I continue to be very interested in better understanding whether the globalization movement is having a net positive or negative impact on our economically disadvantaged brothers and sisters. I have a growing reading list on poverty-related literature from a wide variety of viewpoints. Bhagwati in In Defense of Globalization (read my review) argues for the net positive conclusion while pointing out numerous negatives. Sachs in The End of Poverty (read my review) argues that without a financial aid “jumpstart”, globalization will continue to bypass many people.

One of the best articles that I seen written on the impact of globalization was published on the front page of the Wall Street Journal on May 24, 2007 entitled “Wealth of Nations: Globalization’s Gains Come With a Price“.

Here’s the summary … 100’s of millions of those living in extreme poverty have been lifted out of poverty in the last 25 years AND the wealthiest 10% of the world’s citizens have grown proportionately richer in that same time.

One of the most astonishing stats is that between 1981 and 2005, more than 450 million people in China (alone) stepped out of extreme poverty (based on UN’s definition of < $1/day using purchasing power parity methodology.) Since China has received very little international aid, this is almost all attributable to globalization. "From 2000 to 2005, per capita income of the bottom 10% of urban households in China rose 26% … while those in the top [10%] saw gains of 133%.

The net is that on an absolute basis, globalization has had a truly phenomenally positive impact on reducing poverty (especially in the historical context). Yet on a relative basis the wealthiest people have increased their wealth faster.

The results in Latin America have been more mixed with positive results for the extreme poor in El Salvador, Chile, Ecuador and Costa Rica while negative in Mexico, Colombia and Peru [see chart at top.]

The article also tells the story of the impact of globalization of a family in Mexico which helps personalize globalization and explain some of the complexities as new emerging markets compete for the new global economic opportunities.

Please respond in comments to this article. Is this a fair/helpful/accurate report?