Question

what is the effect of globalisation in rural areas

Answer 1

Effects of Globalisation

The impact of globalisation on rural poverty and development is an important topic, as most of the world’s poor reside in rural areas. Some authors argue that a country’s inability to integrate into the global economy may lead to shrinking of the economy and hence increase poverty, and that trade liberalization can help countries address poverty in more effective ways. However, as argued by Bardhan (2005), the net impact of globalisation on poverty is complex and context-dependent, and therefore, empirical evidence needs to be assessed to analyse the effects.

The economic theory assumes that globalization should be favourable to the poor in developing countries. Since unskilled labour in these countries is in abundance as compared to other factors of production in developed countries, trade liberalization should augment demand for developing country exports that embody large inputs of unskilled labour. Thus, trade openness leads to increased employment, higher wages for the rural poor, and reduction in poverty (Killick, 2001).

The challenge, however, is that trade liberalization is a ‘super-macro’ phenomenon and poverty i.e. at the level of the household and the individual is ‘super-micro’. It is, therefore, difficult to build a direct causal relationship among the two. The following sections present the positive and negative impacts on rural poverty with support of theory as well as empirical evidence.

I Hope it helps...