Policies that hinder globalization and reduce trade are policies that decrease global prosperity and increase global poverty.
Want to reduce poverty around the world? Support globalized manufacturing.
T he introduction of factory manufacturing in the developing world helped to lift over a billion people out of extreme poverty. Yet factories in developing countries are often portrayed as hot, uncomfortable, dangerous, and wholly unwelcoming places where workers are conscripted against their interests to toil for the betterment of the faraway West.
While this picture of the average factory may seem intuitive, it is far from an accurate portrayal of modern manufacturing in low- and middle-income countries. For over 50 years, the factory has provided an escape from the immiseration and drudgery of subsistence farming.
Subsistence farming in low- and middle-income countries is not the agrarian utopia some rich Westerners imagine. Areas where a large proportion of the population remains engaged in small-scale farming are still the poorest places on earth. Families who work these small farms often cannot afford an education or medical care for their children. They live one bout of ill health or failed harvest away from serious economic stress, hunger, and hardship.
The factories many Westerners view as engines of oppression are, in fact, prime movers in driving up standards of living for the world’s poor. Of course, factories are not without fault. Factory work has historically been dangerous and laborious, undertaken in long shifts, usually six days a week. Factories have conscripted children, exploited workers, and caused significant local environmental damage. While conditions have improved in the majority of factories in recent decades, these issues remain to varying degrees in the developing world.
What we can say with historical certainty is that, on the whole, factories and industrialization bring improved economic opportunities, higher living standards, lower child mortality rates, and increased life expectancy compared to agricultural societies.
The women, men, and children who staff developing-world factories have left the countryside and their farms by the millions, drawn by a more prosperous and abundant life. For those of us living in the richest nations, the idea of factories and industrialization bringing prosperity might feel alien and unsettling. C. P. Snow wrote of our collective and ongoing attitude towards industrialization in the developing world in his 1959 essay “The Two Cultures”:
It is all very well for one, as a personal choice, to reject industrialization — do a modern Walden, if you like, and if you go without much food, see most of your children die in infancy, despise the comforts of literacy, accept twenty years off your own life, then I respect you for the strength of your aesthetic revulsion. But I don’t respect you in the slightest if, even passively, you try to impose the same choice on others who are not free to choose. In fact, we know what their choice would be. For, with singular unanimity, in any country where they have had the chance, the poor have walked off the land into the factories as fast as the factories could take them.
Improved quality of life and economic opportunities rose in lockstep with industrialization across China, as millions of rural Chinese abandoned subsistence farming and migrated to the cities. Between 1980 and 2023, China’s GDP per capita increased from $1,330 to $19,200, while average life expectancy rose from 64.4 years to 78.4 years.
Manufacturing’s positive influence on economic opportunity and living standards isn’t restricted to China. As manufacturing spreads through India, Southeast Asia, and Africa, it brings with it prosperity and abundance that could not be supported by subsistence agriculture.
Starting at the dawn of the Industrial Revolution, global extreme poverty steadily decreased from 81 percent in 1800 to 57 percent in 1950. As industrialization took hold in more places, global extreme poverty continued to fall. Between 1950 and 2023, global extreme poverty was reduced dramatically, from 57 percent to less than 10 percent.
Unfortunately, in the past five to ten years, a global political movement with hostilities toward free trade and globalization has emerged, undermining the very forces that have driven prosperity, stability, and security. Policies and political positions that hinder trade and globalization risk jeopardizing the improvements in living standards for people in poorer countries. Trade doesn’t create world peace, but it does make war less likely on the margin, and policymakers need to keep this in mind when throwing up barriers to global trade.
Manufacturing and industrialization have lifted billions of people out of extreme poverty and provided unprecedented economic opportunities. But the great enrichment that began with the Industrial Revolution has yet to be fully realized.
Policies that hinder globalization and reduce trade are policies that decrease global prosperity and increase global poverty. In the race to impose tariffs and turn our backs on globalization, we in the West risk killing the golden goose because we’ve grown sick of golden eggs.