Sunday, 1 February 2015

Inequalities caused by globalization : the forgotten countries

The recent colour photo above illustrates in a stricking manner the social and spatial disparities within Baku: the ultra-modern high-rise buildings (flats and offices) of the wealthy dominate the dilapidated low-rise inhabitations and workshops of the poor. The document shows that there is wealth in this city (thanks to globalization) but that it is unevenly shared. Globalization has made the disparities that already existed in Azerbaidjan worse. Perhaps, over the long-term, globalization will raise everyone's standard of living to a decent level?

Cf. pages 78 and 79 (Lesson 4) of your textbook.

“Heterogeneity in the South” (cf. "A. Heterogeneity in the South" on page 78) means that many of the regions that make up the “South” (i.e. the LEDCs which are found mostly in the southern hemisphere) have not benefited equally from globalization: there are disparities of income within and between regions.

The impact of globalization on poorer countries can be seen as positive: it has brought them greater wealth.

The impact can also be seen as negative: it has only brought wealth to a small percentage of these countries’ populations, creating or exacerbating social and spatial inequalities (within the growing urban areas and between rural and urban areas).

Document 1 is a photo of Baku, capital of Azerbaidjan, in Central Asia. The urban landscape has been transformed by the impact of increased wealth. After the collapse of the Soviet Bloc in the early 1990s, Azerbaidjan started to profit from the international market for oil. The country's infrastructure started to be improved. However, poor housing still exists (note the slum-like dwellings) and not everyone has equal access to the city's amenities. This photo illustrates the fact that globalization results, at a local level, in increased wealth only for a privileged few (or the fact that “trickle-down” of wealth from the wealthy to the less wealthy is very slow…).

Document 2 is a World Bank graph showing gross capital formation (i.e. spending to improve a country’s infrastructure) in the South from 1980 to 2003. East Asia and Pacific countries show the greatest increase (especially since 2000) in investment. Investment in Latin America and the Caribbean increased slowly. Investment in South Asia was low in 1980 and only increased a little by 2003 (it has increased much more since). There has been virtually no investment in the countries of Sub-Saharan Africa. These figures are a good indication of a region’s integration into the globalized economy. We can say that South Asia has, up to recently, been excluded from the globalization process, and Sub-Saharan Africa continues to be excluded (it has been “forgotten” according to the lesson title). LEDCs have little money to invest in improving their facilities (e.g. factories) and transport networks (e.g. roads) and this results in an inability to exploit natural resources, transport and sell goods abroad.

TNCs prefer to invest (FDI) in countries which are not too risky (i.e. that are politically stable, with an abundant and competent workforce, not subject to extreme weather conditions, etc.). For example, a company will probably choose to invest in India rather than Pakistan. The result is that some LEDCs develop faster than others, hence the heterogeneity of the South.

Map showing that the South is less well served by air routes than the North

Document 3 is a table that illustrates the unequal benefits to destination countries of international tourism. The flow of international tourism has virtually doubled since 1990. All regions of the world are now tourist destinations, but it is the areas that are safe, easy to get to, and with decent tourist facilities that are preferred (tourists prefer Europe to Africa for example). Globalization includes the movement of people (for work, tourism, emigration), but the statistics show that the flows of travellers are concentrated between wealthier parts of the world with efficient transport hubs; poorer countries are not primary destinations and therefore do not benefit from increased immigration or from tourist money as much as the wealthier countries, thus accentuating income differences between the countries of the world.

Documents 1, 2 and 3 show that globalization has succeeded in increasing wealth generally (especially for those countries that have something to sell abroad), increased investment by TNCs in foreign countries, encouraged increased investment in infrastructure, and increased population flows. However, disparities between the MEDCs and LEDCs, and between rich and poor areas within regions, notably in the South, still remain.

There is a North-South divide still in the world (“North” means “wealthy countries”, most of which are indeed in the northern hemisphere, and “South” means “poor countries”, mostly in the southern hemisphere). Is it possible to balance this divide and if so, how? After all, the globalized economy is controlled by the powerful economies of the world to their advantage…

Document 4 is a cartoon which illustrates the absurdity of “free trade” between the North and the South. The man on his pallet truck carrying big boxes overflowing with consumer goods (symbolizing the great wealth of rich countries) seems very satisfied, whilst the woman, carrying a cooking pot on her head filled with fruit and vegetables (symbolizing the subsistence economy of the poorest countries) is at a loss as to how to react; she does not have anything with which to “trade”… The cartoonist is condemning the so-called “free trade” of the globalized economy which favours rich countries and excludes the poorest countries. Free trade is not an economic system that benefits countries that have insufficient resources with which to compete on a worldwide market. The differences between North and South rests on economic strength (the MEDCs are able to produce and trade vast amounts of goods, unlike the LEDCS) and political power (international trade agreements rarely favour poorer countries and TNCs can exploit the resources of poorer countries mostly to their advantage, cf. as an example the practices of several TNCs in Africa).

Document 5, a 2003 article from The Guardian, demonstrates how the “rules” of the globalized economy are biased in favour of the wealthy and powerful countries. The farmer in Benin produces plentiful crops of good-quality cotton. The Texas farmer’s cotton crops are poor because there is not enough rainfall. However, this is not a problem for him because cotton production is subsidised by the US State (he is guaranteed an income even if he does not manage to produce any cotton). Surplus American cotton is sold on the world market more cheaply than the African cotton. The result is that the African cotton farmers are put out of business (they do not get any help from the State) and the economy stays poor.

The USA is a proponent of “free trade”, in other words it is supposed to be against protectionism. Direct government subsidies to farmers are, however, a protectionist policy; it would appear that the USA is not playing by its rules… The WTO is also supposed to favour free trade but is still very much controlled by the most powerful countries to their advantage; the poorer countries are not so much “forgotten” but excluded from the global marketplace. Anti-globalization activists point to these unfair practices as proof that globalization actually creates poverty…

Documents 4 and 5 tend to prove that the globalization process is biased in favour of the rich and powerful countries, with little hope of breaching the divide between the North and South because poor countries are too weak to compete and are even excluded.


Not all countries have so far benefitted equally from increased global GDP; some have been "forgotten" (left trailing) by globalization. The world is still divided because some countries have greater advantages than others: they have a fairer socioeconomic system, are more stable, are wealthier, are good places for foreign investors, are more attractive to tourists, have greater resources, are more powerful, and use protectionist methods to maintain their advantages on world markets. Wealthy and powerful regions become more powerful and wealthier thanks to a globalized economy because they exploit their advantages mostly for themselves. The poorer regions find it difficult to compete on a world scale. The North-South divide will not be closed easily or soon...

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