The Many Faces of Globalization

By 1990, globalization in various forms was happening and spreading across all regions. Its impact on countries and groups was diverse. It was affected by policy decisions: trade policy liberalization affected trade in goods and services, one of the traditional dimensions of globalization. The opening up of the capital account of the balance of payments to flows of short-term capital by many developing countries was equally policy driven. The break-up of the Soviet Union increased the openness of the new states and their involvement in the global economy. And the Information and Communications Technology (ICT) revolution radically lowered the cost of moving ideas. This enabled multinationals to move their technical know-how, including marketing and managerial expertise, to offshore production facilities that exploited the low-wage advantage of developing nations. This chapter reviews the experience with growth and poverty alleviation of the main regional groupings of developing countries during the 1990s. Then it discusses the results of several studies which have attempted to link globalization to particular outcomes in terms of growth and poverty. The final two sections examine the impact of two key globalizing policies on developing country poverty levels: the policies on international trade and capital flows, including both foreign aid and private capital.