[Market Economy Guide] Child Laborers in Bangladesh

The Claim That Globalization Exploits Children in Less Developed Countries Is a Misunderstanding,

The Solution to Poverty Is Growth Through Openness… Korea Is a Successful Example

Whenever international meetings such as APEC and the G20 are held, the areas around the venues are often overwhelmed by anti-globalization protesters. If you ask those protesters what globalization is, they will talk all day about children in Bangladesh or Vietnam making soccer balls in poor conditions. While children in advanced countries are running around schoolyards playing with soccer balls, children in developing countries are making them.

Globalization Does Not Exploit Developing Countries

To them, the ugly face of globalization is Salvadoran women sewing premium blue jeans while crowded into cramped spaces, or Indonesian workers making sneakers in poorly ventilated factories, breathing in glue fumes until they can hardly breathe. And behind it all, in their telling, are multinational capitalists smiling smugly and patting their full stomachs. Anyone with a conscience, they say, could hardly avoid joining the protests. But is globalization really exploiting the labor of developing countries and deepening their poverty?

It is true that the conditions faced by child workers in Bangladesh evoke sympathy. It is also true that child labor is difficult to support, both legally and ethically. But when it comes to poverty, globalization is only a secondary issue. Globalization by itself neither makes poor countries poorer nor richer. Some believe globalization is a system in which capitalists exploit workers and advanced countries exploit developing countries, preventing the poor from earning money, but that is not true.

The only real solution to poverty is economic growth. There is no more reliable way to escape poverty than economic growth. Today, Americans live roughly six times better than Americans did 100 years ago. There is no other reason for that. It is solely because the economy grew. Consider India, a country often seen as emblematic of the developing world. India’s annual average economic growth rate was 1.4% from the 1950s to the 1980s, and a higher 4.0% from the 1980s to the 1990s. As a result, by the 2000s Indians were living more than twice as well as Indians in the 1950s. And this is a country whose growth rate was relatively low.

If we acknowledge that the only solution to poverty is economic growth, then the next question is whether globalization lowers or raises economic growth. And even those who insist that globalization is a stage on which the powerful exploit the weak would have difficulty claiming that globalization lowers a country’s economic growth.

Subcontracting by Advanced Countries Provides “Good Jobs” in Poor Countries

Let us return to the children making soccer balls in Bangladesh. It is true that child labor is more common in less developed countries than in advanced countries, but globalization is not what increases child labor. However unpleasant this may be to admit, subcontracted work from advanced countries is often a relatively good job under the poor labor conditions of those countries.

One may want to believe that if children are rescued from soccer ball factories in Bangladesh, they will be able to go to school like children in advanced countries. But reality is not a fairy tale. Most of those children would probably have to return to the odd jobs they did before making soccer balls, such as hauling water from village wells. The wages they would receive there would be incomparably worse than what they earned at the soccer ball factories.

Soccer ball manufacturers from advanced countries may pay Bangladeshi children lower wages than they pay their own workers, but even so, those jobs are clearly fairly good jobs by Bangladeshi standards. For Bangladesh, soccer ball factories clearly contribute to economic growth.

Of course, there is a counterargument. Why should factories in advanced countries and factories in developing countries be paid different wages for making the same soccer ball? That is not an unreasonable point. But entrepreneurs are not charity workers or religious figures. If wages were equalized in that way, firms would lose the incentive to operate in less developed countries where the business environment is poor.

Many Countries Have Grown Within Globalization

Consider the Kaesong Industrial Complex in North Korea, an inter-Korean joint industrial zone. South Korean companies operated factories there because of North Korea’s low labor costs. North Korean wages are incomparably lower than those in South Korea, which has already entered the ranks of advanced countries. Given the level of North Korea’s labor force, labor costs relative to quality may even be lower in North Korea than in China or Vietnam. In other words, manufacturing the same industrial goods can be cheaper there than in South Korea, China, or Vietnam.

But no one sees the Kaesong Industrial Complex as a system in which South Korean capitalists exploit North Korean workers through low wages. If it were, North Korea’s socialist authorities would never have tolerated it. Whatever anyone says, the Kaesong Industrial Complex played the role of providing very good jobs under North Korea’s present circumstances and increasing North Korean incomes. For North Korea, Kaesong was a window to the world, opened through South Korea.

Some claim that advanced countries exploit less developed countries through globalization, but several developing countries achieved successful growth between 1970 and 2000, even as globalization advanced rapidly. Korea, which achieved export-led economic growth, is a representative example of a country that benefited from globalization. Of course, many countries during the same period suffered low growth and experienced economic failure. But the claim that globalization brings economic exploitation and dependence and thereby makes economic growth difficult is false. One thing is clear: globalization offers less developed countries opportunities that are not at all bad. Whether a country makes the most of those opportunities depends on that country’s own capabilities, not on globalization itself.

■ Please remember

It is false to say that globalization brings economic exploitation and dependence and thereby makes economic growth difficult. One thing is clear: globalization offers less developed countries opportunities that are not at all bad. Whether a country makes the most of those opportunities depends on that country’s own capabilities, not on globalization itself.

Sung-no Choi, President, Center for Free Enterprise (CFE)

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Original title: [시장경제 길라잡이] 방글라데시의 어린이 노동자

Author: Sung-no Choi

Date: 2020-09-21

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=column&pn=6&idx=23090