Investigation of the global poverty and inequality

With the development of globalization, the level of the global economy is constantly
improving, but at the same time, the global inequality is also increasing. It exists a disputation
that whether globalization really lead to inequality. Basu (2006) believes that it is not easy to
answer the question with yes or no, because whether it is good or not depends on which aspect to
look at it. Colonization has brought about globalization, accelerated the development of global
modernization and improved people's living standards in various regions (Basu 2006). However,
the gap between the rich and the poor is also increasing (Basu 2006). For example, in a remote
village in Pakistan, villagers do not want globalization (Basu 2006). They are worried about the
impact of globalization on local handicraft industry, also, they believe that the prosperity brought
by globalization will not last for a long time, and they may fall into more serious poverty after
the globalization (Basu 2006). In addition, for the outsourcing phenomenon brought by
globalization, the transfer of factories makes local workers lose their jobs, while the local profits
are limited, it is difficult to get full development for developing countries (Basu 2006).
Because of the unequal development of the world, global poverty is also a big problem.
The figure on Bill Gates' twitter shows that the proportion of poverty has declined, but most of
the poverty reduction is in China, which does not mean that the problem of poverty in other parts
of the world has been solved (Matthews 2019). Scholars believe that although the proportion of
the poor has declined, the number of the poor has increased (Matthews 2019). Although global
capitalism has been committed to reduce poverty, it still has not been solved. In some countries
with high Gini Coefficient, the change of food price will bring turbulence to the country
(Hendrix and Haggard 2015). Thus, the intervention on food price of governments are
particularly important, and the governments need to adjust its political opportunity structure to
cope with the fluctuation of food price. (Hendrix and Haggard 2015). Governments often adopt
policies such as “Marketing boards, consumer subsidies or price controls, and export taxes or
even bans” (Hendrix and Haggard 2015, 146) to solve the problem, however, these policies tend
to be more beneficial to urban consumers but not rural dwellers.
In order to solve the problem of poverty, some developing countries implement
Microfinance (MIF). In Mongolia, most of the microfinance objects are female, including group
loans and individual loans (Attanasio et al. 2015). However, the purpose of most of female
borrowers are not for business, they prefer to improve their family lives and buy healthy food
(Attanasio et al. 2015). In India, The MIF of Spandana provides group loans for only female
(Duflo et al. 2013). Similarly, these women are more willing to use loans to buy durable goods to
improve their family life, but their wealth has not increased, only the composition of expenditure
has changed (Duflo et al. 2013). Because of the lack of personal capacity of borrowers and the
meager profits of marginal business, poverty problem cannot be solved by MIF.
As far as I am concerned, I believe poverty and inequality cannot be solved by only some
economic and political measures, and education is still important to solve the problem. I've
noticed that people don't have the ability to use loans to create a lot of wealth, they need
knowledge to know how to use the money to create wealth. We cannot ignore the important role
of education in reducing poverty.
Reference
Attanasio, Orazio, Augsburg, Britta, De Haas, Ralph, Fitzsimons, Emla, and Harmgart, Heike.
“The Impacts of Microfinance: Evidence from Joint-Liability Lending in Mongolia
†.” American Economic Journal: Applied Economics 7, no. 1 (January 1, 2015): 90–122.
Basu, Kaushik. “Globalization, Poverty, and Inequality: What Is the Relationship? What Can Be
Done?” World Development 34, no. 8 (2006): 1361–1373.
Duflo, Esther, Banerjee, Abhijit, Glennerster, Rachel, and Kinnan, Cynthia. “The Miracle of
Microfinance? Evidence from a Randomized Evaluation.” NBER Working Paper
Series (May 1, 2013): 18950.
Hendrix, Cullen S, and Haggard, Stephan. “Global Food Prices, Regime Type, and Urban Unrest
in the Developing World.” Journal of Peace Research 52, no. 2 (March 2015): 143–157.
Matthews, Dylan. “Bill Gates Tweeted out a Chart and Sparked a Huge Debate about Global
Poverty.” Vox. Vox, February 12, 2019. https://www.vox.com/future-
perfect/2019/2/12/18215534/bill-gates-global-poverty-chart.