The Highway of Globalization
“Almost half the world — over three billion people — live on less than $2.50 a day” (Shah). In 2013, it was found that “The poorest 40 percent of the world’s population accounts for 5 percent of global income. The richest 20 percent accounts for three-quarters of world income” (Shah, "Poverty Facts and Stats"). Why is this? Is it because third world governments don’t know how to run a country? Or is it because of powerful multinational corporations driven by their thirst for profit?
Third world countries are largely reliant on multinational corporations for jobs, resulting in their loss of independence from the globalized economy (Shah, "Structural Adjustment-a Major Cause of Poverty"). Although these corporations seem to help third world populations by supplying jobs, they are not a long-term solution for poverty and are unfair to workers.
There are many problems with the globalized system that affect local economies. One problem is the development of sweatshop factories. One article noted: “Sweatshops are a product of the global economy and so-called ‘free’ trade. Companies increase profits by driving down costs any way possible, so they set up low-cost factories” (“Background on Sweatshops”). Because third world countries are desperate to attract multinational businesses, they promise them limited or no regulations on things like environmental standards, child labor, wages and taxes. When these factories are tied to outside economies instead of the local economy, local producers have fewer possibilities for integration which weakens the national economy. Therefore, these third world countries get little benefit other than low wage employment.
If we prevent third world countries from having self-sustaining, relatively independent economies, we will not only allow an unbalanced system to continue, ensuring the poverty of millions, but we will be unable to be rely on our own country for labor and products (Amadeo).
As the gap gets wider between the rich and the poor (Puzzanghera), we need to embrace alternatives. The Grameen Bank, founded in 1976 by Muhammad Yunus in Bangladesh, is a micro-loan system that allows the poor to establish their own businesses to create a stable and long-term solution to these problems of poverty. In an unfair globalized system, the Grameen Bank drives third world countries out of poverty by advocating for independence and equality. In 1994, it was found that “a program participating household owns 56 percent more resources and 51 percent more networth [sic] than a nonparticipating household” (Khandker).
Muhammad Yunus is an economist, social entrepreneur and Nobel Peace Prize winner (for his work in founding the Grameen Bank). During the Nobel ceremony in Oslo, Yunus referred to the globalized economy as “a dangerous, free-for-all highway, whose lanes will be taken over by the giant trucks from powerful economies, even as Bangladeshi rickshaws will be thrown off the highway.”
In an interview, Yunus explains how globalization is like a multi-lane highway, with products from all around the world traveling along it. However, these larger economies have many more products and bigger trucks on the highway which are taking over the lanes until the small countries don’t have space for themselves. Later on, he speaks about how “we should have traffic rules so that little companies and little economies have their safe lanes, where they are slow moving, they carry little things and very fragile [things], but they can move safely so that the big trucks don’t take over everything” (Knowledge@Wharton). In a way, this is the very intention Muhammad had for the Grameen Bank; a system that pushes against the overpowering corporations and stands up for the rights of poor countries.
The Grameen Bank resolves this inequality and instability by providing borrowers business development support and financial management training. This in-turn helps not only borrowers because their businesses succeed, but local communities because successful businesses support the larger community and the Grameen Bank because successful businesses support successful payback.
Not only does the Grameen Bank support citizens to be self-sufficient, but it also unifies the country. Unlike factory systems where people go to work and have little communication with their co-workers (Hidden Face of Globalization), the Grameen Bank supports small businesses that interact with and support other local businesses.
Before the Grameen Bank, commercial banks charged higher interest rates, would only give loans of larger amounts, and demanded collateral. Collateral is security for repayment of a loan which will be collected in the event of default. This is not beneficial because these loans are much more difficult to get and pay back, which makes it harder on the borrowers and on the bank.
By allowing families to take out smaller loans, more loans are provided and payback rates are increased. Not requiring collateral is a key to making the Grameen Bank so beneficial. So when the Grameen Bank was established, it opened up many more opportunities to the poor, freeing them from having to be reliant on corporate banks and exploitative multinational corporations.
As a result of Muhammad’s amazing work, there has been great growth for the Grameen Bank in other countries. In 1995, the bank had “two million members spread over 35,000 villages, 94 percent of whom are women” (Shahidur). In the beginning, other countries said, “It may work in Bangladesh, but it won’t work outside.” However, it has worked in places like Turkey, Kosovo, Costa Rica, Guatemala, China, India and New York (Knowledge@Wharton).
As Muhammad said, “The poor need to be empowered to help themselves” (Grameen Bank - the mother of social business), and that’s exactly what the Grameen Bank has done.
How can you join in this project? Get involved by visiting http://www.kiva.org/. Kiva is a “non-profit organization with a mission to connect people through lending to alleviate poverty. Leveraging the internet and a worldwide network of microfinance institutions” ("Kiva - About Us”) allows individuals to lend $25 or more to families in third world countries. It is a simple way to support a family and empower third world countries!
Work Cited
Amadeo, Kimberly. "U.S. Trade Deficit with China." About.com US Economy. About.com, n.d. Web. 23 Feb. 2014. <http://useconomy.about.com/od/tradepolicy/p/us-china-trade.htm>.
"Background on Sweatshops." Do Something.Org. N.p., n.d. Web. 07 Feb. 2014. <http://www.dosomething.org/tipsandtools/background-sweatshops>.
"Grameen Bank - the mother of social business." The Grameen Creative Lab. N.p., n.d. Web. 30 Jan. 2014. <http://www.grameencreativelab.com/live- examples/grameen-bank-the-zmother-of-grameen-social-business.html>.
"Hidden Face of Globalization." YouTube. YouTube, 03 Apr. 2007. Web. 11 Feb. 2014. <http://www.youtube.com/watch?v=8Bhodyt4fmU>.
Khandker, Shahidur R. " Poverty Reduction Strategy: The Grameen Bank Experience." HRO DISSEMINATION NOTES. N.p., 23 Nov. 1994. Web. 2 Feb. 2014. <http://www.gdrc.org/icm/grameenbank.html>.
"Kiva - About Us." Kiva. N.p., n.d. Web. 19 Feb. 2014. <http://www.kiva.org/about>.
Knowledge@Wharton. “Profits, Globalization and Leadership -- Muhammad Yunus: Banker to the Poor.” Online video clip. YouTube. Youtube, 2010. Web. 2 Feb. 2014. <http://www.cosmolearning.com/videos/profit-globaliz-leadership-muhammad-yunus-2-6/>.
Puzzanghera January 20, Jim. "Oxfam Report Highlights Widening Income Gap between Rich, Poor." Los Angeles Times. Los Angeles Times, 20 Jan. 2014. Web. 11 Feb. 2014. <http://www.latimes.com/business/la-fi-income-inequality-20140121%2C0%2C3481555.story#axzz2szKHU9kT>.
Shah, Anup. "Poverty Facts and Stats." Global Issues. N.p., 7 Jan. 2013. Web. 10 Feb. 2014. <http://www.globalissues.org/article/26/poverty-facts-and-stats>.
Shah, Anup. "Structural Adjustment-a Major Cause of Poverty." Global Issues. N.p., 24 Mar. 2013. Web. 19 Feb. 2014. <http://www.globalissues.org/article/3/structural-adjustment-a-major-cause-of-poverty>.
Shahidur, Khandker R., Khalily Baqui, and Khan Zahed. "Grameen Bank : Performance and Sustainability." Grameen Bank : Performance and Sustainability. N.p., 31 Oct. 1995. Web. 12 Feb. 2014. <http://econ.worldbank.org/external/default/main?pagePK=64165259&theSitePK=469372&piPK=64165421&menuPK=64166093&entityID=000009265_3961214153703>.
“Almost half the world — over three billion people — live on less than $2.50 a day” (Shah). In 2013, it was found that “The poorest 40 percent of the world’s population accounts for 5 percent of global income. The richest 20 percent accounts for three-quarters of world income” (Shah, "Poverty Facts and Stats"). Why is this? Is it because third world governments don’t know how to run a country? Or is it because of powerful multinational corporations driven by their thirst for profit?
Third world countries are largely reliant on multinational corporations for jobs, resulting in their loss of independence from the globalized economy (Shah, "Structural Adjustment-a Major Cause of Poverty"). Although these corporations seem to help third world populations by supplying jobs, they are not a long-term solution for poverty and are unfair to workers.
There are many problems with the globalized system that affect local economies. One problem is the development of sweatshop factories. One article noted: “Sweatshops are a product of the global economy and so-called ‘free’ trade. Companies increase profits by driving down costs any way possible, so they set up low-cost factories” (“Background on Sweatshops”). Because third world countries are desperate to attract multinational businesses, they promise them limited or no regulations on things like environmental standards, child labor, wages and taxes. When these factories are tied to outside economies instead of the local economy, local producers have fewer possibilities for integration which weakens the national economy. Therefore, these third world countries get little benefit other than low wage employment.
If we prevent third world countries from having self-sustaining, relatively independent economies, we will not only allow an unbalanced system to continue, ensuring the poverty of millions, but we will be unable to be rely on our own country for labor and products (Amadeo).
As the gap gets wider between the rich and the poor (Puzzanghera), we need to embrace alternatives. The Grameen Bank, founded in 1976 by Muhammad Yunus in Bangladesh, is a micro-loan system that allows the poor to establish their own businesses to create a stable and long-term solution to these problems of poverty. In an unfair globalized system, the Grameen Bank drives third world countries out of poverty by advocating for independence and equality. In 1994, it was found that “a program participating household owns 56 percent more resources and 51 percent more networth [sic] than a nonparticipating household” (Khandker).
Muhammad Yunus is an economist, social entrepreneur and Nobel Peace Prize winner (for his work in founding the Grameen Bank). During the Nobel ceremony in Oslo, Yunus referred to the globalized economy as “a dangerous, free-for-all highway, whose lanes will be taken over by the giant trucks from powerful economies, even as Bangladeshi rickshaws will be thrown off the highway.”
In an interview, Yunus explains how globalization is like a multi-lane highway, with products from all around the world traveling along it. However, these larger economies have many more products and bigger trucks on the highway which are taking over the lanes until the small countries don’t have space for themselves. Later on, he speaks about how “we should have traffic rules so that little companies and little economies have their safe lanes, where they are slow moving, they carry little things and very fragile [things], but they can move safely so that the big trucks don’t take over everything” (Knowledge@Wharton). In a way, this is the very intention Muhammad had for the Grameen Bank; a system that pushes against the overpowering corporations and stands up for the rights of poor countries.
The Grameen Bank resolves this inequality and instability by providing borrowers business development support and financial management training. This in-turn helps not only borrowers because their businesses succeed, but local communities because successful businesses support the larger community and the Grameen Bank because successful businesses support successful payback.
Not only does the Grameen Bank support citizens to be self-sufficient, but it also unifies the country. Unlike factory systems where people go to work and have little communication with their co-workers (Hidden Face of Globalization), the Grameen Bank supports small businesses that interact with and support other local businesses.
Before the Grameen Bank, commercial banks charged higher interest rates, would only give loans of larger amounts, and demanded collateral. Collateral is security for repayment of a loan which will be collected in the event of default. This is not beneficial because these loans are much more difficult to get and pay back, which makes it harder on the borrowers and on the bank.
By allowing families to take out smaller loans, more loans are provided and payback rates are increased. Not requiring collateral is a key to making the Grameen Bank so beneficial. So when the Grameen Bank was established, it opened up many more opportunities to the poor, freeing them from having to be reliant on corporate banks and exploitative multinational corporations.
As a result of Muhammad’s amazing work, there has been great growth for the Grameen Bank in other countries. In 1995, the bank had “two million members spread over 35,000 villages, 94 percent of whom are women” (Shahidur). In the beginning, other countries said, “It may work in Bangladesh, but it won’t work outside.” However, it has worked in places like Turkey, Kosovo, Costa Rica, Guatemala, China, India and New York (Knowledge@Wharton).
As Muhammad said, “The poor need to be empowered to help themselves” (Grameen Bank - the mother of social business), and that’s exactly what the Grameen Bank has done.
How can you join in this project? Get involved by visiting http://www.kiva.org/. Kiva is a “non-profit organization with a mission to connect people through lending to alleviate poverty. Leveraging the internet and a worldwide network of microfinance institutions” ("Kiva - About Us”) allows individuals to lend $25 or more to families in third world countries. It is a simple way to support a family and empower third world countries!
Work Cited
Amadeo, Kimberly. "U.S. Trade Deficit with China." About.com US Economy. About.com, n.d. Web. 23 Feb. 2014. <http://useconomy.about.com/od/tradepolicy/p/us-china-trade.htm>.
"Background on Sweatshops." Do Something.Org. N.p., n.d. Web. 07 Feb. 2014. <http://www.dosomething.org/tipsandtools/background-sweatshops>.
"Grameen Bank - the mother of social business." The Grameen Creative Lab. N.p., n.d. Web. 30 Jan. 2014. <http://www.grameencreativelab.com/live- examples/grameen-bank-the-zmother-of-grameen-social-business.html>.
"Hidden Face of Globalization." YouTube. YouTube, 03 Apr. 2007. Web. 11 Feb. 2014. <http://www.youtube.com/watch?v=8Bhodyt4fmU>.
Khandker, Shahidur R. " Poverty Reduction Strategy: The Grameen Bank Experience." HRO DISSEMINATION NOTES. N.p., 23 Nov. 1994. Web. 2 Feb. 2014. <http://www.gdrc.org/icm/grameenbank.html>.
"Kiva - About Us." Kiva. N.p., n.d. Web. 19 Feb. 2014. <http://www.kiva.org/about>.
Knowledge@Wharton. “Profits, Globalization and Leadership -- Muhammad Yunus: Banker to the Poor.” Online video clip. YouTube. Youtube, 2010. Web. 2 Feb. 2014. <http://www.cosmolearning.com/videos/profit-globaliz-leadership-muhammad-yunus-2-6/>.
Puzzanghera January 20, Jim. "Oxfam Report Highlights Widening Income Gap between Rich, Poor." Los Angeles Times. Los Angeles Times, 20 Jan. 2014. Web. 11 Feb. 2014. <http://www.latimes.com/business/la-fi-income-inequality-20140121%2C0%2C3481555.story#axzz2szKHU9kT>.
Shah, Anup. "Poverty Facts and Stats." Global Issues. N.p., 7 Jan. 2013. Web. 10 Feb. 2014. <http://www.globalissues.org/article/26/poverty-facts-and-stats>.
Shah, Anup. "Structural Adjustment-a Major Cause of Poverty." Global Issues. N.p., 24 Mar. 2013. Web. 19 Feb. 2014. <http://www.globalissues.org/article/3/structural-adjustment-a-major-cause-of-poverty>.
Shahidur, Khandker R., Khalily Baqui, and Khan Zahed. "Grameen Bank : Performance and Sustainability." Grameen Bank : Performance and Sustainability. N.p., 31 Oct. 1995. Web. 12 Feb. 2014. <http://econ.worldbank.org/external/default/main?pagePK=64165259&theSitePK=469372&piPK=64165421&menuPK=64166093&entityID=000009265_3961214153703>.