Globalization and Poverty

Globalization presents the largest new uncertainty in the realm of food security in India and other developing countries. Will globalization bring economic growth, poverty reduction, better technology, and more efficient farming? Or will it bring greater exports of luxury agricultural items, reduced food production, and hurt the national government's sovereignty and ability to ensure adequate nutrition for the people?

The greatest hope of many government leaders in India and in other developing countries is the promise of globalization. Institutions such as GATT and the WTO reduce trade barriers, with the expectation that it will speed economic growth and bring industry, employment, and revenue from goods exports to developed countries. The cities will be filled with a new urban middle class, technology will flow freely from developed countries to developing ones, and the revenue earned from the huge amounts of exports can be used to uplift the poor, both urban and rural. Give it ten, twenty years of free-trade and development, and the country will be a utopian capitalist paradise of happy, well-fed, middle-class Indians with houses and cars and each their own TV. But will globalization really bring such results?

One of the greatest problems brought about by globalization so far is that of decreased domestic food availability. In India, exports of luxury agricultural crops have increased, while productivity and domestic food production have fallen. The failure of American crops in the late 90's, mostly due to drought, destroyed 50% of large-scale wheat farming in the US. Following this, Indian wheat exports increased substantially, despite their problems feeding their own people. Large corporations, mainly Continental and Cargill, buy wheat at their low prices of USD60-100 per metric ton and then sell it for USD230 or more internationally, keeping the great bulk of the profits out of the Indian economy and instead putting it into the hands of the rich of the developed countries. Meanwhile, wheat availability in India is reduced, hurting the average low-income Indian.

Proponents of globalization would likely respond to this by asserting that it is merely a short-term problem. The promise of increased trade and fast economic growth should, in their minds, lead to a general improvement of economic conditions for the poor and an eventual end to poverty in the country.

However, economic growth does not automatically mean a reduction in poverty. Yes, it can be a powerful tool to achieve such a goal, but does not necessarily bring about an uplifting of the poor. From 1950 to 1975, when economic growth averaged a healthy 3.6%, poverty remained at generally stable levels. From 1975 to 1985, when poverty reduction was significant, the economy did grow at a faster 4%; however, much of the reduction of poverty is attributable to increased agricultural production (agriculture being the most significant industry in India). In the late 1980s and early 1990s, when economic growth was even more rapid, poverty rates were generally flat, and even increased when agricultural production fell due to adverse weather conditions in the early 1990's.

Economic growth from 1950 to 1975 concentrated mostly on the enhancement of large-scale industry. While this has the power to uplift lower-middle-class urban residents, it did not have an appreciable effect on the bulk of India's economic difficulty—the problem of the massive numbers of rural poor. Most Indians are employed in very small scale micro-enterprise, not in factories. Health and educational services were built, but mostly in urban areas, thusly inadequately serving the huge rural population. Agricultural growth was prompted by the Green Revolution, but not distributed very well throughout the country. Land reforms were introduced to favor small farmers over inefficient absentee landlords of large plots, but enforcement was very spotty. Central planning focused on large goals but the details failed to be fleshed out.

The decreases in poverty accomplished in the late seventies and early eighties were mostly due to a few important factors: improvements in infrastructure, enforcement of land reforms, and the public food distribution system, which provides grain at fair prices to the country's poor. The Green Revolution's accelerated pace also played an important role in this improvement; however, the uneven distribution of the benefits of the Green Revolution lead to improvements only in certain areas. Great geographic disparities of economic well-being were accentuated by the Green Revolution.

Many of the land reforms and agricultural subsidies instituted to uplift India's rural poor are being challenged by globalization. Land reforms instituted in the 1970's to address the problem of rural landless families and absentee landlords have been a crucial part of the advancement of the country's poor. But current trends advocate huge, mechanized farms, which are not possible under many of India's land holding ceilings. It is often claimed that large farms are very efficient, but that is mostly untrue. The "inefficient small farmer" is mostly a myth-while a large mechanized farm can produce more of any single product than a small farm, overall productivity is much lower. In India, farms smaller than 5 acres have productivity rates of some 735 Rupees (Rs.) per acre, while larger farms of 35 acres or more have productivity rates of a mere Rs.346 per acre. This is because most mechanized farms are a monoculture that focuses on production of one part of the plant, while small farms focus on diverse crops and on utilizing every portion of the plant. In the state of Bengal, strong and effective land reforms divided many large farms into small farms, which gave it a 6.5% growth rate, compared to the 3% national average. And while small-scale agriculture may be much more labor-intensive, this is not a bad thing in a country of one billion inhabitants suffering from massive underemployment.

Given some of the negative effects experienced so far with globalization and trade liberalization, it is easy to wonder why the Indian government (as well as the governments of many other developing countries) would be pursuing it so enthusiastically. Certainly, the great promise of such successful economies as found in developed countries can be a powerful lure. And economic growth can indeed be a powerful tool for socioeconomic advancement. But intelligent, village-scale planning is essential to such improvement, and current global trade policies focusing on the large-scale matter of gross "economic growth" and encouraging the liberalization of markets goes completely counter to these needs. Removal of public subsidies and repeal of land reforms encouraged by global trade policies will only further damage India's economic well-being. Massive multinational corporations pay farmers very low prices for goods then sell them at huge profits abroad, taking advantage of their dominance in the system and sucking massive amounts of capital and food from the country.

Development of industry could certainly help advance India's people and help to modernize the country, and global trade can play a part of this. But current policies only help the vampiric multinationals suck India dry of its wealth and goods, leaving a chaotic, shivering wreck of a country in its place. India needs to develop its rural areas, encourage intensive small-scale community agriculture, and manage to feed all its people—all aims that are not aided by the current west-favoring global trade policies.

 

 


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