Critics of globalization and liberalization claim that these forces marginalize poor countries and aggravate poverty. In fact, globalization is not a zero-sum game, and all can benefit. But its current manifestation harms the poorer developing countries because they miss out on the knowledge and innovation needed to exploit the expanded opportunities resulting from globalization. Five initiatives could stop the knowledge gap from further widening the income gap. First, developing countries need to pursue a twin strategy of opening their borders to more foreign direct investment and improving basic education.
Knowledge spreads more easily as foreign companies introduce foreign technologies.
But knowledge cannot take hold without proper literacy. The priorities of cash-strapped governments should be to provide basic education to all, spread knowledge opportunities through foreign direct investment, and offer tax breaks to encourage the private sector to support training and advanced education. Second, developing countries need to break up their communication monopolies. Knowledge grows as it runs along telephone lines, e-mail, and wireless connections. The more expensive and restricted these means of communication are, the more limited is the development of knowledge.