Geography - Economic Growth - Essay Example

According to them, there are two types of the developing world -- one who has globalized their trade and the one who has not. The globalized group of countries has increased their foreign investment and trade well above the rates of rich countries and opposite is the case with non-globalized group of countries (121) Authors believe that globalization has not caused any higher inequality within economies though they also agree that inequality has gone up in China but it has nothing to do with any free trade and investment flows.

They attribute it to education, social policies and taxation. What they want to emphasize is that higher economic growth rates translate higher incomes for the poor. For example, in China inequality has increased but at the same time poverty reduction has taken place and that is entirely because of foreign trade and investment. Authors suggest that growing protectionist movement in rich countries does not augur well if full potential of economic integration and its benefits are to be realized; however, at the same time, developing countries need to change their policies and build up institutions so that they can prosper under globalization (121).

Authors argue that further integration is being opposed in the rich countries and their protectionist measures are directed toward agriculture and labor-intensive products (131). Authors argue that human productivity has increased manifold. The world economy, which was crawling at the rate of 1 percent during mid-nineteenth century accelerated to 3.5 percent during1960-2000 because of economic integration among several countries. Authors put forward the argument that worldwide income inequality was on rise until 1970 but thereafter it started reducing.

The income inequality in 1970 was at its highest level at 88.1% that subsequently reduced to 77.7 percent in year 1995. According to authors, after 1980 the number of poor has reduced by 200 million. This has been possible due to accelerated growth rate of China and India (125). Authors advocate migration from poor countries to reduce the poverty and currently that is highly restricted by rich countries because of the fear of high unemployment rate in those countries. Authors strongly argue that the fate of poor also hangs on the rich countries' migration policy decisions (133).

Growth with Equity is Good for the Poor Oxfam (2000) argues that 'growth with equity' is a solution to poverty eradication and not growth proposed by Dollar and Kraay. According to Oxfam, growth alone cannot help in reducing poverty. Oxfam advocates poverty-focused growth that reaches to the lowest 20% of the population to bring them up in line with others. They consider Dollar and Kraay's growth model as anti-poor and anti-growth (2). The important thing, according to Oxfam, is how income is distributed among poor.

The larger share of income growth should go to poor if poverty is to be reduced. Comparing different regions on economic growth, Oxfam asserts that East Asia is the only region, which can achieve its goal of poverty eradication by 2015. Due to poverty-focused growth in East Asia, it has raised 22 million people out of poverty, which other region such as Latin America has not been able to do so. At least 3 million people in Latin America would have been out of poverty had it initiated a focused growth (4).

Oxfam argues that growth alone is not sufficient to reduce poverty. Oxfam emphasizes that the income distribution is