Working Paper
Globalization, Local Ecosystems, and the Rural Poor

Livelihoods of the rural poor in developing countries are critically dependent on the health of the local ecosystems. In this paper we examine the various mechanisms through which globalization can lead to ecosystem degradation, and consequently poverty. Models on ecosystem dynamics from ecology are examined and linked to models in new institutional economics that examine how institutions and technologies evolve in the process of globalization. To illustrate ecological dynamics, a prototypical model of a semi-arid savannah ecosystem is examined. This ecosystem is characterized by non-linearities, multiple steady states and threshold effects. An important ecological concept in this context is that of resilience, which refers to the ability of ecosystems to absorb shocks without changing their essential structure. In economic models only the productivity of a resource is considered. We discuss why resilience is also an important characteristic and why management institutions that focus only on short-term productivity may lower resilience and contribute to the emergence of crisis. Within the context of a traditional closed economy, we discuss how traditional knowledge systems and institutions shape resource-use practices and how these practices fare in terms of productivity and resilience. Then we examine the effects of globalization through trade liberalization, international technology transfer and short-term capital movements on institutional and ecological dynamics, and consequently, on poverty.