Explain the impact of Globalisation on Poverty Reduction [ Alleviation ].
Answer – In recent years, it has been found that in the developing countries domestic savings are the main source of finance for investment. Factually, countries in South Asia and Sub Saharan Africa have recorded lower domestic savings leading to lesser investment due to which these countries could not get maximum advantage of globalisation in terms of raising the living standards of their subjects.
Nor they have been able to considerably reduce poverty as targeted. It is this situation when global development assistance is required. The development agencies have noticed the link between aid effectiveness, poverty and policy environment.
Over a decade, striking improvement has been observed in targeting of development assistance on poor countries with broadly acceptable policies. According to estimates, countries in South Asia receive only $10 as development assistance per person per year. On the other hand, the Middle East and North Africa receive $950. The Organisation of Economic Cooperation and Development (OECD) has targeted to provide assistance to countries in the African and Asian regions for multilateral development with a view to reducing poverty.
In the middle income countries, where there are a large number of people still living below the poverty line, it is the development assistance that can jettison them out of the problem. Many of these countries have considerable resources of their own and access to private sector investment. They do not, therefore, need the large scale concessional flows required by low income countries.
However, support to focus their own resources on the reforms needed to reduce poverty and inequality has to be given due attention. There is an important role for technical assistance to improve the effectiveness of government and the efficiency of markets in order to achieve this.
Development assistance can contribute to poverty reduction in countries pursuing sound policies. Almost 160 million people live in countries in which the policy environment is assessed as too weak for World Bank management. A further 288 million live in countries in which the World Bank is active but which it assesses as having a very poor policy environment.
Further, government to government aid is conventional and conservative manner may not prove to be effective. On the contrary, they may also be found associated with the policies that inhibit or hinder economic development and growth. In these circumstances, development as well as humanitarian assistance is also required for which the country has to, and should, depend on the non governmental organisations and the media.
In the recent years with the advent of information age globalisation has been sped up. The close association of globalisation and information technology, particularly the software development have been assisting the governments in developing countries to formulate new strategies with a view to reducing poverty. In fact, such a link has been helping nations in ensuring the success of their developmental programmes in almost all spheres. The diffusion and the use of software applications to support knowledge intensive activities are expanding rapidly in the industrialised nations also.
Concerns have been expressed that a failure to encourage widespread use in developing countries will lead to the perpetuation or deepening of existing disadvantages and poverty. According to a recent study conducted by Jane Mttlar and Robin Monsell of University of Sussex, the effectiveness of software applications depends on their complementarity with other local initiatives within poor communities. Software applications are likely to be perceived by local users as being successful only when they complement other locally embedded development initiatives. The role of intermediaries and their skills base for developing and using software applications needs to be promoted to tap available resources for creating applications that will respond to the needs of poor people.
Small scale software applications can be customised to local community needs. Successful applications tend to be associated with new revenue generating activities, improved productivity and efficiency gains, enhanced supplier customer relationships, and contributions to community sustainability. Customisation depends upon the technical designs of applications and upon the organisational context of use. Successful outcomes depend on whether or not software applications are accepted as providing meaningful support for local community practices. The strength and quality of partnerships between software developers and local users are crucial in enabling people within poor communities to benefit from the availability of software applications.
Features of these partnerships that appear to be fundamental are the consistency of effort of the stakeholders involved in applications development programmes; the degree of coordination between software developer and user communities; the extent of information sharing between developer and user community groups; and the resources available to upgrade skills and provide a basis for continuous learning. Stronger partnerships are facilitated by mutual understanding of objectives by stakeholders, and strong motivation and championship of the initiative by prospective users.