The effect of globalization on poverty: The case of Turkey

Generally speaking the origins of the intense and systematic attention to poverty has found its roots in the early 17th century, well before the mid-18th century when mass poverty arose. It is observed that the interest in poverty and distribution problems gradually increased as industrial capitalism took root and spread in the 18th and 19th centuries. Mass poverty has become an important social problem within the capitalist system with the spread of the industrial revolution that took place in England thereafter flourishing to other countries. The expansion of the sphere of influence of the globalization process has been along with the neo-liberal policies implemented after 1980. The development of transportation, the widespread use of information and communication technologies such as communication, electronics, internet, transportation, the ease of access to information and the cheapening of these services have led the service sector to become prominent worldwide and become an important component of economic income. Although this situation contributed to the increase of capital mobility in financial markets, the deepening and development of banking and financial markets, it caused the economies to become more sensitive with the crises and shocks it brought. With this process, poverty has affected many people and the income inequality between the rich and the poor has gradually increased. The effects of globalization on poverty are a frequently discussed issue in economics literature. However, when the literature is examined, it is observed that the results obtained are not the same. While some authors' claims are that globalization reduces poverty, some authors claim the other way round. The purpose of this study is to investigate the effects of economic globalization, political globalization and social globalization, which are sub-components of the KOF globalization index, and foreign direct investments on poverty (per capita household final consumption expenditure) in Turkey between 1980-2018, using time series econometrics. For this purpose, first unit root tests were performed to determine the stationarity of the series, and then two-step Engle-Granger cointegration tests were performed using the Gregory-Hansen cointegration test. According to the findings obtained from the time series analysis, political globalization does not affect poverty. On the other hand, while FDI and social globalization reduce poverty, economic globalization increases poverty. Keywords: Globalization, Poverty, KOF Index