Does globalization slow down the growth of developing nations and cause more poverty?
Just the opposite is true. Developing countries that take advantage of the opportunities offered by globalization generally grow faster than the advanced nations, and much faster than developing countries that do not integrate into the global economy. Globalization allows developing nations to catch-up to the rich nations, a process which is called convergence. This is a common-sense idea. In the decade 1990-2000, Taiwan’s gross domestic product (GDP) grew at 7.0 percent, while the corresponding figure for the U.S. was 3.4 percent. If these rates continue for sufficient time into the future, Taiwan’s GDP level will converge to the U.S. level. However, Taiwan does not benefit at the expense of the United States. Trade between Taiwan and the U.S. assists the growth process in both countries, and consequently allows worker wage rates and the standard of living to rise in both countries. A recent study found that “(1) poverty reduction is mainly about growth in average per capita income; (
