How Will Globalisation Processes Alleviate Poverty - Essay Example

?How Will Globalisation Processes Alleviate Poverty? Globalisation processes alleviates poverty by making more jobs available to parts of the globe where jobs are scarce. People are said to be in poverty when they are deprived of income and other resources needed to obtain the conditions of life – the diets, material goods, amenities, standards and services – that could enable them to play the roles, meet their obligations and participate in the relationships and customs of their society (Townsend, 2006). Globalisation processes expands trade between countries and with this expansion additional jobs becomes available to the poverty stricken population. Globalisation is the result of the WTO and GATT agreements that calls for the internationalization of trade. It was noted that prior to the two agreements most country’s trade has been stifled by unfair tariff and trade restriction imposed by countries due to their adherence to their contractual obligation to the first countries they have been trading with at the onset. WTO and GATT mandate that all signatory countries adhere to the Most Favoured Nation principle, wherein what is conferred to one country as a trade incentive should similarly be given to another country (United Nations Conference on Trade and Development, 2004). This in itself levelled the playing field for all nations big or small in terms of international trade. Globalisation processes not only includes tangible items for trade it can also be in the form of service. Outsourcing of processes is normally conducted by companies in order for them to save on operation cost. To illustrate: It does not make sense for an organization to maintain its own telephone based customer care department manned twenty four seven since the demand or volume is unpredictable over the course of a twenty four hour day. The same is true for organization that requires the services of telephone based campaigners. I. Historical Background Global trade is not a new concept as chronicles of early trade relations between nations occurred in the first century when the Romans bartered riches for spices with the Indians. Similar exchange transpired in West Asia trading silk for spices. Barter was the medium of transaction between nations until the middle ages when the first paper money was developed by the Sung Dynasty as the legal tender to gain access to market rights and trading privileges. Accordingly, the first recorded trading company, The Dutch East India Trading Company, was then established in 1602 until its demise in 1799 due to bankruptcy (Maps of World , 1999). The importance of trade between nations was well received even by Napoleon III where an initiative known as the Free Trade Agreement (FTA) was executed between France and Britain which ended in 1860. On the other side of the globe in1868, Japanese Meiji Restoration introduced industrial development through free trade. As trade expanded between industrial nations, its leaders in 1946 institutionalized standards to govern commercial and financial relations known as the Bretton Woods System which was peddled to promote lasting peace between independent states as well as to avert financial crisis from happening (Maps of World, 1999). Global trading strengthened further in 1949 when a multilateral agreement between nations known as the General Agreement on Tariffs and Trade (GATT) was founded by twenty three countries. This has set forth trade regulations and standards such as reduction of tariffs and other trade barriers was concurred in by more than one hundred (100) countries. The role of the GATT as an international organization was bolstered when negotiations for the creation of an International Trade Organization (ITO) failed to materialize (Bossche, 2005). Thus, GATT continued to discharge its functions by conducting rounds of discussion which included, among others, reduction of tariff and trade barriers; and liberalization of trade affecting wider range of fields such as services, capital, intellectual property, textiles and agriculture. The rounds discussion culminated successfully in the Uruguay Round whereby GATT was replaced by the creation of the World Trade Organization (WTO) in 1994 and became effective on 1 January 1995. The contents and letter of the original 1947 GATT remained embodied under the new WTO framework, subject to the only to modifications of GATT 1994. Among the more significant institutional functionalities of WTO are provisions providing—non-discriminatory treatment amongst member nations under the Most Favoured Nation (MFN) principle. This has extended to goods traded in the local markets without distinction whether locally produced or produced elsewhere under the National Treatment principle. A forum for negotiating additional reductions of trade barriers and a venue for settling disputes, and enforcement of trade rules, sanctions and penalties when negotiations and settlement prove to be unsuccessful or ineffective. Globalisation was envisioned as a means to level trade and employment opportunities amongst nations irrespective of its economic condition. Under this Utopian scenario, all member nations are treated equally—accorded the same rights, privileges and benefits and even meted sanctions and penalties in appropriate cases. Globalisation refers not only free and liberalized markets but it is similarly equated to assimilation of the different cultures. Since distance between places is eliminated in seconds owing to technological developments such as the internet, telecommunications services, and physical travel is likewise shortened due to continuing innovations and tight competition between operators of public conveyances. Global news and events travel so fast that updates in the world of politics, finance, business and the latest trends that even the most insignificant details are broadcast through the wires, social networking site or blogs giving the public real time account of the events. Distance is no longer an issue in this day and age thus even cultures, norms and practices of one nation which is indigenous to its people may be adapted or followed by some thus boundaries between nations are now deemed limitless. The primary aim of globalisation is to make the whole world a one large market where everybody can openly trade with anybody or everybody. The practical effect of making items for trade available to all is making the prices of goods benched at a realistic level as determined by its supply and demand. Thus, items that may be previously restricted in one country due to the limited supply that can be provided by the country’s trading partner will now become widely available considering the entry of other countries to provide similar services or goods. To illustrate: Country A, has been a traditional partner of Country B, thus both enjoy a very profitable trading relationship. Country A supplies wheat to Country B, while Country B supplies Oil to Country A. Country B in order to protect its local wheat industry have limited the import of wheat at a level that stabilises the prices of bread and other products dependent on wheat. With the entry of the two countries in the WTO and GATT, the trade restrictions have been lifted which made it possible for other countries to trade with Country A and Country B to supply the same items. Country B’s wheat industry was forced to revisit their manufacturing process in order to compete with the imported wheat. Due to the increased supply in the market the prices of wheat and the products associated with it went down. The economic dynamic as described above impacts poverty on two fronts. First, globalisation has forced the prices of wheat at an affordable level making it more affordable to the poorer sector of society. This made the poverty index lower for that country. Second, Country B’s wheat industry was forced to revisit its wheat production processes to improve it and make it more efficient. Making things more efficient do away with environmentally harmful processes and wasteful processes that could increase the profit of the local wheat industry. The increased input will result to more money available for other investment that will in-turn create more jobs. Other globalisation processes are not as circuitous when it comes to alleviating poverty in developing countries. Globalisation has created more opportunities in the technology and service sectors. Capitalising on the current trend in technology that are making communication instantaneous and information current, globalisation have provided more direct opportunities to developing countries. The technology driven service provisioning sector has created the Business Outsourcing Industry. This industry capitalising on the current trend in technology have made it possible to outsource labour intensive back-office processes of organization to other countries. So also, capitalising in the differences in time zones some organization allow service providers in a different time zone to process their requirements during the night time to make the output available immediately the following day. II. Globalised Operation: The Business Process Outsourcing industry is the direct result of globalisation. This industry also provides direct jobs therefore it directly alleviates the poverty by providing more jobs to the population of the developing country. In this section, we shall describe some business processes that have essentially been globalised. a. Call/Contact Center There are several kinds of contact center: The Call-in generally refers to customers of client companies calls the hot lines of client companies. The hotlines will then be routed to the Contact Center provider which shall answer the calls. The calls can be in the nature of product inquiry, complaints, direction, product use and other similar inquiries relative to the industry where the client belongs to. When the Contact Center is asked by the client to contact or reach out to potential customers or existing customers, this type of service is called the Call-out. In this type of service, the Contact Center calls out to potential pre-existing customers to pitch a new service or product. There are instances wherein over the phone surveys are also conducted. There are instances however that the calls are made to remind customers of their obligations and other important matters relating to services it provides. Mobile offices or virtual offices services would include setting appointments for the clients. Billing call outs, follow-up calls and reminders are normally included in the service. This type of service makes it appear that the client of the contact center belongs to a large organization. However, in reality this is another way of effectively reducing cost. Instead of paying for an 8 hour work in a day, the service will only provide for the actual work done. b. Medical Transcription HMO normally requires a doctor evaluation sheet that would determine the details of the doctor’s evaluation on a patient that would justify medical tests and other diagnostic services or in the extreme the services of more expensive specialists. Doctors normally conduct their patient evaluation using audio recording devices to enable them to record more evaluation to more patients. These audio recordings are then converted into documents for submission to HMO companies. Familiarity with the subject matter helps in an accurate transcription of voice records, thus nurses and other medical practitioners are hired for this position. c. Radiology Evaluation and Reading X-Rays, CT-Scans, MRIs, and ultrasounds are evaluated and read by medical professionals trained in these types of services. However, only those licensed within a jurisdiction are allowed to provide evaluations to diagnostic plates of patients originating from that jurisdiction. The sensitivity of this service requires that the licensing requirement is mandatory. d. Legal Transcription It is the same as the Medical Transcription Service however this type of service is normally used in court or arbitration proceedings as well as meetings requiring transcripts for records purposes. e. Research Services The internet provides a wide array of information available at the tip of any ones fingers thus researching and acquiring knowledge are relatively easier now. Normally a topic is given to the service provider and the service provider let lose his team of researchers located in probably another country. III. Conclusion There are still a number of Business Process that could be outsourced that would include Financial Services, Application Coding for Application Development, Graphical Art Rendering for the industrial graphical art sector and Document Conversion. Each providing or creating hundreds or even thousands of jobs offshore. This unto itself provides jobs, jobs that alleviate poverty. These types of services previously were anathema in any industry due to the logistical problems and quality issues required. However, with the proper process in place any obstacle can be surmounted. With the equalization of trade opportunities and availability of jobs, it is indeed shown with indubitable clarity that globalisation alleviates poverty and triggers economic activity in a nation to uplift the living conditions of its nationals. Bibliography: Bossche, P. (2005). The Law and Policy of the World Trade Organisation. Retrieved January 19, 2011, from Cambridge University: http://books.google.com.ph/books?id=OaNumuFsIhwC&pg=PA123&lpg=PA123&dq=P.+van+den+Bossche,+The+Law+and+Policy+of+the+World+Trade+Organization,+79&source=bl&ots=ZKKLRuc92y&sig=A3Gj4dN88FH8FbpFhWsAI91dkGM&hl=en&ei=8Ao8Td7rF8jIcYa8jIUH&sa=X&oi=book_result&ct Maps of World . (1999). History of International Trade. Retrieved January 19, 2011, from Maps of the World Finance: http://finance.mapsofworld.com/trade/history-international.html Townsend, P. (2006). What is Poverty: A historical Perspective. Poverty in Focus , 5 - 6. United Nations Conference on Trade and Development. (2004). Development and GLoabilization. United Nation Conference on Trade and Development. New York: United Nations Publications. Read More