Globalization, Poverty and Inequality

The debate over globalization is lively, often passionate. Many of the problems that the critics of globalization point to are real. Some of them relate to economics, others relate to non-economic, but no less important, aspects of life. As far as the economics is concerned, the big challenge is poverty, and the surest route to sustained poverty reduction is economic growth. The globalization–poverty relationship may be nonlinear in many aspects. Indeed, each subset of links embedded in the globalization (openness)–growth-income distribution–poverty nexus can be controversial. Besides the effects of globalization on poverty filtered through economic growth, globalization/integration directly creates winners and losers among the poor (Ravallion, 2004). This paper analyses some of the channels and transmission mechanisms through which the process of globalization affects different aspects and dimensions of poverty in the developing world, in particular the openness channel, the pattern of labour, the vulnerability of poor to economic and financial shocks.