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1 The Impact of Globalization on Inequalities and Poverty Stream 7: Development and Globalization: Organizing Rhetoric and Power Daniela-Emanuela Danacica Department of Economics “Constantin Brâncusi” University of Târgu –Jiu, Romania Bd. Republicii Nr. 1 210152 Email: [email protected] Introduction Globalization has raised powerful debates between optimists and pessimists. The first ones see the new order as a “parusia” of the Technological Man. The last ones find inside globalization the same sort of Cold Armageddon, where the multinational corporations unveil themselves preparing the final confrontation with the world’s poor. Finding a definition for globalization is a real challenge. But beyond definitions, fears and expectations, when one fifth of the world’s population lives with less than 1 $ per day, the question raised “does globalization make the world we live in, a more fair place to live or does it make the rich richer and the poor poorer” is no longer out of place and requires an answer. There are pro and against globalization debates, with strong arguments on both sides, but everyone vaguely refers to what globalization really is, overlooking the fact that globalization has different effects on inequality and poverty. Most of the times when someone speaks about globalization he or she refers to a multitude of phenomena which usually have less or nothing to do with globalization at it is understood by economists. Through the eye of the economist, globalization is the result of the following phenomena: the default of the barriers on the international commerce, the unprecedented development of the capitals market which demands a greater freedom of movement, acceleration migration and the increase of the direct foreign investments and technological transfers. If we want to study the impact of the globalization on inequalities and poverty we must also make the difference between the two separate dimensions of them: inequalities and poverty within the countries and inequalities and poverty between the countries. These conceptual delimitations are very important. Also, studying the impact of globalization on inequalities and poverty we must have a look along history in order to discover potential correlations between the evolution of the globalization process and the tendency of poverty and inequalities. We can identify three important s tages of this phenomenon: The first wave of globalization (1870-1914) The starting point of the first wave of globalization was a combination between the reduction of transportation costs and the downfall of the tariff barriers. The low transportation costs and the downfall of the tariff barriers made possible the optimum use of the countries’ economical potential. Labor force migration and capital circulation

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The Impact of Globalization on Inequalities and Poverty

Stream 7: Development and Globalization: Organizing Rhetoric and Power

Daniela-Emanuela Danacica Department of Economics

“Constantin Brâncusi” University of Târgu –Jiu, Romania Bd. Republicii Nr. 1 210152 Email: [email protected]

Introduction

Globalization has raised powerful debates between optimists and pessimists. The first ones see the new order as a “parusia” of the Technological Man. The last ones find inside globalization the same sort of Cold Armageddon, where the multinational corporations unveil themselves preparing the final confrontation with the world’s poor. Finding a definition for globalization is a real challenge. But beyond definitions, fears and expectations, when one fifth of the world’s population lives with less than 1 $ per day, the question raised “does globalization make the world we live in, a more fair place to live or does it make the rich richer and the poor poorer” is no longer out of place and requires an answer.

There are pro and against globalization debates, with strong arguments on both sides, but everyone vaguely refers to what globalization really is, overlooking the fact that globalization has different effects on inequality and poverty. Most of the times when someone speaks about globalization he or she refers to a multitude of phenomena which usually have less or nothing to do with globalization at it is understood by economists. Through the eye of the economist, globalization is the result of the following phenomena: the default of the barriers on the international commerce, the unprecedented development of the capitals market which demands a greater freedom of movement, acceleration migration and the increase of the direct foreign investments and technological transfers. If we want to study the impact of the globalization on inequalities and poverty we must also make the difference between the two separate dimensions of them: inequalities and poverty within the countries and inequalities and poverty between the countries. These conceptual delimitations are very important.

Also, studying the impact of globalization on inequalities and poverty we must have a look along history in order to discover potential correlations between the evolution of the globalization process and the tendency of poverty and inequalities. We can identify three important s tages of this phenomenon:

The first wave of globalization (1870-1914)

The starting point of the first wave of globalization was a combination between

the reduction of transportation costs and the downfall of the tariff barriers. The low transportation costs and the downfall of the tariff barriers made possible the optimum use of the countries’ economical potential. Labor force migration and capital circulation

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substantially increased. In 1870 the foreign capital stock that could be found in developing countries represented only 9% of their incomes (World Bank, 2002). The drawing of foreign capital and the development of some financial institutions within the market area were necessary. All these together with the improvements from the information area gave to the developing countries the possibility to penetrate in major capital’s market. Until 1914 the foreign capital stocked in developing countries reached 32% of their income (World Bank 2002). Did this fact lead to an economical equalization between countries or to an increase of inequalities? The answer is that, the countries, which used their potential and relied on drawing the labor and the foreign capital, experienced an economical growth in comparison with the others.

Concerning the impact of globalization on inequalities and poverty within the countries, the benefits from the growth of commerce went to the owners of the means of production. This growth of commerce led to an increase of the inequalities in the countries where the possession of the means of production was not uniformly distributed, such as in the countries from Latin America. The inequalities within the countries were far less accentuated in the countries with a uniform distribution of the means of production. Fifty years before the appearance of this new challenge called globalization, since 1820, the income inequalities have dramatically increased at international level. This trend continued along the first wave of globalization. During the 50 years before 1870, the rate of poverty was constant throughout the world with a percentage of 0.3% per year (World Bank 2002). Along the first wave of globalization, this increased more than twice, reaching 0.8 % per year (World Bank 2002). Correlated with the numerical growth of population it led to the increase of the absolute number of the poor at international level. The transport costs continued to cut down due to the technological progress. Then the devastating period of the First World War came, characterized by an accentuated economical decline. The governments attempt to meet the demands by their own forces, they answered to the economical depression with protectionism. This meant a giant step back for the international commerce. The exports dropped to the level of 1870. The turning towards nationalism generated an “anti-immigration” current, the governments imposing drastic restrictions in order to obstruct the access of the new -comers. But this withdrawal towards nationalism and at the same time away from globalization did not change the trend of inequalities and poverty. In 1950 at the end of this withdrawal towards nationalism the world was farther away from equality between people than in 1914 (Maddison, 2001). The rate of world wide economical growth dropped to one third in comparison with the previous period. It was provided by means of this experiment given by history that the opposite of globalization is possible but it is not an attractive experience by. Between 1913 and 1950 the level of inequality between different geographical regions dramatically decreased. The absolute number of poor people increased by 25% (World Bank, 2002). In spite of general accentuation of poverty, this time was also characterized by medical discoveries as well as the development of some public health politics that led to a better life and a greater life expectation. Poverty with all its implications is a complex phenomenon which does not depend exclusively on economical performances. The second wave of globalization (1945-1980)

The negative aspects of the withdrawal towards nationalism led to a sudden change for internationalism. The second wave was synonymous with the increase of the importance of social protection and redistribution politics within the developed countries. There was not a decrease of the inequalities between the countries but within the

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countries as a result of social programmes. Concerning the poverty, this second wave recorded spectacular drops mostly in the OECD countries (World Bank, 2002). This period can be called “the golden period of time” for the industrialized countries. It was not the same for the developing countries. This group of countries was left behind by the developed countries. World wide inequality was the result of three factors: the decrease of inequalities within developed countries, the growth of inequalities between the group of developed countries and the group of developing countries and insignificant changes in the economical development and inequalities within the developing countries. The result of these three factors generated no change, the world wide inequalities being the same at the end of 1970 as they had been 25 years earlier (World Bank, 2002). The new wave of globalization This third wave, which started in 1980, is different from the others two, fact that determined the economists to call it “the new wave” of globalization. One of the main positive effects of this new wave of globalization is that many developing countries participated more and more in the international commerce and they were much more centered towards the international economical opening. As a result, the group of developing countries achieved a decisive penetration on the industrial commodity market and services market. In 1980 the share of industrial products in the total export of developing countries was 25% and in 1998 this share grew to 80% (UNDP). Also the services represented 17% of the total exportation in developed countries and only 9% in developing countries in the early 1980 (World Bank ,2002).

For the countries with a high income gross domestic product per capita, the annual growth rate was 2.1% between 1975 and 2002 and 1.7% between 1990 and 2002. For the middle income countries it was 1.4% between 1975 and 2002 and 2% between 1990 and 2002 and for the low income countries it was 2.2% between 1975 and 2000 and 2.3% between 1990 and 2002.

0

0.5

1

1.5

2

2.5

The annual growth rate (%)

1975-20021990-2002

1975-2002 2.1 1.4 2.2

1990-2002 1.7 2 2.3

high income

middle income

low income

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From the geographical point of view the situation is: Arabian States 0.1% in 1975-2002 and 1% between 1990 and 2002, Eastern Asia and the Pacific 5.9% between 1975 and 2002 and 5.4% between 1990 and 2002, South Asia totalizes 2.4% between 1975 and 2002 and 3.2% between 1990 and 2002, Sub-Saharan Africa -0.8 between 1975 and 2002, Central and Eastern Europe and the CIS -1.5% between 1975 and 2002 and -0.9% between 1990 and 2002, OECD 2% between 1972 and 2002 and 1.7% between 1990 and 2002, Latin America and the Caribbean 0.7% between 1975 and 2002 and 1.3% between 1990 and 2002. Table 1 presents the situation of gross domestic product and gross domestic product per capita annual growth rate for every country.

-2

-1

0

1

2

3

4

5

6

The annual growth rate from gegraphical position

1975-2002

1990-2002

1975-2002 0.1 5.9 2.4 -0.8 -1.5 2 0.7

1990-2002 1 5.4 3.2 -0.9 1.7 1.3

Arabian States

Eastern Asia

South Asia

Sub-S. Africa

C.E. Euro

and CISOECD

Latin America

Along the third wave the value of services in the total exports for the wealthy

countries grew up to 20 %, while for the developing countries its value nearly doubled reaching 17%. Total debt service (as % of exports of goods and services) for medium human development countries is 18.5% in 1990 and 16.7% in 2002, and in low human development countries totalizes 21.6% in 1990 and 11.1% in 2002. From the geographical point of view the situation is: Arabian States 14.9% in 1990 and only 6.7% in 2002, Eastern Asia and the Pacific 17.9% in 1990 and 12.1% in 2002, Latin America and the Caribbean 23.7% in 1990 and 30.8% in 2002, South Asia 19.5% in 1990 and 11.9% in 2002, Sub-Saharan Africa 20.4% in 1990 and 11.9% in 2002, Eastern and Central Europe and the CIS 13.5% in 1990 and 17% in 2002 (UNDP).

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0

5

10

15

20

25

Total debt. service as % of exports of goods and services

19902002

1990 18.5 21.6

2002 16.7 11.1

MHD country LHD country

0

5

10

15

20

25

30

35

Total debt. service as % of exports of goods and services from geographical point of view

19902002

1990 14.9 17.9 23.7 19.5 20.4 13.5

2002 6.7 12.1 30.8 11.9 11.9 17

Arabian States

Eastern Asia

Latin America

South Asia Sub S. Africa

E.-C.Europe and CIS

Net foreign direct investments inflows (% of GDP) for the high human

development countries was 1% in 1990 and grew to 2% in 2002, for medium human development countries was 0.7% in 1990 and 2.2% in 2002, and for low human development countries was 0.5% in 1990 and 2.9% in 2002. The distribution of net foreign direct investments flows (% of GDP) on regions is the following: Arabian States totalized 0.9% in 1990 and 0.6% in 2002, Eastern Asia and the Pacific 2.3% in 1990 and

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3.6% in 2002, Latin America and the Caribbean 0.7% in 1990 and 2.7% in 2002, Sub-Saharan Africa 2.4% in 2002, Central and Eastern Europe and the CIS 3.5% in 2002, South Asia 0.6 in 2002, OECD 1% in 1990 and 1.9% in 2002, and world wide they totalized 1% in 1990 and 2% in 2002. The situation for every country is presented in Table 4.

0

0.5

1

1.5

2

2.5

3

Net foreign direct investments inflows (% of GDP)

19902002

1990 1 0.7 0.5

2002 2 2.2 2.9

HHD country

MHD country LHD country

00,5

11,5

2

2,53

3,5

4

Net foreign direct investments inflows (% of GDP) from the geographical point of view

1990

2002

1990 0,9 2,3 0,7 1

2002 0,6 3,6 2,7 2,4 3,5 0,6 1,9

Arabian States

Eastern Asia

Latin America

Sub-S. Africa

C.-E. Europe

South Asia

OECD

For the groups of developed countries the globalization continued to homogenize them, in 2002 the inequalities being much smaller than in 1960. Table 3 presents the situation of the inequalities measured by Gini index per countries. Concerning the

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poverty between 1993 and 2003 the number of people in absolute poverty dropped to 762 millions. In Table 6 we present the situation of the population which lives with less than 1$/day in percentage between 1990 and 2002 and table 7 presents the population which lives under the limit of 50% of the media value of income in percentage. The average public spending for education as % of GDP was 4.63% in 1990, maintaining the same level between 1999 and 2001 for high human development countries and 3.39% in 1990 and 3.88% between 1999 and 2001 for low human development countries. In table 8 is presented the situation of this indicator per countries. Concerning the average public spending for health (% GDP) high human development countries reached a percentage of 4.5% in 1990 and of 5.05% in 2001, medium human development countries reached 2.59% in 1990 and 0.87% in 2001 and low human development countries have a rate of 1.71% from GDP in 1990 and 2.43% in 2001 (Table 8). Life expectation at birth in high human development countries was 71 years between 1970 and 1975, growing along this third wave to 77.5 years between 2000 and 2005, in medium human development countries grew to 67.3 years between 2000 and 2005 in comparison with 57.8 years between 1970 and 1975 and in low human development countries is 49.1 years in 2000-2005 in comparison with only 45 years between 1970 and 1975. (Table 9)

0

10

20

30

40

50

60

70

80

Life expectation at birth (years)

1970-19752000-2005

1970-1975 71 67.3 49.1

2000-2005 77.5 57.8 45

HHD country

MHD country

LHD country

An alarming problem in the evolution of industrialized national economies in transition or under development is the economical growth that does not create enough jobs. The number of people unemployed in OECD countries was 36,137 thousands in 2002 which is 6.9% of the labor force in 2002, the level of long term unemployment % of total unemployment being 30.9% for women and 28.5% for men in 2002. The countries which are under a stabilization process or under structural adjustments often get to recession and lay off many people. Many countries from the group of developing countries experienced economical growths but created very few jobs. An example is Pakistan where gross domestic product grew between 1975 and 1994 with about 6.3% and the employment only with 2.4%. Other countries such as China, Botswana, and Indonesia achieved between 1980 and 1990 a rapid growth of the annual revenue per person and of the labor force employment. A different situation occurred in the group of the countries in transition, the newcomers in the arena of international commercial

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relationships. The transition to a market economy proves to be a difficult and complex process with significant production and incomes drops. The gross domestic product of these countries constantly registered negative evolutions. The disparities between Eastern and Central European economies and those of the western part of the European continent, as well as the reduction of these economical differences represent a century-old problem whose solutions are in the future. Developing countries registered important general economical growths, but this process was not homogenously distributed. An example of this sort is the African continent, now poorer than in the 70’s.

The changes of global revenue distribution per day and the number of poor persons are the result of the compensation effect. So, on a long term, the tendency of the inequalities global growth and the increase of the absolute number of poor persons was wavering and even reversed.

Analyzing the impact of globalization on poverty and inequalities during the time, the conclusion is that globalization is a powerful factor for reducing poverty and inequalities for the countries that know how to use the contexts in their advantage. The impact of globalization on inequalities and poverty within the countries Globalization was followed by major changes in economical specialization, revenues, inequalities and poverty between and within the countries. In the developed countries globalization is seen by most of the economists as having a tendency to increase the difference between qualified and unqualified labor service. This popular idea was stressed by some economists who consider that the difference noticed in the US and UK, as well as the different reactions of globalization cannot be explained only by the arguments of the amplified commercial trades’ theory. Alternative explanations contain the influence of the technological progress on inequalities or the changes of labor service market (Aghion 2001, Atkinson 1999). If we investigate the group of the developing countries, it is not very clear how the globalization affects inequalities within them. As Dollar and Kraay show, the changes of the inequalities trend are different from one country to another. The effects of globalization on poverty are much easier to be shown and analyzed. The economical growth rate increases at the same time with the acceleration of the commercial flows and such an increase lead to a decrease of poverty.

If we analyze the impact of globalization on inequalities and poverty we will notice that there are two levels of globalization and channels through which it influences the economical status of the countries.

At the first level, globalization helps the economical growth. The second step is that the economical growth leads to a certain “sweetening” of the poverty. The means through which the globalization implements its effects are: international commercial trades, international capital flows, human capital mobility, technological improvements, especially in the area of IT and telecommunication. I have chosen to focus on the countries that are representative for the demographic map of the World. The United States of America The impact of globalization within the United States of America is the cause of debate between pessimists and optimists. According to the researches of some well – known American economists, the globalization of American economy and particularly its

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two dimensions, the growth of international trade and the immigration are important elements towards the enlargement of inequalities within the US.

It is beyond any doubt that inequalities in this country have been growing since the beginning of the 1970’s. The American economist, Benjamin Disraeli underlines that lies and false statistics are used by different economists according to the situation they want to present. Misunderstandings concerning the methodology of statistic measurement of the social-economical status as the medium value of income family are used in order to bring arguments against what some consider to be a fact not enough analyzed, that the globalization led to the increase of inequalities within the US. Optimists show that non- income indicators such as spare time, number and the quality of consumed goods, real costs for necessities and measurement indicators of the two sides of social well-fair, such as health, education, show that Americans live better than any time. Also many economists talk about some meritocracies inequalities. The equality of chances is guaranteed by Constitution, but not the equality of what the citizens will become (Blueston, 1994). Other answers to the concerns related to the growth of inequalities are offered by the choice of data which demonstrates that the trend of inequalities can be changed in a positive way in a society with a high level of the employment mobility as US, and those increases and decreases in the dynamic of inequalities are irrelevant in proportion to the economical growth. On the other hand, the pessimists, who make much of the growth of inequalities, use indicators that show that the US is the country with the greatest inequalities between the developed countries, that the median value of the family income stagnated long the last two decades while the necessities grew, that the growing tendency of the inequalities is happening despite the very well announced increase of the productivity worker in all the domains but mostly in the manufacturing field.

The statistic data for the US show the following: the Gini index in 2002 was 40.8, the fourth after Brazil, the country with the highest Gini value, 59.1, Russia with 45.6 and China with 44.7 for the same year 2002 (Table 1).

0

10

20

30

40

50

60

Gini index in 2002

USBrasilRussia

China

Gini index 40.8 59.1 45.6 44.7

US Brasil Russia China

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The share of income or consumption for poorest 10% was 1.9 % and for richest 10% was 29.9% for the same year, 2002. GDP reached the value of 10,383.10 billions in 2002 and the GDP per capita annual growth rate was 2% between 1975 and 2002 (Table 3). Concerning the goods imports from developing countries, they reached 48% from all the imports in 2002, and the average annual change in consumer price index was 2.6 between 1990 and 2002 and 1.6% between 2001 and 2002. The medium life expectancy at birth grew from 71.5 years between 1970 and 1975 to 77.1 years between 2000 and 2005 (Table 9). Public expenditure on education represented 5.2% from GDP in 1990 and 5.5% between 1999 and 2001 and public expenditure on health reached a share of 4.7% from GDP in 1990 and 6.2% in 2001 (Table 8). In spite of these growths and the fact that by World Bank’s standards from 2004 USA is registered as a high income country, the population living below 50% of median income was 17% of the total population between 1990 and 2000 (Table 7).

If we look at the Gini index, the US is the most unequal country among the rich countries, members of OECD. In comparison with other countries with a high rate of inequalities such as Ireland and Switzerland, the rich people of the US have the highest income and the poor people have the lowest income, related to the same social groups from the developed countries .

Also the changes in geography production along American history led to the creation of a “center” and a “periphery” in the USA, the North-East and the West Middle forming the center and the South and the West forming the periphery. The economy development up to an international level led to the downfall of the traditional production areas, this fact leading to a growth of inequalities within the US.

U.S. Census Bureau offers the statistical data that clearly show increases of income inequalities. The richest 20% of the population own 48.5% of the total income in comparison with 40.6% in 1969 while the poorest 20% of the population passed from 5.6% in 1969 to 3.6% from present income.

05

101520253035404550

Income inequalities in 1969 and 2002 in US

richest 20% poorest 20%

richest 20% 40,6 48,5

poorest 20% 5,6 3,6

1969 2002

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The middle class is stable. The arguments of pro and against groups fade when we face the reality. A large number of citizens of the US were affected in the last years by the quick technological changes generated by globalization and its impact on American economy. Former USSR countries

Created after the downfall of USSR, its component countries were much slower moving concerning the laws of international trade. The break-up of USSR created an opportunity of increases in commercial flows, capital flows and labor force migration from former USSR to other countries, but within the former USSR commercial trade dramatically decreased.

The situation shown by statistical data for these countries is: GDP for Russian Federation was 346,5 billions US $ in 2002, Lithuania 13,8 and Latvia 8,4 billions US $ Belarus 14,3 billions, Ukraine 41,5 billions, Kazakhstan 24,6 billions, Turkmenistan 7,7 billions, Azerbaijan 4,1 billions, Uzbekistan 7,9, Kyrgyzstan 1,6, Tajikistan 1,2 billion US $ for the same year 2002 and GDP per capita annual growth rate was -2.4% for Russian Federation between 1990 and 2002, Lithuania -0,3%, Latvia 0,2, Belarus 0.2, Ukraine -6, Kazakhstan -0.7, Turkmenistan -3.2, Azerbaijan 0.2, Uzbekistan -0.7, Tajikistan -8.1, Kyrgyzstan -3.2, for the same period of time 1990-2002 (Table 1). Concerning the net foreign direct investments inflows, as percent of GDP, the distribution on former USSR countries of these indicators is the following for 2002: Turkmenistan 1.3%, Azerbaijan 22.9%, Georgia 4.9%, Uzbekistan 0.8%, Kyrgyzstan 0.3%, Moldova 6.8%, Tajikistan 0.7%, Russian Federation 0.9%, Lithuania 5.2%, Latvia 4.5%, Belarus 1.7%, Ukraine 1.7% (Table 4). Public expenditure on education registered 3.8% from GDP in 1990 and 5.9% from GDP between 1999-2001 for Russian Federation, 4.9% in 1990 and 6% between 1999-2001 for Belarus 3.5% at the same time for Azerbaijan, 5.2% in 1990 and 4.2% between 1999-2001 for Ukraine, 3.2% in 1990 for Kazakhstan 4.3% between 1999 and 2001 for Turkmenistan, 8.3% from GDP in 1990 and 3.1% between 1999-2001 in Kyrgyzstan, 4.9% from GDP in 1990 and 1% from GDP in 2001 for Tajikistan (Table 8).

0

50

100

150

200

250

300

350

GDP in Former USSR countries 2002 ( billions US $)

Russian Federation

LithuaniaLatviaBelarusTajikistanAzerbaijan

UzbekistanKyrgystan

GDP 347 13.8 8.4 14.3 41.5 24.6 1.2 4.1 7.9 1.6

Russian

Lithuania

Latvia

Belarus

Ukraine

Kazahst

Tajikistan

Azerbaija

Uzbekist

Kyrgysta

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0

5

10

15

20

25

Net foreign direct investments inflows (%GDP) in Former USSR Countries

TurkmenistanAzerbaijanRussiaGeorgiaMoldovaTajikistanLithuania

LatviaBelarusUkraine

net foreign directinv.flows (%)

1.3 23 0.9 4.9 0.8 0.3 6.8 0.7 5.2 4.5 1.7 1.7

Turkm

Azerbai

Russi

Georgi

Uzbeki

Kyrgys

Moldov

Tajikist

Lithuan

Latvia

Belaru

Ukrain

Life expectancy at birth grew in Lithuania from 71.3 years between 1970 and

1975 to 72.7 years between 2000 and 2005, from 70, 1 years to 71 in Latvia, from 60,7 to 67, 1 in Turkmenistan, from 69 to 72.2 years in Azerbaijan, from 69.2 to 73.6 years in Georgia, from 64.8 to 68.9 years in Moldova and from 63.4 to 68.8 years in Tajikistan, for the same period of time and decreased in Russian Federation from 69.7 to 66.8 years in Belarus, from 71.5 to 70.1 years in Ukraine from 70.1 to 69.7 years for the same period of time (Table 9).

Gini index was 45.6 for Russian Federation, the second in the world after Brasilia, 30.4 for Belarus, 29 for Ukraine, 31.3 for Kazakhstan, 40.8 for Turkmenistan, 36.5 for Azerbaijan, 36.9 for Georgia, 26.8 for Uzbekistan, 29 for Turkmenistan and 34.7 for Tajikistan, high values which demonstrate the existence of inequalities in the former USSR countries (Table 1).

0

10

20

30

40

50

Gini index in Former USSR countries Russia

Lithuania

Belarus

Ukraine

Kazahstan

Turkmenistan

Azerbajian

Georgia

Uzbekistan

Kyrgistan

Moldova

TajikistanGini index 46 32 32 30 29 31 41 37 37 27 29 36 35

Russi

Lithuan

Latvia

Belaru

Ukrain

Kazah

Turkm

Azerb

Georgi

Uzbek

Kyrgist

Moldov

Tajikist

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The status of these countries, by World Bank’s standards, was in 2004 the following: Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan, Turkmenistan, Russian Federation and Ukraine – lower middle income, Kyrgyzstan, Tajikistan, Uzbekistan – low income, Latvia – upper middle income (Table 10).

Dollar and Kraay show that the changes in commercial politics had a greater impact on the economical situation than institutional changes. Their view was doubted by Rodrik, Subramanian and Trebi (2002) who demonstrated that the institutional changes have an important direct effect on income, while the geographical position and commercial changes affect the income most through the quality of institutions. The experience of the countries in transition seems to suggest the fact that effects of globalization greatly depend on the quality of institution. Many times they considered that the decisive factors for success or failure concerning the economical growth for the countries in transition, is the quality of the governmental institutions and their ability to prevent economic chaos from the beginning of the transition period and to guarantee, protect and encourage local or foreign investments through lows that protect private property.

After the break-up of USSR, commercial trades, capital flows and labor force migration were freer although they are different from one country to another. In Belarus, Uzbekistan and Turkmenistan there is a variety of non-price barriers for international trade, state control of production and commercial trades, restrictions of currency convertibility and capital flows. While in Kyrgyzstan, Georgia and Moldova there are no barriers of this kind and the import tariffs are very low (Yudaeva, 2003).

It becomes obvious the important role played by institutions in studying the impact of globalization on inequalities and poverty within and between the countries. The experience of former USSR countries, for example Russia, shows that they can suffer because of “passive liberalism”. The inefficient institutions and corrupted ones are also a barrier for foreign direct investments even in the most productive extractive industry fields. Russian experience shows that unequal incomes can grow to enormous proportions because of the differences of incomes between export industry and import industry, which is not compensated by the labor force mobility between different economical areas or by a good system of social assistance (Yudaeva, 2003).

As Kolenikov and Shorrocs (2002) show, this kind of growth in the trend of inequalities can lead to a growth of the poverty rate. The conclusion is that only the countries with strong governments can control the international integration and can guarantee the protection of foreign investors’ rights and can have a benefit from globalization without widening the inequalities or growing poverty rate.

Inequalities grew, along the transition period within al l former USSR countries, but at a different rate. In Russia, for example, inequality reaches rates registered only in the most unequal countries in the world, such as Brazil (Table 3). In spite of the methodological differences in measuring inequalities and poverty, they still clearly show a picture of the effect of globalization on inequalities and poverty in these countries. While at the beginning of the transition period in 1989, the Gini index was almost the same, in 2002 the level of inequalities is significant different. The highest level was registered in the countries affected by war such as Armenia, Georgia, while the lowest level was registered in the country with the slowest reform process, Belarus (29 in 2002). Paradoxically, the most liberal countries have the highest rate of inequalities 44, 2%. In all these countries the level of inequalities in 2002 is much higher comparing to the level registered in 1989. Concerning the growth of the poverty rate, the main cause was the

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decline of productivity and the growth of inequalities between incomes. The transition in former USSR countries led to changes in the structure of incomes and employment. Most of population which in former USSR was the middle class mostly, those who worked in the budgetary branch, teachers, doctors, researchers, suffered a powerful decline of income and chose to emigrate. The brain-drain strongly affected the former USSR countries, the effect of this export is negative on long term and difficult to measure. The population suffers because of the incomes instability and the employment instability, and education, which generates incomes in other countries such as the US, in Russia for example, does not provide an income for a decent life, or a safe job. Anti-globalists consider this phenomenon to be the result of globalization which determines the decline of social standards up to the limit. Other economists pro-globalization, consider that the growth of noticed inequalities cannot be explained in an exhaustive way, only by the theory of commercial trades, but more likely were determined by social changes as a natural result of international opening process. In conclusion the inequalities and poverty within the USSR countries, in my opinion, are more likely determined by the transition process together with an inefficient institutional structure. Unlike the countries studied by Dollar and Kraay, with powerful governments, which together with the liberal politics created a friendly environment for investments, we cannot say the same thing for former USSR countries. Most of these governments are weak and their commercial politics are inefficient according to the economical growth. On the list of countries studied by Dollar and Kraay there are countries with an inefficient government and whose rates of poverty and inequalities present the same evolution as the CIS countries. These countries suffered from “passive globalization”, from government inefficiency to protect the products and the lack of economical substance which could define their international integration.

China After the fall of the communist world in Europe and the break –up of USSR, China remains the main survivor of the old socialist system, a state in which the monopoly exercised by the Communist Party, the only party in the political and cultural life has its indisputable place and where at the same time a state where acts an economy based on the capitalist market and that has one of the highest rates of development in the World, in the last decade. The amazing development of China beginning with 1979 drew the attention because of the high rate of economical growth, unique in the world, as well as for its consistency regarding the redistributing income politics (Azizur, 1998). The reforms introduced in 1979 led to an unprecedented growth of the economy. GDP reached 1266, 10 billions US dollars in 2002 and the annual growth rate of GDP was 10.2% in 1980, 8.2% between 1975 and 2002 and 8.6% between 1990 and 2002 comparing to with 5.5% in 1970 (Table 1).

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0

2

4

6

8

10

12

The annual growth rate of GDP (%) in China

197019801975-2002

1990-2002

the annual growth rate 5.5 10.2 8.2 8.6

1970 19801975-2002

1990-2002

During the reforms in between 1979 and 2000 the GDP per capita annual growth was four times higher, an unprecedented phenomenon in the history of mankind. The powerful economical development in the middle of 1980’s, the time when the effects of the new wave of globalization started to make their presence felt, was possible because of the increase of exports on the background of globalization and integration of world economy. The share of exports in GDP in China was 18% in 1990 then amazingly rising to 29% in 2002 (Table 2).

0

5

10

15

20

25

30

The share of exports in GDP (%) in China

1990

2002

share of exports in GDP%

18 29

1990 2002

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China, a country financed by its own investments became a kind of accumulator of foreign capital, in 1995 foreign direct investments reached 33,8 billions, net foreign direct investments inflows represented 1% from GDP in 1990 and 3.9% from GDP in 2002 (Table 4). Imports of goods and services represented 14% from GDP in 1990 and 2.9% in 2002. Public expenditure on education was 2.3% from GDP in 1990 and public expenditure on health was 2.2% from GDP in 1990 and 2% in 2001.

0

0.5

1

1.5

2

2.5

3

1990 2001

Public expenditure on health and education (% from GDP) in China

public expenditure on healthas %from GDPpublic expenditure oneducation %from GDP

Life expectancy at birth grew from 63.1 years between 1970 and 1975 to 71

years between 2000 and 2005 (Table 9).

58

60

62

64

66

68

70

72

1970-1975 2000-2005

Life expectancy at birth in China (years)

1970-1975

2000-2005

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The question is what was the impact of this unprecedented economical growth on inequalities and poverty in China?

The answer is that we can talk about two different stages concerning the influence of economical development on inequalities and poverty. Along the beginning of the reform, almost until 1980, a historical period of the first wave of globalization, China reached a high rate of poverty decrease. After the middle of 1980’s the rate slowed down and even experienced increases. There are substantial differences between rural and urban situation.

According to the research made by World Bank, the rate of poor rural population dropped from 33% in 1978 to 11% in 1984, this rate being constant since then, until 11.5% in 1990. In this country the population living below 2 dollars /day represented 46.7% from total population between 1990 and 2002, and those who lived with one dollar /day represented 16.6% in the same period of time. This is a high percentage considering the growth of GDP (Table 6). Regarding the poverty in the urban area, according to the same research, it dropped from 1.9 % in 1981 to 0.3% in 1994. In the rural area poverty decreased in a spectacular way in the first years of reform and after 1980 the rhythm slowed down. Unlike the rural area, the urban area experienced a decrease of poverty after 1980. As most of the Chinese live in rural area, we draw the conclusion that the poverty rate slowed down in the middle of 1990’s, when the phenomenon of globalization was at its highest point. One of causes because of which there is still poverty in China, in spite of the growth rate of the GDP, is that the increase of personal income, an important factor that influences poverty decreased in comparison with the growth of GDP of 4.71% per years in rural area and 4.48% in urban areas. Between 1975 and 1985 a period when poverty dropped significantly, the growth of personal income was accentuated. After this moment differences between the growth rate of GDP and the growth rate of personal income, appeared due to the macro economical politics promoted by China, and centered towards distributing GDP between households, government and corporations. This is a possible explanation for the insufficient decrease of poverty, mainly in the rural area (Azizur,1998). The insufficient decrease of poverty reflected also in the increase of inequalities in the distribution of personal income. The high level of Gini index of 44.7 situates China on the third place concerning the inequalities. The growth of inequalities has many forms, one of them being the growth of inequalities between provinces and regions. Also inequalities within provinces grew. Public finances, taxes and subsidies were an important source of inequalities, both in rural and urban areas (Azizur,1998).

The rate of poverty for rural population in China

05

1015

2025

3035

1978 1984 1989 1990 1994

1984

1990

1994

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The rate of poverty for urban population in China

0

0,2

0,4

0,6

0,8

1

1,2

1,4

1,6

1,8

2

1981 1989 1994

1989

Concerning inequalities, it is necessary to get all the regions to the same level. 12 provinces on the coast of China which include 40% of the population, achieve 80% of China’s exports. From these 12 provinces, 8 of them are the richest in China and the others are above the median value of income/person (Azizur, 1998). It is necessary to identify the cause that makes poverty and inequalities so different as regards provinces and as regards urban and rural areas. The status of China by World Bank’s standards in 2004 is of lower middle income country.

India In India, the second country in the World as number of population, after China, inequalities and poverty accentuated after the economical reforms in 1991. The statistical data sustain this statement. Gini index was 32.5 in 2002 and the number of persons who live with one dollar /day was 34.7% from total population between 1990 and 2002 and 79.9% (high percentages) persons who live with 2 dollars/day at the same time (Table 3 and 6). Share of income or consumption poorest 10% reached 10%, 27.4% in the same year 2000 (Table 5). GDP was 510,2 billions dollars US in 2002, GDP per capita annual growth rate being 3.3% between 1990 and 2002, and net foreign direct inflows 0.1% from GDP in 1990 and 0.6% from GDP in 2002 (Table 1 and 4). The level of imports of goods and services was 9% in 1990 and 16% in 2000, expenditure on education represented 3.9% from GDP in 1990 and 4.1% from GDP between 1999 and 2001, and public expenditure on health was the same, 0.9% from GDP in 1990 and 2000 (Table 8). In table 2 we have data concerning Gini ratios for per capita consumption expenditure. We can notice obvious difference between urban and rural areas. As in China, the distribution of inequalities and poverty is different between urban and rural areas and among the provinces of India.

The increase of poverty and inequalities among the regions is the result of the political conflicts, of divergences that are difficult to be settled in a country with a big cultural diversity such as India. The loss of central control, as a result of the reforms, amplified two of the main concerns of the population: the first one is that the poor will be left beside, and the second is that the traditional values of the Indian State will be abandoned (Singh, 2002). The statistical data show the increase of poverty and regional

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inequalities in these years of globalization, but these increases are not high enough to be considered alarming. The data show also another important thing, that the government’s politics can make significant the differences between regions, for example the local administration of poor provinces such as Madhya Pradesh and Rajasthan managed to improve the living standard by means of coherent economical politics (Singh, 2002). Again we can draw the conclusion that the quality of institutions is very important concerning social equity and the welfare of a country.

Though India has problems concerning poverty and inequalities, and is registered as a low income country by World Bank’s standards from 2004, but the statistical data during the reforms are not so bad, the economical reforms could be able in the future, to give the ability to the government to influence in a positive way the equity and social welfare. Pakistan The poverty rate and the inequalities trend grew in Pakistan along the 1990’s. According to some studies of UNDP, the poverty doubled from 17.4% between 1987 and 1988 up to 32.6% between 1998 and 1999. 13.4% from Pakistan’s population lived with one dollar/day in 2002 and 65.6% lived with 2 dollar /day in the same final year from my analysis (Table 6). Gini index is for Pakistan 33, and the share of income of consumption poorest 10% was 3.7% in 1999 and for the richest 10% was 28.3% for the same year 1999 (Table 3 and 5). Similar results concerning the conclusions we drew are obtained if we study the basic needs and the lack of opportunities. Public expenditure on education was 2.6% from GDP in 1990 and 1% from GDP between 1999 and 2001, and public expenditure on health was 1.1% from GDP in 1990 and 1% from GDP in 2001 (table 8).

0

5

10

15

20

25

30

35

The rate of poverty in Pakistan (%)

1987-19881998-2000

the rate of poverty 17.4 32.6

1987-1988

1998-2000

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The median life expectancy at birth grew from 49 years in 1970 and 1975 to 61 years in 2000-2005, still one of the lowest levels in the world (Table 9).

0

10

20

30

40

50

60

70

The median life expectancy at birth in Pakistan (years)

1970-1975

2000-2005

the median lifeexpectancy at birth

49 61

1970-1975

2000-2005

These social indicators as well as others such as access to water, food ration, etc, together with the poverty rate already presented, show that the weak economical development and poverty are not only at an unacceptable level, in absolute terms, but they got worse along the last decade.

So the question is what are the factors responsible for this situation? GDP has a low value in comparison with the number of the inhabitants, being 59.1 billions US dollars in 2002 and the annual growth rate of GDP dropped from 2.6% between 1975 and 2002 to 1.1% between 1990 and 2002 (Table 1). The economical growth rate also decreased from an historical level of 6% to 4% at the same time with the growth of population rate of 2.5%, the growths per inhabitant being insignificant.

Poor performances concerning the economical growth are accompanied by the increase of inequalities between incomes along with a high rate of unemployment. Gini index also grew reaching 33% in 2002. The important budget deficits from 1980 did not allow the redistribution of income and the fight against poverty.

The inefficient administration of the public sector and the decline of public commodities along with the deterioration of general social environment led to the decrease of poor’s access to these services. Because of these problems, the possibilities of professional training of those under the poverty limit substantially decreased (Ishrat, 2000).

In a period of globalization, financial integration and technological revolution, Pakistan did not benefit too much of these situations. Pakistan’s exports remained the same, from 16% in 1990 to 19% in 2000 while world’s exports grew with 5% per year. Imports of goods and services dropped from 23% in 1990 to 19% in 2002 (Table 2). Direct foreign investments in Pakistan remained at a modest level in comparison with the economical dimensions and the demographical potential of the country. Pakistan will have to choose between giving the opportunity to the globalization to penetrate more

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into its economy or to remain an outsider country event. If Pakistan channeled its economical resources in order to increase its exports rate on the world market, it would have an annual profit share from it. Also, if direct foreign investments to Pakistan increased, it would benefit concerning the employment opportunities and the know-how transfers, etc.

Concerning human capital migration, another element of globalization, Pakistan had substantial benefit in the past because of the massive increase of the oil price from the Middle East, and a lot of unqualified labor force migrated towards the states of Persian Gulf. Therefore, their earnings come to Pakistan creating a commodity market for traditional products, investments in the development of human resources and education for their children (Ishrat, 2000). The condition shows that for a country like this, it is very necessary to know how to find its own place in the dynamic market of international commercial trades, to attract direct foreign investments, cutting edge technology and to ensure access to education and training for citizens as much as possible. Arabian Countries

In order to understand the impact of globalization on Arabian Countries, it is important to underline that in spite of their common culture and history, these countries have their own characteristics concerning the economical structure, the level of development, the form of government and institutions.

The distribution of GDP (US $ billions 2002) for these countries is: Bahrain 7.7, Kuwait 35.4, UAE 71, Oman 20.3, Saudi Arabia 188.5, Lebanon 17.3, Jordan 9.3, Tunisia 21, Iran 108.2, Syria 20.8, Algeria 2.1, Egypt 89.9, Morocco 36.1, Jordan 13.5, Yemen 4.4, Djibouti 0.6, Mauritania 1. (Table 1)

0

50

100

150

200

The distribution of GDP US $ billions in 2002 for Arabian Countries Bahrain

KuwaitUAE

OmanJordanTunisiaIranSyriaAlgeriaEgypt

MoroccoYemenDjiboutiMauritaniathe distribution of GDP

(US $ billions)8 35 71 20 18

917 14 21 10

821 2 90 36 4 1 1

Bah

Ku

UA

Om

Sau

Leba

Jord

Tun

Iran

Syria

Alge

Egy

Mor

Ye

Djib

Mau

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Concerning net foreign direct investment inflows, as % of GDP, Oman has a share of 1.4% in 1990 and 0.2% in 2002, Lebanon 0.2% in 1990 and 1.5% in 2002, Jordan 0.9% in 1990 and 0.6% in 2002, Morocco 0.6% in 1990 and 1.2% in 2002, Yemen -2,7% in 1990 and 1,1% in 2002, Djibouti 0.6% in 2002 (Table 4). Public expenditure in education and health (% of GDP) were: Bahrain 4.2% for education in 1990 and 2.9% for health in 2001, Kuwait had a share of public expenditure on education of 4,8% in 1990 and for health it dropped from 4% in 1990 to 3.5% in 2001, the level of public expenditure on education in Qatar was 3.5% in 1990 and 2.2% for health in 2001, UAE had a rate of 3.5% for education in 1990 and of 2.2% for health in 2001, Mauritania 3.6% for education between 1999 and 2001 and 2.6% for health in 2001, Oman 3.1% on education and 2.4% on health in 2001, Lebanon 2.9% public expenditure on education between 1999 and 2001 and public expenditure on health was 3.4% in 2001, Jordan 8.4% for education in 1990 and 4.5% for health in 2001, Iran 4.1% for education in 1990 and 2.7% for health in 2001, Syria 4.1% for education in 1990 and 2.4% for health in 2001, Algeria 5.3% and 3.1%, Egypt 3.7% and 1.9%, Morocco 5.3% and 2%, Yemen 10% and 4.3%, Djibouti 4.1% for health in 2001 (Table 1). Median life expectance at birth in these countries is presented in table 8. The Arabian Countries, as a group, occupy the second place after the region of Latin America as a level of inequalities for 1981-1985. In between 1976-1980 and 1986-1990 the Arabian region fell in the third place of the zones with the highest rate of inequalities. The trend of inequalities decreases from 44% to 38% in the last period of time (Abdel, 2003). The distribution of Gini index within the countries is the following: Iran 43, Egypt 34, 4, Algeria 35, 3. Morocco 39.5, Yemen 35.4, Mauritania 39, Jordan 36.4 (Table 3).

0

5

10

15

20

25

30

35

40

45

Gini index in Arabian Countries in 2002

Iran

EgyptMorroco

Yemen

Mauritania

Jordan

Gini index 43 34 35 40 35 39 36

Iran

Egypt

Algeria

Morro

Yeme

Maurit

Jordan

Concerning the poverty, the indicator “population below income poverty line” (%) shows that in Jordan with less than 2% from population living with 1$/day between 1990 and 2002 and 7.4% from the population living with 2 $/day in the same period, in Tunisia

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less of 2% from the population lived with 1$/day between 1990 and 2002 and 6.6% lived with 2 $/day for the same period of time, Egypt has higher percentage, 3.1% who lives with 1 $/day and 43.9% those who live with 2 $/day, the number of those who live with 1 $/day in Yemen is 15.7% from the population and those who live with 2 $/day are 45.2% from the population (Table 6).

05

101520253035404550

Population below income poverty line (%) between 1990 and 2002

living with 1$ 1990-2002living with 2$/day 1990-2002

living with 1$1990-2002

2 2 3,1 15,7

living with 2$/day1990-2002

7,4 6,6 43,9 45,2

Jordan

Tunisia

Egypt Yemen

The status of the analyzed Arabian countries is in conformity with World Bank’s

standards in 2004: Bahrain and Qatar – high income, Djibouti, Jordan, Morocco – lower median income, Mauritania, Oman and Yemen – low income (Table 10). At the beginning of 1999’s inequalities in the distribution of expenditure have different values for the Arabian Countries. The highest level is registered in Mauritania, in 1992, with expenditure Gini of about 50, around 56.6 Gini income. High values were registered in Iran, 43, Jordan with 41, Yemen with 40, Morocco and Algeria with 39 and a lowest level is registered by Egypt. Analyzing the presented data it is noted that in spite of the high level of GDP in some countries, inequalities and the poverty rate are significant because this type of societies have big differences between social layers concerning income (Abdel, 2003). Though the Arabian area is diverse and rich in oil until now it was left behind by the third wave of globalization. Because of their diversity the speed with which these countries integrate in the global economy and achieve the status of “globalized countries” is different. Using the growth rate of commercial trades percentage in GDP as an indicator of globalization, only 5 Arabian countries can be considered “globalised”: Morocco, Syria, Tunisia, UAE and Yemen (Abdel, 2003). The data used for the analysis of inequalities and poverty show high variations concerning the distribution of incomes. These variations began to decrease after 1990. Considering that the Arabian countries were left behind by the third wave of globalization, it is not clear if this decrease is or is not the effect of globalization. The problems of the poor from the Arabian region are the same with those of other developing countries. The economical growth created by globalization is insignificant as an impact to their incomes. Commercial politics that can provide the possibility of internal economical growth and the institutions that can attract

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direct foreign investments are needed. These together with the free economy can lead to the economical growth and the decrease of inequalities and poverty.

Instead of conclusions Globalization generates fears related to the growth of inequalities, shifts of power

and cultural uniformity. Some of these fears are real, others are prejudices generated by insufficient the knowledge of the phenomenon. Globalization means global possibilities of economical development but it does not distribute the benefits in an equal way for each country, many of them, including the group of the countries under transition, do not feel the positive effects and more the environmental problems, social conflicts and immigration tendencies increase for them.

It seems that globalization, as any other phenomenon, creates winners and losers among the countries and within the countries. The social threat of globalization is not insignificant. If this process is not controlled it overstates the mechanisms of social integration of every society. Ralf Dahrendorf warns us against the possible threat of “a wild and ruthless globalization” which only obeys the law of competition and can have as effect, the expulsion from society “of a large number of people from a lot of countries”, this may lead to more powerful conflicts and endanger the cohesion of a society. Foreign direct investments, which have an important role in the process of globalization, are absorbed in a share of 90% by USA, Western Europe, Japan and China, while the rest of the World where 70% of the population lives, draws less than 10% from it. New technologies promoted by globalization create at least the same amount of jobs as it destroys. Analyzing the statistical data we can notice that the most losses will be within unqualified labor force, the new jobs being occupied by highly trained personal. Global capitalism may lead to the creation of a polyglot cosmopolitan elite labor force spread world wide which will work anywhere on this planet for those called “global-players”.

The globalization along its three waves led to a decrease of inequalities between countries, but there are exceptions which show that the lack of action costs. The countries which didn’t know or could not render valuable their potential lost and they were left behind. Through the experiment provided by history was demonstrated that the developing countries and those under process of transition need national politics and mostly international politics and actions that help them to render valuable the opportunities created by globalization. But within the countries at least for the countries analyzed in this study, globalization proved to increase inequalities, leading to a society made by rich and poor. For some countries, the geographical location represented a disadvantage, for others the major disadvantage was the weakness of politics, institutions and governments, and other went through the hell of civil wars. The decrease of inequalities and poverty in these areas demands a mixture of reform politics, in order to create a better environment for investments, the development of the needed assistance for solving the educational and health problems.

Concerning the poverty, globalization widely contributes to its decrease, a possible explanation being that the integrated economies tend to develop faster and this development happens more often. While the low incomes countries penetrate on world goods and services market, industrial conglomerates are created, towards which, people below poverty line can migrate searching a better paid job and a better life. About three billions people live in the countries called “new globalists” developing countries (World Bank, 2002). The number of those below the poverty line, which live with 1 $/day is less dropped in the last years, but the access to education, public expenditure on health and

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the median life expectancy at birth increased. Many countries with about two billions citizens were left behind by this process of globalization, many becoming outsiders in World economy often having decreases of incomes and increases of poverty. For this group of countries the globalization did not have the wanted results (World Bank, 2002).

There are many questions concerning inequalities, poverty or cultural political and environmental changes in the context of globalization. The answers for many of these questions are missing. I believe though, that everything depends on us, if we know how to use the globalization or if we let it uses us. Globalization could be, after all, a powerful factor for the decrease of economical differences and poverty if it is only used right. The future may demonstrate this. References Abdel Gadir A. (2003), “Globalization and Inequality in the Arab Region”, paper

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Annexes Table 1 Gross Domestic Product

GDP GDP per capita annual growth rate (%)

HDI rank Country

US$ billions 2002

PPP US$ billions 2002

1975-2002 1990-2002

High human development

1 United States 10.383,10 10.308,00 2 2 2 Bahrain 7,7 12 1,1 1,5 3 Kuwait 35,4 37,8 -1,2 -1,7

4 United Arab Emirates

71 .. -2,8 (.)

Medium human development

5 Russian Federation

346,5 1.185,60 .. -2,4

6 Belarus 14,3 54,8 .. 0,2 7 Ukraine 41,5 237,3 -6,6 -6 8 Saudi Arabia 188,5 276,9 -2,5 -0,6

9 Kazakhstan 24,6 87,4 .. -0,7 10 Turkmenistan 7,7 20,1 -4,4 -3,2

11 Jordan 9,3 21,8 0,3 0,9 12 Azerbaijan 6,1 26,2 .. 0,2 13 China 1.266,10 5.860,90 8,2 8,6

14 Iran, Islamic Rep. of

108,2 438,3 -0,4 2,2

15 Uzbekistan 7,9 42,1 -1,5 -0,9 16 Kyrgyzstan 1,6 8,1 -3,6 -3,2

17 Tajikistan 1,2 6,1 -9 -8,1 18 South Africa 104,2 456,8 -0,7 (.) 19 India 510,2 2.799,60 3,3 4

Low human development

20 Pakistan 59,1 281,3 2,6 1,1 21 Yemen 10 16,2 .. 2,5 22 Djibouti 0,6 1,4 -4,6 -3,8

Source: U.N.D.P.

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Table 2 Imports and exports of goods and services

Imports of goods and services (% of GDP)

Exports of goods and services (% of GDP)

HDI Rank Country

1990 2002 1990 2002

High human development

1 United States 11 14 10 10 2 Bahrain 95 65 116 81 3 Kuwait 58 40 45 48 4 Qatar .. .. .. .. 5 United Arab

Emirates 40 .. 65 ..

Medium human development

6 Russian Federation

18 24 18 35

7 Belarus 44 74 46 70 8 Ukraine 29 52 28 56 9 Oman 31 35 53 57

10 Saudi Arabia 32 23 41 41 11 Kazakhstan .. 46 .. 47 12 Turkmenistan .. 47 .. 47

13 Jordan 93 67 62 46 14 Azerbaijan 39 51 44 44

15 China 14 26 18 29 16 Georgia 46 39 40 27 17 Iran, Islamic

Rep. of 24 29 22 31

18 Syrian Arab Republic

28 28 28 37

19 Uzbekistan 48 34 29 38

20 Kyrgyzstan 50 43 29 39 21 Moldova, Rep.

of 51 79 49 54

22 Tajikistan 35 72 28 58 23 Egypt 33 23 20 16 24 Morocco 32 37 26 32 25 India 9 16 7 15

Low human development

26 Pakistan 23 19 16 19 27 Yemen 20 39 14 38

28 Mauritania 61 68 46 39 29 Djibouti .. 63 .. 45

Source: U.N.D.P.

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Table 3 Inequality measure

Inequality measures HDI rank Country Richest 10% to

poorest 10% Richest 20% to poorest 20%

Gini index

High human development

1 United States 15,9 8,4 40,8 2 Bahrain .. .. ..

3 United Arab Emirates

.. .. ..

Medium human development

4 Russian Federation 20,3 10,5 45,6 5 Belarus 6,9 4,6 30,4

6 Ukraine 6,4 4,3 29 7 Saudi Arabia .. .. .. 8 Kazakhstan 7,1 4,8 31,3

9 Turkmenistan 12,3 7,7 40,8 10 Azerbaijan 9,7 6 36,5 11 China 18,4 10,7 44,7 12 Georgia 12 6,8 36,9 13 Iran, Islamic Rep.

of 17,2 9,7 43

14 Uzbekistan 6,1 4 26,8

15 Kyrgyzstan 6 4,2 29 17 Tajikistan 8 5 34,7

18 Egypt 8 5,1 34,4 19 India 7 4,7 32,5

Low human development

20 Pakistan 7,6 4,8 33 21 Djibouti .. .. ..

Source: U.N.D.P.

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Table 4 Net foreign direct investment inflows

Net foreign direct investment inflowsb (% of GDP) HDI rank Country 1990

2000 High human development

1 United States 11 14 10 10 2 Bahrain 95 65 116 81 3 Kuwait 58 40 45 48 4 Qatar .. .. .. .. 5 United Arab Emirates 40 .. 65 ..

Medium human development 6 Russian Federation 18 24 18 35 7 Belarus 44 74 46 70 8 Ukraine 29 52 28 56 9 Oman 31 35 53 57 10 Saudi Arabia 32 23 41 41 11 Kazakhstan .. 46 .. 47 12 Lebanon 100 41 18 14 13 Turkmenistan .. 47 .. 47 14 Jordan 93 67 62 46 15 Azerbaijan 39 51 44 44 16 Tunisia 51 49 44 45 17 China 14 26 18 29 18 Georgia 46 39 40 27 19 Iran, Islamic Rep. of 24 29 22 31 20 Syrian Arab Republic 28 28 28 37 21 Uzbekistan 48 34 29 38 22 Algeria 25 26 23 36 23 Kyrgyzstan 50 43 29 39 24 Moldova, Rep. of 51 79 49 54 25 Tajikistan 35 72 28 58 26 Egypt 33 23 20 16 27 Morocco 32 37 26 32 28 India 9 16 7 15

Low human development 29 Pakistan 23 19 16 19 30 Yemen 20 39 14 38 31 Mauritania 61 68 46 39

32 Djibouti .. 63 .. 45 Source: U.N.D.P.

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Table 5 Share of income or consumption

Share of income or consumption (%)

HDI rank Countries Survey year

Poorest 10% Richest 10% High human development

1 United States 2000 1,9 29,9 2 Bahrain .. .. .. 3 United Arab Emirates .. .. `

Medium human development

4 Russian Federation 2000 1,8 36 5 Belarus 2000 3,5 24,1 6 Ukraine 1999 3,7 23,2

7 Saudi Arabia .. .. .. 8 Kazakhstan 2001 3,4 24,2

9 Armenia 1998 2,6 29,7 10 Turkmenistan 1998 2,6 31,7 11 Jordan 1997 3,3 29,8

12 Azerbaijan 2001 3,1 29,5 13 China 2001 1,8 33,1 14 Georgia 2001 2,3 27,9 15 Iran, Islamic Rep. of 1998 2 33,7 16 Uzbekistan 2000 3,6 22 17 Kyrgyzstan 2001 3,9 23,3 18 Tajikistan 1998 3,2 25,2 19 Egypt 1999 3,7 29,5 19 India 1999/2000 3,9 27,4

Low human development

20 Pakistan 1998/99 3,7 28,3

21 Yemen 1998 3 25,9 22 Djibouti .. .. ..

Source: U.N.D.P.

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Table 6 Human and income poverty for developing country

Human poverty index (HPI-1)

Population below income poverty line (%)

HDI rank Country

Rank Value (%) $1 a dayd1990-2002c

$2 a day e 1990-2002c

National poverty line 1990-2001c

High human development

1 Bahrain .. .. .. .. ..

2 Kuwait .. .. .. .. ..

3 Qatar .. .. .. .. ..

4 United Arab Emirates

.. .. .. .. ..

Medium human development

5 Oman 50 31,5 .. .. ..

6 Saudi Arabia 30 15,8 .. .. ..

7 Jordan 7 7,2 <2 7,4 11,7

8 China 24 13,2 16,6 46,7 4,6

9 Iran, Islamic Rep. of

31 16,4 <2 7,3 ..

10 South Africa 52 31,7 7,1 23,8 ..

11 Egypt 47 30,9 3,1 43,9 16,7

12 India 48 31,4 34,7 79,9 28,6

Low human development

13 Pakistan 71 41,9 13,4 65,6 32,6

14 Yemen 67 40,3 15,7 45,2 41,8

Source: U.N.D.P. Table 7 Population below income poverty line (%)

Population below income poverty line (%)

HDI rank Country

50% of median income e

1990-2000 f

$11 a day

1994-95 f,g $4 a day

1996-99 f,h

High human development 1 United States 17 13,6 ..

Medium human development 2 Russian Federation 18,8 .. 53

3 Belarus .. .. ..

4 Ukraine .. .. 25

5 Kazakhstan .. .. 62

6 Armenia .. .. ..

7 Turkmenistan .. .. ..

8 Azerbaijan .. .. ..

9 Georgia .. .. ..

10 Uzbekistan .. .. ..

11 Kyrgyzstan .. .. 88

12 Moldova, Rep. of .. .. 82

13 Tajikistan .. .. ..

Source: U.N.D.P.

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Table 8 Public expenditure on education and health

Public expenditure on education a

(% of GDP)

Public expenditure on health (% of GDP)

HDI rank Country

1990

1999-2001

1990

2001

High human development

1 United States 5,2 5,6 4,7 6,2 2 Bahrain 4,2 .. .. 2,9 3 United Arab

Emirates 1,9 .. 0,8 2,6

Medium human development

4 Russian Federation

3,5 3,1 2,5 3,7

5 Belarus 4,9 6 2,5 4,8 6 Ukraine 5,2 4,2 3 2,9 7 Saudi Arabia 6,5 .. .. 3,4 8 Kazakhstan 3,2 .. 3,2 1,9

9 Turkmenistan 4,3 .. 4 3 10 Jordan 8,4 4,6 3,6 4,5 11 Azerbaijan .. 3,5 2,7 ..

12 China 2,3 .. 2,2 2 13 Iran, Islamic

Rep. of 4,1 5 1,5 2,7

14 Uzbekistan .. .. 4,6 2,7 15 Kyrgyzstan 8,3 3,1 4,7 1,9 16 Tajikistan 9,7 2,4 4,9 1 17 Egypt 3,7 .. 1,8 1,9 18 India 3,9 4,1 0,9 0,9

Low human development

19 Pakistan 2,6 1,8 1,1 1 20 Yemen .. 10 1,1 1,5

21 Djibouti .. .. .. 4,1

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Table 9 Life expectancy at birth HDI rank Country Life expectancy at birth

(years) 1970-75 c 2000-05 c High human development

1 United States 71,5 77,1 2 Bahrain 63,3 74

3 Kuwait 67 76,6 4 Qatar 62,1 72,2 5 United Arab Emirates 62,2 74,7

Medium human development

6 Russian Federation 69,7 66,8 7 Belarus 71,5 70,1

8 Ukraine 70,1 69,7 9 Saudi Arabia 53,9 72,3

10 Kazakhstan 64,4 66,3 11 Turkmenistan 60,7 67,1 12 Jordan 56,5 71

13 Azerbaijan 69 72,2 14 China 63,2 71 15 Georgia 69,2 73,6 16 Iran, Islamic Rep. of 55,3 70,3 17 Uzbekistan 64,2 69,7 18 Kyrgyzstan 63,1 68,6 19 Moldova, Rep. of 64,8 68,9 20 Tajikistan 63,4 68,8 21 Egypt 52,1 68,8 22 India 50,3 63,9

Low human development 23 Pakistan 49 61 24 Yemen 39,8 60

Source: U.N.D.P

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Table 10 World Bank list of economies 2004 World Bank list of economies July 2004 Economy Region Income group Afghanistan South Asia Low income Albania Europe & Central Asia Lower middle income Algeria Middle East & North Africa Lower middle income Armenia Europe & Central Asia Lower middle income Austria .. High income: OECD Azerbaijan Europe & Central Asia Lower middle income Bahrain .. High income: nonOECD Belarus Europe & Central Asia Lower middle income Brazil Latin America & Caribbean Lower middle income China East Asia & Pacific Lower middle income Djibouti Middle East & North Africa Lower middle income Egypt, Arab Rep. Middle East & North Africa Lower middle income Georgia Europe & Central Asia Lower middle income Hong Kong, China .. High income: nonOECD India South Asia Low income Iran, Islamic Rep. Middle East & North Africa Lower middle income Iraq Middle East & North Africa Lower middle income Jordan Middle East & North Africa Lower middle income Kazakhstan Europe & Central Asia Lower middle income Kuwait .. High income: nonOECD Kyrgyz Republic Europe & Central Asia Low income Latvia Europe & Central Asia Upper middle income Lebanon Middle East & North Africa Upper middle income Lithuania Europe & Central Asia Upper middle income Mexico Latin America & Caribbean Upper middle income Moldova Europe & Central Asia Low income Morocco Middle East & North Africa Lower middle income Oman Middle East & North Africa Upper middle income Pakistan South Asia Low income Qatar .. High income: nonOECD Romania Europe & Central Asia Lower middle income Russian Federation Europe & Central Asia Lower middle income Saudi Arabia Middle East & North Africa Upper middle income Syrian Arab Republic Middle East & North Africa Lower middle income Tajikistan Europe & Central Asia Low income Tunisia Middle East & North Africa Lower middle income Turkmenistan Europe & Central Asia Lower middle income Ukraine Europe & Central Asia Lower middle income United Arab Emirates .. High income: nonOECD United Kingdom .. High income: OECD United States .. High income: OECD Uzbekistan Europe & Central Asia Low income Yemen, Rep. Middle East & North Africa Low income