At a glance:
Globalization, poverty, trade
and the environment

Over the last half century the world economy has grown fivefold. In the same period world trade has grown nearly three times as fast, by a factor of 14. International trade, at $6 trillion a year, is a massive force for economic, environmental and social change: its growth and liberalization is changing the way people live and work around the globe. In addition, annual flows of private foreign investment to developing countries are more than five times greater than official overseas development assistance.

While the last decade of the 20th century saw great economic progress in many parts of the world, it also witnessed stagnation and setbacks. An estimated 1.2 billion people still live on less than one US dollar a day. A fifth of the world’s people living in its richest countries share 86 per cent of its GDP, the poorest fifth just 1 per cent – and the gap between them continues to increase. These differential effects of trade and investment on development and poverty reduction show that while economic growth is of central importance, its quality is the key for sustainable development. Both the sources and the patterns of growth also shape development outcomes.

National and international policy frameworks need to be broadened to integrate the social, economic and environmental dimensions of sustainable development, in a democratically accountable and equitable way.

The links between trade and the environment are important, but multiple and complex. The growth and liberalization of trade are neither necessarily good nor bad for the health of the planet. They can cause resources to be used more efficiently and create wealth that can be used to protect the environment. However they can also increase trade-related pressures that contribute significantly to natural resource depletion and environmental degradation.

The challenge is to manage the processes of trade liberalization and globalization in a way that promotes environmental sustainability and equitable human development. In short, the more integrated environmental, trade and other economic policies are, the more sustainable will be economic growth, and the more positive will be the contribution of globalization to the environment and sustainable development.

The processes of globalization that so strongly influence the evolution of society need to be directed towards resolving, rather than aggravating the serious imbalances – between rich and poor, and humanity and nature – that now plague the world.

Global income disparities
The world is becoming more unequal. Growth in many developing countries has been far outpaced by the increase in wealth in the richest ones – while in Africa per capita incomes have declined.

Living on less than $1 a day
The number of extremely poor people in the world fell only slightly during the 1990s though – because of growing human numbers – their share of world population fell from 29 to 23 per cent.

Failing to grow out of poverty
Increases in per capita income of 3.7 per cent a year will be needed – even on optimistic estimates – if countries are to meet the Millennium Development Goal of halving poverty. During the 1990s only 24 (including the most populous, India and China) achieved this rate: the rest fell short or actually suffered declining income.

Debt service repayments
Repayments by developing countries grew from 19.6 per cent to 22.3 per cent of export earnings over the 1990s. The need to increase exports to make repayments can lead to overexploitation of natural resources.

Mergers and acquisitions
The largest firms are becoming bigger and more international in a globalizing world. In 1970 there were some 7,000 transnational companies: by 2000 there were well over 50,000.

Share of exports
The share of developing countries has been increasing, but they still have a far smaller proportion than developed ones.

This issue:
Contents | Editorial K. Toepfer | Looking through new lenses | Development with a human face | Trade can transform | Achieving win–win–win | People | Promises to keep | As precious as gold | Expanding the circle | At a glance: Globalization, poverty, trade and the environment | Acting local | Cooperation is catching | Books & products | Getting through the bottleneck | Investing in the environment | Bishkek Mountain Platform | You can’t breathe money | We will succeed | Fair trade? Fair question

Complementary articles in other issues:
Issue on Poverty, Health and the Environment, 2001
Issue on Production and Consumption, 1996
Issue on World Summit on Sustainable Development, 2002
Issue on Global Environment Facility, 2002

AAAS Atlas of Population and Environment:
About the AAAS Atlas of Population and Environment