Globalization & the Poor

The urbanization of poverty is being propelled by a tremendous increase in the transnational movement of people and capital. The rapid transfer of money and jobs to cities and countries where cheap labor can be found has fueled by a race to the bottom. For the urban poor who are impacted by this race, there are no winners, and the losers will most likely find themselves among the projected two billion people who will be living in slums by 2030.

Hardest hit by globalization are women and children - the most vulnerable of urban dwellers. Poor women are becoming increasingly marginalized as the feminization of poverty manifests itself in many parts of the world.

The positive aspects of globalization, including greater longevity, increased literacy, lower infant mortality and wider access to infrastructure and social services, mask the unfortunate truth that these benefits are not being shared equally. The effects of globalization on cities – both positive and negative – need to be better understood if public policy is to be effective in bettering the lives of those who live in them.

Under globalization, manufacturing activities in cities have been relocated offshore to the developing economies whose lower labor costs, lower taxes and less rigorous environmental protection enable higher profits. The socio-economic consequences of globalization weaken access to basic infrastructure and housing, fuel the creation and expansion of slums, and reinforce the negative environmental and health impacts affecting the urban poor in many cities.

Demographic shifts, including transnational migration and poor integration of ethnic and racial groups, add impetus to these changes. So, too, does the ability (or not) of households and individual people to cope with rapid economic change. Those on the losing end of these changes can easily find themselves confronted with the loss of jobs, and the consequent sale of assets in order to survive, converting them into the new poor, leaving them even more insecure and vulnerable in the face of economic change.

The last two decades have witnessed a transformation of the global economy, which has led to vast economic, social and political realignments in many countries and cities. The trend towards open markets has enriched some countries and cities tremendously, while others have suffered greatly. World trade in this period has grown from about US$580 billion in 1980 to US$6.3 trillion in 2004—11-fold increase. Flows of capital, labor, technology and information have also increased tremendously.

Among the losers in this race are female workers, whose wage levels and working conditions have declined as a result of the dropping of barriers to footloose industries. This same dynamic is evident inside individual cities as well, leaving many people unable to obtain stable jobs and incomes. This leads to changes in patterns of social inclusion and exclusion across cities, often along racial and ethnic lines.

The distribution of the fruits of globalization reflects private-sector judgments about the expected financial returns to these investments, their security, and the economic and political environments in which they occur. Corporations have tended to concentrate direct investment in ten countries, including China, Brazil, Mexico, Indonesia and Thailand. In stark comparison, the poorest countries have seen no such investment.

The vacuum created by footloose industries is rarely filled by job opportunities for the poor. Rather, any new jobs tend to be in knowledge-intensive industries, many requiring university-level education.

The race also occurs within individual cities, resulting in job losses where large segments of the labor force have to shift from one sector to another. The urban poor are losing jobs and benefits and must now find other income-generating opportunities in the informal sector, which offer no security or benefits.

The loss of secure jobs with secure community roots fosters an informalization of the urban economy, with more people eking out a living in unregulated sectors. Several economic processes converge to informalize employment and other aspects of urban life. The closing of formal-sector enterprises often coincides with the downsizing of ancillary industries and services. As one industry declines – as with light engineering in Karachi - incomes in the city as a whole reduce. Former employees are no longer able to purchase services on the street; hence, street vendors also suffer. Simultaneously, if utility tariffs increase, other enterprises suffer and are forced to reduce their operations or close altogether.

Globalization has set cities against each other in a desperate competition for a share of highly mobile capital and trade. The needs and desires of global capital must be balanced with policies based on the needs of the region’s own inhabitants. Otherwise, any effort to alleviate urban poverty will expire, as meaningless gestures that provide little more than temporary relief – and the gap between rich and poor will continue to grow larger.

Jobs, consumption patterns and opportunities for social mobility are all easily influenced by external factors. This instability can be manifested in both national and local contexts through at least four important channels: patterns of investment, labor markets, prices and public expenditures. Moreover, they occur in different locations within the city, creating patchworks of decay, renewal, and economic revitalization. The challenge for national and local authorities is to identify which kinds of changes are occurring, or better still, which types of changes can be anticipated, in order to consider whether there are measures that can cushion or mitigate these impacts. To do that, changes must be anticipated and capital set aside to deal with them.

While government may feel its budget is severely constrained, it needs to apply discipline to save some of their resources for these future needs. This does not mean borrowing and thereby passing on debts to future generations. It means saving for the future. In reality, this saving is an insurance policy against future unknowns. Having such resources at hand allows decision-makers to face the future more confidently and to smooth out the impacts of volatile changes in the global economy at large. (www.asifjmir.com)

The Ballooning Youth of Pakistan

In more than 100 countries, people are getting not only more numerous, but younger. Youth bulges, combined with economic stagnation and unemployment, can burden these countries with disproportionately high levels of violence and unrest—severely challenging their hopes for social and economic stability. Pakistan is one such country

Pakistan currently has the largest number of young people in its history, with approximately 25 million people between the ages of 15 and 24. Pakistani youth makes up 63% and adolescents nearly 43 % of the total Pakistani population. Illiteracy, lack of awareness, poverty and dearth of focused attention to youth-related problems add to the complexity of the problems currently faced by the country in social sector development.

The predominance of young adults can be a social challenge and a political hazard. Our economy and labor markets have been unable to keep pace with population growth, contributing to high rates of unemployment. While unemployment tends to be high in Pakistan in general, it is among young adults three to five times as high as overall adult rates.

Young men in rural areas are often hardest hit relative to their expectations. Agriculture is the single largest source of livelihood worldwide, but many young rural men expecting to inherit land increasingly find themselves disinherited.

With few opportunities in rural areas, young people in Pakistan are increasingly forced to leave behind more traditional lifestyles and migrate to cities in search of work, education, and urban amenities.

Many urban areas are thus now home to significant, and potentially volatile, youth bulges. Rapidly industrializing cities and frontier areas can be spawning grounds for political unrest because thousands of young men migrate to these sites in search of already in short supply livelihoods.

Yet urbanization is proceeding faster than municipalities can provide infrastructure, services, and jobs. Municipal governments in Pakistan are the least able to muster the human and financial resources to contend with these problems, especially when the poorest, nontaxable segment of the urban population continues to grow rapidly.

Most young people, men and women, work in agriculture. Other types of work are segregated by gender, with females engaged in stitching, embroidery, and knitting (largely based at home) while young men work in factories, are self-employed, or perform skilled labor. Young people’s attitudes about gender roles remain traditional, with well-defined lines between the domains of males and females.

The UN projected that by 2007, for the first time ever, more people would be living in cities than in rural areas. This urban share could top 60 percent by 2030—with almost all of this growth projected to occur in the developing world.

We have a large number of youth between 18 and 35 who are properly educated, but have nothing to do. Urban discord, more than the rural sort, afflicts diverse social classes, including the angry unemployed. The risks of instability among youth are increased when skilled members of elite classes are marginalized by a lack of opportunity.

It isn’t difficult to find contemporary parallels. The collapse of the Communist regime in the Soviet Union in the early 1990s in part to the mobilization of large numbers of discontented young men who were unable to put their technical educations to use due to party restrictions on entering the elite. And Samuel P. Huntington, Harvard professor and author of the controversial treatise on the Clash of Civilizations, has pointed to connections between tensions in the Middle East (where 65 percent of the population is under the age of 25) and the unmet expectations of skilled youth. Many Islamic countries, he argues, used their oil earnings to train and educate large numbers of young people, but with little parallel economic growth few have had the opportunity use their skills.

Pakistan where a large youth bulges, coupled with high rates of urban growth and shortages of employment opportunities, is already creating a very high risk of conflict.

The US has begun to take notice. In April 2002, in a written response to congressional questioning, the US, CIA noted that “several troublesome global trends—especially the growing demographic youth bulge in developing nations (Pakistan included) whose economic systems and political ideologies are under enormous stress—will fuel the rise of more disaffected groups willing to use violence to address their perceived grievances.” The CIA warned that current US counter-terrorist operations might not eliminate the threat of future attacks because they fail to address the underlying causes that drive terrorists.

Fortunately, demographics are not destiny. But the likelihood of future conflict may ultimately reflect how Pakistan chooses to deal with its demographic challenges.

There are nevertheless examples of some countries, where policies were in place that provided young men with occupations and opportunities—including land reform and frontier settlement schemes, migration abroad, industrialization, and the expansion of military and internal security forces. The latter strategy probably helped regimes such as North Korea, China, and Turkmenistan that maintain political stability during the post-Cold War era despite large proportions of young adults.

In the short term, Pakistan government will need to tackle the underlying factors contributing to discontent among young people, including poverty and the lack of economic opportunity. And the government can address part of the risk associated with youth unemployment by investing in job creation and training, boosting access to credit, and promoting entrepreneurship.

Ultimately, however, the only way to achieve the necessary long-term changes in age structure will be through declines in fertility. Government can facilitate fertility decline by supporting policies and programs that provide access to reproductive health services—voluntary family planning services and maternal and child health programs and counseling, including providing accurate information for young adults—and by promoting policies that increase girls’ educational attainment and boost women’s opportunities for employment outside the home. (www.asifjmir.com)