Box 1.4 Poverty and Governance in a Global Frame

Many of the obstacles the poor face in turning their natural assets into wealth manifest themselves at the local and national levels. But these governance and economic obstacles often have their roots in policies and practices at the global level. The arenas of international trade, development aid, and international finance and investment influence global poverty trends, in as much as they influence the broad economic and political setting that poor people find themselves in.

Over the past five years, the controversy over the benefits and dangers of globalization has highlighted the power of international policies to affect poverty. This influence can be positive: inflows of capital, goods, and services to developing countries exceeded US$2.5 trillion in 2003 (World Bank 2005). Several East Asian countries like China, Korea, and Taiwan have used export-oriented trade to spur the economic growth that helped many of their citizens escape poverty. China has also attracted large quantities of foreign direct investment, another growth accelerant. Remittances that immigrants to industrialized countries send back home provide a vital source of funds for many developing nations. In addition, industrialized countries provide significant amounts of technical assistance and foreign aid to developing countries