villagers get paid for their work and amass greater opportunities in return, while money and prosperity flow into their previously sleepy villages. Globalization is making Chinese villagers richer, contrary to critics who claim that globalization generates poverty. Interconnected, free markets generate wealth and pull people out of poverty. This occurs as the connective technologies of globalization (like the Internet) increase competition. That benefits consumers who can buy more, increasingly inexpensive products to better their quality of life. That also creates innovation and employment, as is the case for Chinese villagers.Fourth, globalization connects countries to export markets where industries in developing countries can export their goods. They also gain access to an expanded set of consumer products that can benefit them.

Washington Times, October 6, 2014, “Economic Globalization Boosts Asia, bogs down US Middle Class,”http://www.washingtontimes.com/news/2014/oct/6/economic-globalization-boosts-asia-bogs-down-us-mi/?page=all DOA: 1-2-14

LDCs have the most to gain from engaging in the global economy. First, they gain access to much larger markets, both for imports and exports. On the import side, consumers gain access to a dramatically larger range of goods and services, raising their real standard of living. Domestic producers gain access to a wider range and better quality of intermediate inputs at lower prices. On the export side, domestic industries can enjoy a quantum leap in economies of scale by serving global markets rather than only a confined and underdeveloped domestic market.Fifth, globalization increases economic growth, which raises incomes.


Any casual survey of the world today will confirm that nations relatively open to trade tend to be more prosperous than nations that are relatively closed. The wealthiest nations and regions of the world- -western Europe, the United States, Canada, Japan, Hong Kong, Taiwan, South Korea, Singapore—are all trade-orientated. Their producers, with a few notable exceptions, must compete against other multinational producers in the global marketplace. In contrast, the poorest regions of the world—the Indian subcontinent and sub-Saharan Africa—remain (despite recent, halting reforms) the least friendly to foreign trade. And those countries that have moved decisively toward openness—Chile, China, and Poland, among others—have reaped real (and, in the case of China, spectacular) gains in living standards. Systematic studies confirm a strong link between openness and economic growth.8 A study of 117 countries by Jeffrey Sachs and Andrew Warner found that open economies grew much faster than closed economies. Specifically, the authors found that the developing countries that maintained open economies throughout the 1970s and ’80s grew at an average annual rate of 4.5 percent, compared with an average growth rate of 0.7 percent for closed economies. As a result, the open developing economies tended to converge toward the slower-growing rich economies, while relatively closed economies did not converge. A more recent study, by Jeffrey Frankel and David Romer, produced similar results. The authors found that trade exerts “a qualitatively large and robust E positive effect on income.” In their study of 150 countries, they concluded that increasing the ratio of trade to gross domestic product by 1 percentage point raises income per person by between 0.5 and 2 percent.10 The Organization for Economic Cooperation and Development (OECD) concluded that nations relatively open to trade grew on average twice as fast as those relatively closed to trade.Sustained growth reduces poverty.


Globalization offers hope to the world’s poorest. Just as more open trade tends to promote economic growth, growth in turn leads to poverty

reduction. A World Bank study found that periods of sustained economic growth are almost always accompanied by reductions in poverty. Specifically, the study found that poverty fell in 77 of the 88 decade- long periods of growth covered by the survey.

The greatest reductions in poverty in the last twenty years have occurred in nations that have moved decisively toward openness and domestic liberalization. The most spectacular gains have been realized in East Asia. Between 1993 and ‘96, the number of people living in absolute poverty—what the World Bank defines as less than $ 1 per day— declined in the region from 432 million to 267 million. In China alone, the number of poor people so defined fell by 150 million between 1990 and ‘97.13 The 1997—98 financial crisis that began in East Asia brought a temporary halt to this progress, but poverty rates in the hardest-hit countries—Korea, Thailand, and Indonesia—have begun to decline back toward their precrisis levels. Globally, the number of people living in absolute poverty has declined in the 1990s to an estimated 1.2 billion in 1998.

Globalization facilitates the spread of modern medicine, which has helped to extend life expectancy and reduce infant mortality in rich and poor countries alike. On average, life expectancy in developing countries rose from 55 years in 1970 to 65 years in 1997. This good news is tempered by the fact that life expectancy has actually fallen in thirty-three LDCs since 1990, in large part because of AIDS epidemics, and remains far behind the OECD average of 78 years. Infant mortality rates in Asia and sub-Saharan Africa have fallen by about 10 percent since 1990.

Opponents of globalization try to blame poverty in the world on the spread of trade and investment liberalization. But those regions where poverty and inequality have been the most visible and intransigent for decades—Latin America, sub-Saharan Africa, and the Indian subcontinent—for most of that time self-consciously followed policies of economic centralization and isolation.Sixth, globalization increases access to financial services

Anish Bharadwaj, 2014, International Max Planck Research School for Competition and Innovation, Munich Centre for Innovation and Entrepreneurship Research, Advances in Economics and Business 2(1): 42, p. 42-57

There are, undoubtedly, significant potential benefits to globalization. Openness to foreign direct investment, for instance, can contribute to growth by stimulating domestic capital formation and improving efficiency and productivity, as a result of greater access to new technologies. At the same time, openness to capital flows may also increase opportunities for portfolio risk diversification and consumption smoothing through borrowing and lending; and producers who are able to diversify risks on world capital markets may invest in riskier (and higher-yield) projects, thereby raising the country’s rate of economic growth (Obstfeld, 1994). Increased access to the domestic financial system by foreign banks may raise the efficiency of the intermediation process between savers and borrowers, thereby lowering markup rates in banking, as well as the cost of investment, and again raising growth rates (Baldwin and Forslid, 2000). And to the extent that financial openness helps to mitigate asymmetric information problems and to reduce the fixed costs associated with small-scale lending, it can improve the opportunities for the poor to access the formal financial system.

Seventh, openness to trade increases efficiency of resources allocation

Similarly, openness to trade may generate significant gains, both static and dynamic (Agenor, 2004). Static economic gains, as emphasized by conventional trade theory, refer to the fact that under greater openness to trade, productive resources tend to be reallocated toward activities where they are used with comparatively greater efficiency and away from less efficient activities (such as import-substitution industries or rent-seeking activities). In addition, the literature on endogenous growth has emphasized the existence of various mechanisms through which trade may generate dynamic gains and thereby affect the economy’s rate of growth in the long run. In particular, it has been argued that trade openness may facilitate the acquisition of new inputs, less expensive or higher-quality intermediate goods, and improved technologies, which enhance the overall productivity of the economy. Romer (1994), for instance, has argued that in an economy subject to trade restrictions, only a narrow range of specialized intermediate goods or capital goods can be profitably produced and therefore the full range of technological possibilities, which rely on a potentially broader range of inputs, cannot be exploited effectively,Eighth, it provides countries with access to the services they need to grow.

Washington Times, October 6, 2014, “Economic Globalization Boosts Asia, bogs down US Middle

Class,”http://www.washingtontimes.com/news/2014/oct/6/economic-globalization-boosts-asia-bogs-down-us-mi/?page=all DOA: 1-2-14

Fourth, openness to the global economy can provide the infrastructure a developing economy needs for growth. Foreign capital can finance more traditional types of infrastructure, such as port facilities, power generation, and an internal transportation network, just as British capital helped to finance America’s network of canals and railroads in the nineteenth century. But just as importantly, multinational companies can provide an infrastructure of what could be called “enabling services,” such as telecommunications, insurance, accounting, and banking. As China and India have realized, a protected and inefficient service sector weighs down an entire economy, retarding the development of manufacturing and other industries. LDCs need to shed the mistaken idea that opening their economies up to international service competition is a “concession” to be made to gain access to farm and manufacturing markets in the advanced economies. In reality, liberalizing their service sectors by opening them to foreign competition is a favor LDCs can do for themselves.Globalization and the quality of life.

As discussed in the introductory essay, Con teams may argue that globalization may undermine the environment and educational systems and that people who live in poor environments and lack an appropriate education are “poor,” but there is strong evidence that globalization has a net positive impact on human welfare.

Krieckhaus et al. 11 – Missouri political science professor [Jonathan, “Globalization and human well-being”, International Political Science Review, SAGE]

Globalization is increasingly prevalent in the modern world, and scholars have therefore rightly explored both its causes and consequences. Human well-being is also a heavily studied topic, given that citizens around the globe desire healthy children and longer lifespans. Surprisingly, however, there has been scant research on the myriad ways through which globalization might influence human well-being. We have argued that there are advantages and disadvantages to globalization, but that in spite of the shortcomings, on balance globalization has a positive effect on human welfare, due to its ability to bring increased development, technology, knowledge, and foreign support. We tested three aspects of this argument, namely the effects of economic globalization, social globalization, and political globalization. We found that all three of these forms of

globalization have enhanced human welfare, and that these positive effects are relatively robust to a wide range of statistical specifications. These findings have significance for both social science and public policy. Concerning social science, we contribute to the longstanding debate as to whether the forces of globalization are a positive or negative force in the world. Although our results speak only to the issue of human physical well-being, we suggest that this is an important criterion for evaluating globalization. Given that we find that three different dimensions of globalization all have consistently positive effects on well-being, we provide new evidence in support of globalization. Concerning public policy, our findings have clear implications for child welfare advocates. While organizations like the UNDP and UNICEF can, and should, continue to advocate for the interests of developing countries, they should also keep in mind that encouraging developing countries to incorporate themselves into the global system (economically, socially, and politically) will also encourage child welfare. For these same reasons, our results should be of considerable interest to policymakers in the developing world, who often face difficult choices concerning the political costs and benefits of economic liberalization and decreased cultural autonomy. While we cannot provide here a full cost/benefit analysis of globalization, we do note that a new and important dimension must enter such calculations, namely globalization’s positive effects on the well-being of children.And since poverty undermines the environment and economic globalization is associated with a reduction in tyranny, The Pro can claim that globalization improves the overall quality of life.

Jim Chen, 2000, Minnesota law school professor [Jim, “ESSAY: PAX MERCATORIA: GLOBALIZATION AS A SECOND CHANCE AT “PEACE FOR OUR TIME”, 24 Fordham Int’l L.J. 217,p. 245-6

Of the myriad environmental problems in this mutually dependent world, “persistent poverty may turn out to be the most aggravating and destructive.” We must remember “above all else” that “human degradation and deprivation … constitute the greatest threat not only to national, regional, and world security, but to essential life-supporting ecological systems.” The enhancement of individual liberty through globalization. By dislodging local tyrants and ideologies, globalization has minimized the sort of personal abuse that too often seems endemic to one place, one population. The twenty-first century will witness “people voting with their feet to escape from some village elder’s idea of how to live, or some London School of Economics graduate’s idea of protecting Indian folkways.” This changing social reality will undermine the conventional

assumption that capital is mobile but labor is immobile. Generations of scholarship on trade and international relations hang in the balance. At the very least we will have to recalibrate existing race-to-the-bottom models and their sensitivity to “giant sucking sounds.” Nor has localism propounded plausible solutions to challenges such as food security, AIDS and other epidemiological crises, and barriers to full equality for women and children. The localist package of autarky, retaliatory protectionism, and isolationism would be catastrophic. It really is a shame that Ralph Nader will probably not be named “the first U.S. ambassador to North Korea,” where he could “get a real taste of what a country that actually follows [his] insane economic philosophy – high protectionism, economic autarky, anti-markets, antiglobalization, anti-multinationals – is like for the people who live there.” The policies preferred by the protesters at Seattle and Prague guarantee penury for most, security for some, and power for an unjustly privileged few. That way runs anew the road to serfdom.And the quality of life is generally improving.

Dash 13 – Co-Founder and Managing Director at Activate, a new kind of strategy consultancy that advises companies about the opportunities at the intersection of technology and media co-founder and CEO of ThinkUp, which shows you how to be better at using your social networks, publisher, editor and owner of Dashes.com, my personal blog where I’ve been publishing continuously since 1999, entrepreneur, writer and geek living in New York City [Anil. “THE WORLD IS GETTING BETTER. QUICKLY.” 2/4/13. http://dashes.com/anil/2013/02/the-world-is-getting-better-quickly.html]

The world is getting better, faster, than we could ever have imagined. For those of us who are fortunate enough to live in wealthy communities or countries, we have a common set of reference points we use to describe the world’s most intractable, upsetting, unimaginable injustices. Often, we only mention these horrible realities in minimizing our own woes: “Well, that’s annoying, but it’s hardly as bad as children starving in Africa.” Or “Yeah, this is important, but it’s not like it’s the cure for AIDS.” Or the omnipresent description of any issue as a “First World Problem”. But let’s, for once, look at the actual data around developing world problems. Not our condescending, world-away displays of emotion, or our slacktivist tendencies to see a retweet as meaningful action, but the actual numbers and metrics about how progress is happening for the world’s poorest people. Though metrics and measurements are always fraught and flawed, Gates’ single biggest emphasis was the idea that measurable progress and metrics are necessary for any meaningful improvements to happen in

the lives of the world’s poor. So how are we doing? THE WORLD HAS CHANGED The results are astounding. Even if we caveat that every measurement is imprecise, that billionaire philanthropists are going to favor data that strengthens their points, and that some of the most significant problems are difficult to attach metrics to, it’s inarguable that the past two decades have seen the greatest leap forward in the lives of the global poor in the history of humanity. Some highlights: Children are 1/3 less likely to die before age five than they were in 1990. The global childhood mortality rate for kids under 5 has dropped from 88 in 1000 in 1990 to 57 in 1000 in 2010. The global infant mortality rate for kids dying before age one has plunged from 61 in 1000 to 40 in 1000. Now, any child dying is of course one child too many, but this is astounding progress to have made in just twenty years. In the past 30 years, the percentage of children who receive key immunizations such as the DTP vaccine has quadrupled. The percentage of people in the world living on less than $1.25 per day has been cut in half since 1990, ahead of the schedule of the Millennium Development Goals which hoped to reach this target by 2015. The number of deaths to tuberculosis has been cut 40% in the past twenty years. The consumption of ozone-depleting substances has been cut 85% globally in the last thirty years. The percentage of urban dwellers living in slums globally has been cut from 46.2% to 32.7% in the last twenty years. And there’s more progress in hunger and contraception, in sustainability and education, against AIDS and illiteracy. After reading the Gates annual letter and following up by reviewing the UN’s ugly-but-data-rich Millennium Development Goals statistics site, I was surprised by how much progress has been made in the years since I’ve been an adult, and just how little I’ve heard about the big picture despite the fact that I’d like to keep informed about such things. I’m not a pollyanna — there’s a lot of work to be done. But I can personally attest to the profound effect that basic improvements like clean drinking water can have in people’s lives. Today, we often use the world’s biggest problems as metaphors for impossibility. But the evidence shows that, actually, we’re really good at solving even the most intimidating challenges in the world. What we’re lacking is the ability to communicate effectively about how we make progress, so that we can galvanize even more investment of resources, time and effort to tackling the problems we have left.Answering Additional Con Arguments

The most fundamental problem with Con arguments is that they do not establish that there is a net increase in poverty. At best, they provide reasons that globalization

many increase poverty in some specific instances. This claim is no doubt true, but it is far from a conclusion that poverty will increase.

In this section of the essay I will also answer some specific Con arguments.

Sweatshops. One common argument against globalization is that it increases “sweatshops,” as companies move their factories to low wage areas in order to generate the same good for less cost.

While these wages may seem low to Americans, they are benefitting the poor in those countries.

Jan Cienski, 2011, Globalization Cures Poverty: Study,https://www.globalpolicy.org/component/content/article/162/27754.html DOA 1-2-15

“Many of the charges against globalization are misguided,” says the study, which says that while globalization does carry some costs, they are more than outweighed by the benefits. The drumbeat of protest about manufacturers such as Nike and the Gap using Third World sweatshops to make their products actually harms the workers in those factories. While a salary of $5 a day may seem “shockingly poor” to protesters in rich countries, that is often five times more than the workers would have gotten by staying in traditional industries such as agriculture, the study says.And if children weren’t working in sweatshops, they would be working somewhere even worse.


Q: This suggests that the knee-jerk response of banning children from working in any factory may not be the most effective way to improve their welfare.When you look at the images of children working in not-very-safe factories, that is the knee-jerk reaction. What we need to be asking is, if we banned child labor, if we shut down these factories, what would these children be

doing? We would like to see them attend school, but that might not be the alternative for these children. They might take a job that is even more hazardous, like prostitution or stone quarrying, or work in parts of the economy that are even more informal than sweatshops.

Labor and environmental standards. A second argument against globalization is that it encourages countries to lower wages and environmental standards in order to attract industry. This is called a “Race to the Bottom (RTB) where countries supposedly race to develop the lowest possible standards in order to have the lowest possible costs for business. The problem with this argument is that there really isn’t any empirical support for it.

Although there is some proof that countries exporting energy and natural resources such as timber underprice those products, causing environmental harm, there is no evidence of a “race to the bottom” in wages or environmental standards. Many critics contend that corporations will relentlessly hunt for the cheapest place to do business, forcing richer countries to gut their social safety nets and environmental rules to match those of the lowest-cost country. “If low wages alone were enough of an attraction, more [investment] would have flowed to the poorest countries in Africa, rather than predominantly to a small number of middle-income countries in Asia and Latin America,” it says. In fact, it is in Africa that the study finds the weakest international performers, and failed economies that drag down the statistics for theReduced wages. Some argue that globalization produces wage declines because of increased competition, but even if wages decline, there is still a massive overwhelming net gain.


The migration of Latin American and Asian job seekers to the U.S. and Eastern European and African job seekers to Western Europe also has helped build wealth in the developing world, even as it has put “modest pressure” on the wages of low-skilled native workers in the West who compete with the migrants, he said. The availability of such plentiful, cheap labor clearly has benefited the owners of corporations and other rich people, even as it has presented competition for poorer Americans, he

said. Still, the era of globalization overall has brought big benefits to the human race, he said. Moreover, the rise of the middle class in China and other emerging countries adds to the pool of global consumers and presents businesses and workers in the West with opportunities for growth. “Although significant economic problems remain, we have been living in equalizing times for the world — a change that has been largely for the good,” Mr. Cowan said. “Policies on immigration and free trade sometimes increase inequality within a nation yet can make the world a better place and often decrease inequality on the planet as a whole.”Increased US poverty. Some argue that globalization has increased poverty in the United States because lower costs of producing goods abroad has resulted in unemployment, but this unemployment is due to gains in technology, not globalization.

Ravi Kanbur, Cornell University, 2015, Handbook of Income Distribution, Volume 2, pp. 1845-1881

There is, however, the issue of how much of the rising inequality in the United States can be attributed to trade, and how much to other factors, specifically to technology. The overview by Pavcnik (2011)captures the recent consensus: A large body of research on this topic finds little support that international trade in final goods driven by relative factor endowment differences can account for much of the observed increase in skill premiums in developed and developing countries… . First, the Stolper–Samuelson mechanism suggests that increased relative demand for skilled labour in countries abundant in skilled labour occurs as a result of shifts in the relative demand for skilled labour across industries… . However, the employment shifts across industries have not been sufficiently large to account for the large increase in wage inequality. Most of the observed increase in demand for educated labour in countries such as the United States is driven by increased relative demand for skilled labour within industries. (p. 242)

There is significant debate on the relative role of trade. Although Krugman (2008) argues against his own earlier view that trade was a relatively small factor in explaining the rise of inequality compared to technology, there are also criticisms of the “small role of trade” view by Irwin (2008), Katz (2008), andAutor (2010). It would be fair to say that skill-biased technical change is considered to be a major driving force, if not necessarily the dominant force, behind rising inequality.7 This empirical and policy debate has in turn fed into an emerging literature that goes beyond simple H–O/Stolper–

Samuelson formulations to consider within-industry wage differentials between heterogeneous firms and how these could be affected by trade.Inequality. There is very good Con evidence that globalization increases inequality. The basic problem with this argument, however, is that it is meaningless within the context of the resolution; all that the resolution asks that Pro to defend is that globalization reduces poverty, and an increase in inequality does not mean an increase in poverty.

Wu, economist, Cardiff University, 2012, International Encyclopedia of Housing and Home, “Globalisation,” pp. 292-7

Potentially the most important transmission channel is growth. High rates of economic growth such as those experienced in China and India today translate into significant declines in the incidence of poverty even when the growth pattern is dampened by increased income inequality.And even absent this obvious point, Pro teams can argue that globalization will reduce inequality (though, honestly, this is not the best side of the debate to be on).

Goklany 07 – Assistant Director for Science and Technology Policy [Indur, “IS A RICHER-BUT-WARMER WORLD BETTER THAN POORER-BUT-COOLER WORLDS?”,http://www.ce.cmu.edu/~gdrg/readings/2006/02/14/Goklany_160.pdf]

It has been sometimes argued that the extent to which economic growth increases society’s (or another entity’s) capacity to reduce climate change damages via adaptation or mitigation, this capacity would depend considerably on the distribution of the determinants of human well being (such as economic growth) between and within countries. For example, if economic growth is concentrated on countries that are already wealthy, as sometimes has been claimed to be the case in recent decades, then today’s poorer countries’ ability to reduce future climate impacts (due to higher adaptive capacity because of economic growth) could be seriously overestimated. While there is some merit to this argument, it should be noted that in the recent past, economic growth in some of the most populous developing countries (e.g., China and India) has outstripped that in developed countries. As a result, income inequalities have, for the world population as a whole, shrunk around the world (Sala-i-Martin, 2007; Bhalla, 2002), as have inequalities between developing and developed countries since the 1950s in terms of determinants of human well-being. 6

More importantly, according to the IPCC scenarios, between 1990 and 2100 income growth in developing countries relative to developed countries will be greater by a factor of 3.6 to 9.4 (IPCC, 2000: 301). Secondly, an examination of Figures 1 and 2 indicates that the dependence of virtually all determinants of human well-being on income is highly non-linear (generally logarithmic) with their improvements occurring much more rapidly at the lowest levels of income (Goklany, 2007a). Thus even a small improvement in income for poor societies (or the poor within a country) could enhance their adaptive capacity more than a larger increase for richer societies (or the rich). Thirdly, over the long haul (say, 50 to 100 years), secular improvements in technology could dominate over increases in income with respect to enhancing adaptive capacity, particularly at low income levels (see Figure 3). The long term impact of technological change is one reason for the remarkable declines—99 percent or greater—during the 20th century in mortality and morbidity rates in the United States for various waterrelated diseases, e.g., typhoid, paratyphoid, dysentery, malaria and various gastrointestinal diseases) (Goklany, 2007b: 153; USBC, 1975: 77).And Pro teams can argue inequality is trending downward.

Segerstrom 10 – Stocholm School of Economics professor [Paul, “Naomi Klein and the Anti-Globalization Movement”, 6-23, http://www2.hhs.se/personal/segerstrom/naomiklein.pdf]

Much of what Naomi Klein writes about the marketing behavior of large corporations is true. But I want to focus on her reason for being concerned. According to Naomi Klein (NL, p.122), “over the last decade [the 1990s], there has been a massive redistribution of the world’s resources, with everyone except those in the very highest tier of the corporate elite…getting less.” There appears to be a general consensus among anti-globalization activists that the world we live in is characterized by disturbing increases in poverty and income inequality. But is this really the case? Economists have devoted a lot of energy to measuring poverty and income inequality in the world. I want to discuss at length the influential paper “The World Distribution of Income: Falling Poverty and…Convergence, Period” by Xavier Sala-i-Martin (2006), an economist at Columbia University. Sala-i-Martin (2006) uses aggregate Gross Domestic Product data and within-country income shares for the period 1970-2000 to assign a level of income to each person in the world. All income data used are purchasing-power-parity-adjusted since people tend to buy goods where they live and one wants to compare incomes across people who live in different countries. Also all income levels are converted to 1996 constant

US dollars and are thus corrected for inflation. Sala-i-Martin estimates a densit function for the world distribution of income. The implications for poverty and income inequality are surprising. Sala-i-Martin finds that the percentage of people in the world with incomes below $1 per day (one commonly used measure of poverty) has fallen from 15.4% in 1970 to 5.7% in 2000 and the percentage of people in the world with incomes below $2 per day (another commonly used measure of poverty) has fallen from 29.6% in 1970 to 10.6% in 2000. The recent period of globalization has been associated with a substantial decrease in the fraction of the world population living in poverty (using either measure). Indeed, the entire distribution of income in the world has shifted significantly to the right (see Sala-i-Martin’s Figure 4). 5 Turning to income inequality, Sala-i-Martin uses eight different popular indexes to measure income inequality. All indexes show a reduction in global income inequality between 1980 and 2000. Within-country income inequality has increased slightly during the sample period but not enough to offset the substantial reduction in across country disparities. 6 The reduction in global income inequality is driven by China, where 1.2 billion people (20% of the world population) have benefited from high economic growth rates since 1978. If one removes China from the data, then global income inequality would be roughly constant over time.Failure in Africa. Some argue that the failure of (widespread) poverty reduction in Africa proves that globalization does not reduce poverty. After all, it is the case that poverty has not decline in Africa. But there are some good answers to this argument.

First, Pro teams can argue that instability in Africa, not globalization, is responsible for poverty.

Anish Bharadwaj, 2014, International Max Planck Research School for Competition and Innovation, Munich Centre for Innovation and Entrepreneurship Research, Advances in Economics and Busines, 2(1): 42, p. 42-57

Those who are more dubious of global processes point out that in the same decades, poverty has remained stubbornly high in sub-Saharan Africa, as Chen and Ravalllion (2004) have estimated. During 1981-2001 the percentage of people living below the poverty line of $1.08 per day (at 1993 purchasing parity) increased in sub-Saharan Africa from about 42% to about 46%.Abs But this may have little to do with globalization, and more to do with unstable or failed political regimes, wars, and civil conflicts which afflicted several countries in Africa; if anything, such instability only

reduced their extent of globalization,, as it scared off many foreign investors and traders.Second, Pro teams an argue that globalization hasn’t benefitted Africa because of mismanagement, not because of any problem inherent in globalization.

Derrick Owusu-Kodu, April 7, 2014, Poverty and the Impacts of Globalization on the African Economy, http://www.africandynamo.com/2014/04/poverty-and-impacts-of-globalization-on.html#mM4cowGoocBOQhUe.99 DOA: 1-2-1

In many ways, Globalization could have helped accelerate development throughout the Continent, but conflicts, wars, corruption, greed, an unstable political system, lack of competent human capital and innovations, and cultural practices which hinder development continue to stifle economic and social progress. These are the manifestations of the overall trend of poor governance and mismanagement on the African continent. The end results of this trend are an avalanche impeding the Continent’s capacity to progress in it’s handling of the modern economic landscape, and manipulate the impacts of globalization to the benefit of its citizenry.Third, a strong case can be made that that it is actually the fact that Africa’s markets are closed that has hindered reductions in poverty. Integrating Africa into globalization could benefit it substantially.


Poor nations that have fallen further behind the rich nations are almost uniformly those that have clung to state-directed and inward- oriented economic policies. Sub-Saharan Africa has lagged behind the rest of the world in economic growth in significant part because its markets remain among the most closed in the world. Its governments have neglected domestic infrastructure such as roads and have distorted their domestic economies with subsidies, high taxes, and regulations. Granted, many African nations must also bear the burden of civil and tribal strife, poor soil, and inaccessible geography. But domestic economic policy must be considered a key variable in explaining the region’s failure to develop. Those African nations that have implemented more open, stable, and market-friendly policies in the last decade—such as Uganda, Botswana,

and Mauritius—have achieved growth rates exceeding those of the advanced nations.Environment. As discussed earlier, some may argue that globalization threatens the environment. There are a number of answers to this.

First, unless the Con ties environmental decline to poverty, the argument is irrelevant to determining the truth of the resolution.

Second, Pro teams can argue that economic evaluations are important to long-term environmental sustainability.

Thompson 03 – Stanford natural resources professor [Barton, “What Good is Economics”, 27 Environs Envtl. L. & Pol’y J. 175, p. 187-90

Even the environmental moralist who eschews any normative use of economics may find economics valuable for other purposes. Indeed, economics is indispensable in diagnosing why society currently does not achieve the level of environmental protection desired by the moralist. Those who turn their backs on economics and rely instead on ethical intuition to diagnose environmental problems are likely to find themselves doomed to failure. Economic theory suggests that flaws in economic markets and institutions are often the cause of environmental problems. Three concepts of market failure have proven particularly robust in analyzing environmental problems. The first is the “tragedy of the commons.” If a resource is open and free for multiple parties to use, the parties will tend to over-utilize the resource, even to the point of its destruction. Economists and others have used the tragedy of the commons to explain such environmental problems as over-fishing, the over-drafting of groundwater aquifers, the early and inept exhaustion of oil fields, and high levels of population growth. The second, more general concept (of which the tragedy of the commons actually is a specialized instance) is the “negative externality.” n30 When parties do not bear the full cost to society of environmental harms that they cause, they tend to under-invest in the elimination or correction of the harm. Externalities help explain why factories pollute, why landowners destroy ecologically valuable wetlands or other forms of habitat, and why current generations consume high levels of exhaustible resources. The final concept is the problem of “collective action.” If political or market actions will benefit a large group of individuals and it is impossible to exclude anyone from enjoying the benefits, each individual will have an incentive to “free ride” on the actions of others rather than acting themselves, reducing the possibility that anything will get done.

This explains why the private market does not provide us with more wildlife refuges or aesthetic open space. Although these economic explanations for environmental problems are not universal truths, accurate in all settings, they do enjoy a robust applicability. Experimenters, for example, have found that subjects in a wide array of countries succumb to the tragedy of the commons. Smaller groups sometimes have been able to overcome the tragedy of the commons and govern a resource in collective wisdom. Yet this exception appears to be the result of institutional characteristics peculiar to the group and resource that make it easier to devise a local and informal regulatory system rather than the result of cultural differences that undermine the economic precepts of the tragedy of the commons. These economic explanations point to a vastly different approach to solving environmental problems than a focus on environmental ethics alone would suggest. To environmental moralists, the difficulty is that the population does not understand the ethical importance of protecting the environment. Although governmental regulation might be necessary in the short run to force people to do what they do not yet appreciate is proper, the long run answers are education and moral change. A principal means of enlightening the citizenry is engaging them in a discussion of environmental goals. Economic analysis, by contrast, suggests that the problem lies in our economic institutions. The solution under economic analysis is to give those who might harm the environment the incentive to avoid the harm through the imposition of taxes or regulatory fines or the awarding of environmentally beneficial subsidies. The few studies that have tried to test the relative importance of environmental precepts and of economics in predicting environmentally relevant behavior suggest that economics trumps ethics. In one 1992 experiment designed to test whether subjects would yield to the tragedy of the commons in a simulated fisheries common, the researchers looked to see whether the environmental attitudes of individual subjects made any difference in the subjects’ behavior. The researchers measured subjects’ environmental beliefs through various means. They administered questionnaires designed to elicit environmental beliefs; they asked the subjects how they would behave in various hypothetical scenarios (e.g., if someone asked them to volunteer to pick up litter on the weekend); they even tried to see how the subjects would react to real requests for environmental help (e.g., by asking them to participate in a Saturday recycling campaign). No matter how the researchers tried to measure the environmental attitudes of the subjects, attitude failed to provide a statistically significant explanation for participants’ behavior in the fishing commons. Those who appeared to have strong environmental beliefs behaved just as tragically as those who did not when fighting for the limited stock of fish. In another study, researchers examined domestic consumers

of high amounts of electricity in Perth, Australia. After administering a survey to determine whether the consumers believed they had a personal and ethical duty to conserve energy, the researchers tried various methods for changing the behavior of those who reported that people have a conservation obligation. Informing these individuals of their high electricity usage and even supplying them with conservation tips did not make a statistically significant difference in their energy use. The only thing that led these individuals to reduce their electricity consumption was a letter reminding them of the earlier survey in which they had espoused a conservation duty and emphasizing the inconsistency of that view with their high electricity usage. In response to this letter, the subjects reduced their energy use. Apparently shame can be a valuable catalyst in converting ethical beliefs into action. But the effect may be short lived. Within two weeks, the Perth subjects’ energy use had risen back to its earlier levels. Ethical beliefs, in short, frequently fall victim to personal convenience or cost considerations. Ethical views sometimes can make a difference in how people behave. Examples include the role that ethics has played in encouraging people to recycle or to eat dolphin-free tuna. But the personal cost, if any, of recycling or of eating dolphin-free tuna is exceptionally small. For most of the environmental dilemmas that face the nation and the world today, the economic cost of changing behavior is far more significant. And where costs are high, economics appears to trump most peoples’ environmental views. Even if ethics played a more powerful role, we do not know for certain how to create or strengthen environmental norms. n38 In contrast, we do know how to change economic incentives. Although environmental moralists should continue trying to promote environmental ethics, economic analysis currently provides the strongest tool for diagnosing and thus helping to resolve environmental problems. The environmental moralist who ignores this tool in trying to improve the environment is doomed to frustration.Third, Pro teams can argue that the introduction of market forces is critical to sustain the environment

Wager 11 – EDF economist [Gernot, But Will the Planet Notice? How Smart Economics Can Save the World, pg 11-2]

The fundamental forces guiding the behavior of billions are much larger than any one of us. It’s about changing our system, creating a new business as usual. And to do that we need to think about what makes our system run. In the end, it comes down to markets, and the rules of the game that govern what we chase and how we chase it. Scientists can tell us how bad it will get. Activists can make us pay attention to the ensuing instabilities and make politicians take note. When the task comes to

formulating policy, only economists can help guide us out of this morass and save the planet. In an earlier time with simpler problems, environmentalists took direct action against the market’s brutal forces by erecting roadblocks or chaining themselves to trees. That works if the opposing force is a lumberjack with a chain saw. It might even work for an entire industry when the task is to ban a particular chemical or scrub a pollutant out of smokestacks. But that model breaks down when the opposing force is ourselves: each and every one of us demanding that the globalized market provide us with cheaper and better food, clothes, and vacations. There is no blocking the full, collective desires of the billions who are now part of the market economy and the billions more who want to—and ought to—be part of it. The only solution is to guide all-powerful market forces in the right direction and create incentives for each of us to make choices that work for all of us. The guideposts we have today for market forces evolved helter- skelter from a historical process that gave almost no weight to the survival of the planet, largely because the survival of the planet was not at stake. Now it is. Since we can’t live without market forces, we need to guide them to help us keep the human adventure going in workable ways, rather than continue on the present path right off the edge of a cliff.The Issue of “Protected Globalization”

The resolution doesn’t specify any specific “type” (for lack of a better word) of globalization that the Pro needs to defend. This is significant because in some countries where globalization has been especially effective in reducing (such as China), globalization has reduced poverty. And there is strong evidence that if countries essentially “regulate” (again, for lack of a better term) globalization effectively so that the poor are protected that it will reduce poverty.

Raphael Kaplinsky, Professor of International Development, 2005, Globalization, Poverty, and Inequality: Between a Rock and a Hard Place, page number at end of card

This book focuses on the mechanisms whereby globalization contributes to global poverty and inequality through the extension of global production and trading networks. As we shall see, there is widespread recognition that globalization may induce greater inequality. But the idea that it might cause greater poverty runs against much of current conventional wisdom. This, as we shall see, argues that inequality and poverty are caused not so much by the workings of the global economy as by the failure to engage positively with globalization. Kaplinsky, Raphael (2013-04-29).

Globalization, Poverty and Inequality: Between a Rock and a Hard Place (Kindle Locations 662-666). Wiley. Kindle Edition.Other authors concur.

Anish Bharadwaj, 2014, International Max Planck Research School for Competition and Innovation, Munich Centre for Innovation and Entrepreneurship Research, Advances in Economics and Business 2(1): 42, p. 42-57The first part of the paper summarizes the channels and transmission mechanisms, such as greater openness to trade and foreign investment, through which the process of globalization could affect poverty in the developing world. Using a panel data of 35 developing countries from 1990 to 2004 an empirical examination is carried out of the impact of real and financial integration on the head count ratio and poverty gap. Results suggest that, on an aggregate level, capital flows via FDI have had an adverse effect and real trade-induced income growth had a favorable effect on the incidence of poverty. On the other hand, a policy of excessive openness to external trade without complementary support mechanisms was found to be negatively related to the depth of poverty in developing countries.

China grew because it protected its industries from globalization

Dani Rodrik, Spring 2012, This article is adapted from the author’s book The Globalization Paradox: Democracy and the World Economy, Norton, 2011,America’s Quarterly, “Global Poverty Amid Plenty: Getting Globalization Right,” http://americasquarterly.org/rodrik DOA: 1-1-15 Dani Rodrik is Rafiq Hariri Professor of International Political Economy at the John F. Kennedy School of Government at Harvard University.

China’s experience offers compelling evidence that globalization can be a great boon for poor nations. Yet it also presents the strongest argument against the reigning orthodoxy in globalization, which emphasizes financial globalization and deep integration through the World Trade Organization (WTO). China’s ability to shield itself from the global economy proved critical to its efforts to build a modern industrial base, which would in turn be leveraged through world markets.

Since 1978, income per capita in China has grown at an average rate of 8.3 percent per annum—a rate that implies a doubling of incomes every nine years. Thanks to this rapid economic growth, between 1981 and 2008

the poverty rate in China (the percent of the population below the $1.25-a-day poverty line) fell from 84 percent to 13 percent, much of it from reducing rural poverty.5 This meant a whopping 662 million fewer Chinese in extreme poverty, a number that accounts for virtually the entire drop in global poverty over the same period.

During the same period, China transformed itself from near autarky to the most feared competitor on world markets. That this happened in a country with a complete lack of private property rights (until recently) and run by the Communist Party only deepens the mystery.

China’s big break came when Deng Xiaoping and other post-Mao leaders decided to trust markets instead of central planning. But their real genius lay in their recognition that the market-supporting institutions they built, most of which were sorely lacking at the time, would have to possess distinctly Chinese characteristics.

China’s economy was predominantly rural in 1978. A Western-trained economist would have recommended abolishing central planning and removing all price controls. Yet without a central plan urban workers would have been deprived of their cheap rations and the government of an important source of revenue, resulting in masses of disgruntled workers in the cities and the risk of hyperinflation.

The Chinese solution to this conundrum was to graft a market system on top of the plan.

Communes were abolished and family farming restored, but land remained state property. Obligatory grain deliveries at controlled prices were kept in place, but once farmers had fulfilled their state quota they were now free to sell their surplus at market-determined prices. This dual-track regime gave farmers market-based incentives and yet did not deprive the state of revenue nor deprive urban workers of cheap food.6 Agricultural productivity rose sharply, setting off the first phase of China’s post-1978 growth.

Another challenge was how to provide a semblance of property rights when the state remained the ultimate owner of all property. Privatization would have been the conventional route, but it was ruled out by the Chinese Communist Party’s ideology.

Once again, an innovation came to the rescue. Township and village enterprises (TVEs) proved remarkably adept at stimulating domestic private investment. They were owned not by private entities or the central government, but by local governments (townships or villages). TVEs produced virtually the full gamut of products, everything from consumer goods to capital goods, and spearheaded Chinese economic growth from the mid-1980s until the mid-1990s. The key to the success of TVEs was the self-interest of local governments, which would reap substantial income from their equity stake in the enterprises.

China’s strategy to open its economy to the world also diverged from received theory. The Chinese leadership resisted the conventional advice to remove trade barriers. Such an action would have forced many state enterprises to close without doing much to stimulate new investments in industrial activities. Employment and economic growth would have suffered, threatening social stability.

The Chinese decided to experiment with alternative mechanisms that would not create too much pressure on existing industrial structures. While state trading monopolies were dismantled relatively early (starting in the late 1970s), what took their place was a complex and highly restrictive set of tariffs, nontariff barriers and licenses restricting imports. These were not substantially relaxed until the early 1990s.

In particular, China relied on Special Economic Zones (SEZs) to generate exports and attract foreign investment. Enterprises in these zones operated under different rules than those that applied in the rest of the country; they had access to better infrastructure and could import inputs duty free. The SEZs generated incentives for export-oriented investments without pulling the rug out from under state enterprises.

What fueled China’s growth, along with these institutional innovations, was a dramatic productive transformation.

The Chinese economy latched on to advanced, high-productivity products that no one would expect a poor, labor-abundant country to produce, let alone export. By the end of the 1990s, China’s export portfolio resembled that of a country with an income-per-capita level at least three times higher than China’s.7

Foreign investors played a key role in the evolution of China’s industries. They created the most productive firms, introduced new technology to the

economy, and became the drivers of the export boom. The SEZs, where foreign producers could operate with good infrastructure and with a minimum of hassles, deserve considerable credit.

But if China welcomed foreign companies, it always did so with the objective of fostering domestic capabilities. It used a number of policies to ensure that technology transfer would take place and that strong domestic players would emerge. Early on, they relied predominantly on state-owned national champions. Later, the government used a variety of incentives and disincentives to foster joint ventures with domestic firms (as in mobile phones and computers) and expand local content (as in autos). Cities and provinces were given substantial freedoms to fashion their own policies of stimulation and support, which led to the creation of industrial clusters in Shanghai, Shenzhen, Hangzhou, and elsewhere.8

Many of these early policies would have run afoul of WTO rules that ban export subsidies and prohibit discrimination in favor of domestic firms—if China had been a member of the organization. Chinese policy makers were not constrained by any external rules in their conduct of trade and industrial policies and could act freely to promote industrialization.

By the time China did join the WTO, in 2001, it had had created a strong industrial base, much of which did not need protection or nurturing. China substantially reduced its tariffs in preparation for WTO membership, bringing them down from the high levels of the early 1990s (averaging around 40 percent) to single digits in 2001. Many other industrial policies were also phased out.

However, China was not yet ready to let the push and pull of global markets determine the fate of its industries. It began to rely increasingly on a competitive exchange rate to effectively subsidize these industries. By intervening in currency markets and keeping short-term capital flows out, the government prevented its currency (renminbi) from appreciating, which would have been the natural consequence of China’s rapid economic growth.

Explicit industrial policies gave way to an implicit industrial policy conducted by way of currency policy.

Asia’s economic experience violates stereotypes and yet offers something for everyone. In effect, it acts as a reflecting pool for the biases of the observer. If you think unleashing markets is the best way to foster

economic development, you will find plenty of evidence for that. If you think markets need the firm, commanding hand of the government, well, there is much evidence for that too.In general, I think the resolution asks a simple factual question – On balance, does economic globalization reduce poverty? Since it is a factual question, I don’t think the Pro can defend a specific type of economic globalization (and that may smell too much like a Plan for people to be comfortable), but the important point is that globalization can be defended, even if not its worst form.

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