Globalization: ”A World on the Edge” by Amy Chua Term Paper

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Introduction

The story A World on the Edge by Amy Chua is devoted to a wide range of social problems affected the third world countries and closely connected with globalization and integration processes of the modern era. The author argues that globalization has a great impact on poverty and social inequalities which lead to such social problems as racial and ethnic envy. The author uses numerous examples which prove that poverty is still an issue of the day affected many third world countries. Underdeveloped countries usually lack sufficient capital and management skills to develop modern industries. Amy Chua argues that poverty does not lead to killing of people but it becomes a driven force of social change and inequalities.

Analysis

The paper will examine the issues of poverty in less developed countries and a possibility of the economic aid and integration initiatives for the third world. If too much profit goes back to the investing companies and if local people are not taught skills and brought into managerial positions, far from spreading economic benefits, such enterprises discourage national industries. In fact national industries sometimes sell out to foreign companies. In these ways foreign companies may come to control a nation’s entire economy. The two sources used for analysis are the book Ending Global Poverty: A Guide to What Works by S.C. Smith and A Corporate Solution to Global Poverty: How Multinationals Can Help the Poor and Invigorate Their Own Legitimacy by G. Lodge, G. and C. Wilson. Both books are based on substantial and objective analysis of economic data and current initiatives aimed to eliminate poverty around the globe. Poverty is one of the main problems in the third world countries influenced by globalization and immigration processes. The additional sources will help to prove that global corporation and foreign aid have a great impact local economies thus this support is weak enough to change the situation in these countries.

Amy Chua argues that poverty is the main problem affected the third world and its development leading to social conflicts and low standards of living. “Critics of globalization are right to demand that more attention be paid to the enormous disparities of wealth created by global markets. But just as it is dangerous to view markets as the panacea for the world’s poverty and strife, so too it is dangerous to see democracy as a panacea” (Chua n.d.). The causes of poverty are inadequate economic development of the countries and lack of natural resources, unstable political situation and high inflation rates. The development was marked, ironically, by a slowing down of economic assistance, measured as a percentage of rich nations’ economic output. In addition a growing proportion of assistance took the form of loans; more loans were offered at higher rates of interest; and as the indebtedness of underdeveloped countries climbed, so did the amount of money that they returned to donor nations in the form of repayments and interest. The word “aid” is a misnomer in any case. Most of it is tied to purchases in the donor country. “Nearly two-thirds of the roughly 80 million ethnic Filipinos in the Philippines live on less than $2 a day. Forty percent spend their entire lives in temporary shelters. Seventy percent of all rural Filipinos own no land.” (Chua n.d.). The problem of poverty is difficult to eliminate because of social inequalities and poor economic development of many regions. The flood of poor migrants leading a life on the fringes of their new urban society is caught up in this dichotomy. Their problems are not just of urban growth and expansion but of westernization and modernization, problems that expressed the discontent and dissatisfaction of much of the country as a whole. Optimism for improving their life’s chances is met by fragmentation and social inequality.

The book Ending Global Poverty: A Guide to What Works analyzes the problem of global poverty and income distribution, and supports the idea that local economies are weak enough to resist globalization and eliminate local poverty. Smith restates Amy Chua’s argument and shows that poverty is one of the main social and economic problems in the third world. A country can also achieve integrated growth by developing other industries that are closely related to agriculture (Smith 29). Poor countries can learn from the period of the Industrial Revolution, when industry relied extensively on agricultural growth for its impetus, and in turn fed that growth. The mining of iron ore, for example, supplied raw material for farm tools and machines. The textile industry made finished products from cotton, wool, and other fibers. Exports should be planned with the same close relationship in mind, so that the productive capacity of the land is fully exploited, and emphasis laid on shipping abroad manufactured goods rather than raw materials. In this way rural development and manufacturing for export can move ahead together. Without a more even spread of economic advantages, povertystricken farm families will be pushed or pulled prematurely in greater numbers to urban centers, seeking nonexistent or marginal jobs. Mounting unemployment underscores a second major requirement: the need for labor-intensive industries. One method that fits well with an emphasis on agriculture, and encourages a more even distribution of the population, is the development of small industries in rural towns and villages. These industries can turn out clothing, furniture, simple tools, and products of various handicrafts, using mainly local materials and locally developed skills (Smith 57). The goods can often be marketed locally as well. Large industries are also necessary, and underdeveloped countries may be so desperate for them that they:

  1. spend most of their development funds on this sector,
  2. persuade, by whatever means necessary, foreign investors to establish industries (Bourke 43).

If those industries promise relatively few jobs for the capital invested, host countries may feel that a few jobs are better than none, or be lured by the hope often disappointed of earning much foreign exchange. Facing massive poverty and unemployment with few resources puts great pressure on poor countries to gamble on this approach. Yet their needs dictate not only greater emphasis on the rural sector, but industries that provide as many jobs as possible (Smith 77). The linkage that poor migrants had been unable to construct between their own worsening economic condition and government policy was, in the end, constructed for them by the regime’s opposition forces. The visible and growing inequality of wealth in the country made the task of mobilization easier, yet the response of the poor was overwhelmingly expressed in religious terms. Because of the role of the migrants in their political associations, the clerical establishment had the organization and leadership necessary to encourage the marginalized and disenfranchised to take previously unfamiliar action (Bourke 65). Mobilization efforts were ultimately successful because the religious dimension was the dominant mode of expression.

Amy Chua argues that foreign aid could become a helping hand for many third world countries but most of the rich countries are not interested in this aid and support. “The United States now devotes only 0.1 percent of its gross domestic product to foreign aid, a smaller share than any other advanced country” (Chua n.d.). These illustrations indicate why the crucial difference between stagnation and momentum can be provided by economic assistance. It is therefore a matter of grave consequence that, measured as a percentage of rich countries’ national output, as well as in value to the poor countries, official development assistance has steadily dropped for more than a decade. Furthermore the trend of that assistance has been away from grants and toward high-interest loans. This paves the way for the rich nations to become net recipients of money from the poor ones, a scrooge-like arrangement that ignores the benefit that development could confer on the entire world. “Rightly or wrongly, for millions around the world the World Trade Center symbolized greed, exploitation, indifference, and cultural humiliation. By extending themselves to the world’s poor, Americans could begin to send a different sort of message” (Chua n.d.). Basic and safe services must be provided to all urban inhabitants at a cost the poor can pay. These include piped water, sewage systems, electricity, and public transport. Presently the urban poor, especially in shantytowns and illegal settlements, lack many of these services–which are often available in the better neighborhoods. Privatization may only worsen the situation because the urban poor cannot pay. These responses do not match the competitive challenge of improving product quality and design and enhancing efficiency. Amy Chua touches the problem of production and development of regional economies as the possible solutions to poverty and low standards of living.

The book A Corporate Solution to Global Poverty supports Amy Chua’s position that foreign aid could become a helping hand for many countries. Th source states that the aid can take a form of investments and corporate aids popular in many low developed countries. Beyond enabling people to eat adequately, to work, and to obtain basic medical and material requirements for life, researchers should begin to think of development less in terms of accelerated production and consumption, and more in terms of human qualities that enrich people in other ways (Lodge and Wilson 43). It has a particular application to underdeveloped countries, most of which cannot hope, perhaps ever, to produce and consume as audaciously as the United States now does. Because that struggle is at best long and arduous, development should not be inflated with expectations that are likely to mislead people both in the poor nations and in assisting countries (Satz 48). The frustration and disillusion that result can only undermine development. A timetable for achieving the elementary goals of eliminating hunger and poverty will stretch over decades, probably well past our lifetimes, even with an unprecedented international effort toward this end. Purchasing new sales outlets implies that scarce financial resources are invested in bricks and cement. Undertaking journeys to regional markets implies high opportunity costs, in addition to revealing a preference for self-reliance instead of co-operation with specialized traders. Cost-cutting responses lead to poverty. On the other hand, there is no sign of the development of more co-operative linkages with suppliers of inputs, specialist producers or established marketing agents capable of finding and exploiting new markets (Lodge and Wilson 61).

Summary

In sum, poverty is one of the main problems affected the third world which requires global support and cooperation between all nations. Amy Chua has a pessimistic view on the problem of poverty and foreign aid. Both books, Lodge and Wilson and Smith agree that only cooperation and integration processes would help to eliminate poverty and support people in need. Multilateral co-operation between a number of producers has awareness-raising effects, making it a potentially important mechanism for clustered producers losing ground in their home market and willing to fight back, although they may not know how to. Among independent producers, it normally takes a respected colleague to question someone’s convictions, to discuss strengths and above all weaknesses, and to propose solutions. Multilateral networking also enables producers to make additional investments, insofar as externalities can be incorporated, indivisibilities avoided, and information problems resolved. Groups and co-operative networks are also better able to contact external agents such as large firms, research and training institutes, banks and authorities, thus transcending the lack of such linkages in the history of the cluster. These attitudes are reinforced by the passive advantages of clustering. However, this model hinders the further development of the cluster and these old attitudes even harden whereas change is highly required because of trade liberalization. This suggests that when clustering is largely based on passive collective efficiency, it may slow down rather than facilitate small-firm development under free trade regimes. But nationalism without a wider sense of responsibility for the common good is a liability. If nations, recognizing their interdependence, work together to insure that hunger and poverty do not grind half or more of the human race into madness or despair, they are in effect agreeing to move beyond unbridled nationalism

Works Cited

Bourke, D. H. The Skeptic’s Guide To Global Poverty (The Skeptic’s Guide). Authentic, 2007.

Chua, A. A World on the Edge. N.d. Web.

Lodge, G., Wilson, C. A Corporate Solution to Global Poverty: How Multinationals Can Help the Poor and Invigorate Their Own Legitimacy. Princeton University Press, 2006.

Smith, S.C. Ending Global Poverty: A Guide to What Works. Palgrave Macmillan; First edition, 2005.

Satz, D. What Do We Owe the Global Poor? Response to World Poverty and Human Rights. Ethics & International Affairs 19 (2005), 47-50.

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