Scott Hipsher

Poverty reduction in Asia

How poor countries benefit from foreign investment

A few weeks back, there was a lot of buzz over a story that first appeared on National Public Radio (NPR) in the USA about the horrific working conditions at a Foxconn factory in China where Apple's products are assembled. Now, NPR has retracted the story and it came to light the writer/presenter/researcher of the piece, Mike Daisey, falsified much of the story.

A reporter falsifying data and fabricating information to create something sensation is nothing noteworthy, but the ease in which the editors and the public fell for a story that with a pinch of common sense and taking a second to analysis was obviously false is worth examining. Why were so many people gullible and easily took in?

This is not some back street factory where a dozen or two migrants are kept in virtual slavery. Foxconn is a huge company that employs hundreds of thousands of employees who all willingly chose to work there. Both becoming a consumer of a company's products and an employee of a company are voluntary activities and companies must compete for both customers and employees. Customers buy a company's product because they have decided buying the company's product is the best option for the use of their money. Employees decide to work for a company because it is felt that is the best option for the use of the employees' time. Workers in China are no different than ESL teachers in Thailand, one only stays at or has chosen the job one has because it is or was the best option available. Like with ESL teachers there is no slavery in modern China, only voluntary employment contracts. Common sense indicates there is no possible way hundreds of thousands of people would willingly choose to work for an exploitative employer which provided worse working conditions and wages than available elsewhere.

Working in China (but maintaining a residence in Thailand) I could write volumes about what I think is "wrong" in China, but I also know that the country has implemented the biggest and fastest poverty reduction program the world has ever seen, and it has been done by going against the advice of most western economic experts and without foreign aid, although it has been helped by western and other foreign investment which has given the people of China far more opportunities as both employees and entrepreneurs.

I am currently finishing up a book which should be out later in the year about the private sectors' role in poverty reduction in Asia and basically all the empirical evidence (although not all the passionate opinion) shows poor countries that open themselves up to international trade do much better than those that don't, and in fact there has never been a single case where driving away foreign investment and more jobs has resulted in economic growth and significant poverty reduction. Poor countries are normally ignored by international businesses, not exploited by them. Yet despite the obvious problems with the story, some people bought into it as it fit into their hoped for conclusions of big and evil American companies exploiting the poor of the world.

There might also have been more than a little of what I have called the "colonial paradigm" in this easy acceptance of the helplessness of the poor Asians who needed the westerns to take up the "white man's burden" and decide under what working conditions workers in Asia should accept. Petitions and threats to boycott Apple products were instituted to help those poor exploited Asians who were helpless to make their own choices on how to live their lives. Was there an underlying assumption of the all powerful western company exploiting the ignorant and helpless locals who need other powerful westerners to fight the battle for them?

But one might ask, what does this have to do with the lives of teachers. This case is a reminder to use our own critical thinking skills before passing on information as "fact." The "reporter" in this story obviously let his political viewpoints and personal biases interfere with his job, we should be careful of not following the same path. Just because we have a captive audience in our classrooms it does not give us the right to pull out our soapboxes and tell out students "facts" we wish or hope were true.

Was it fair for wealthy educated suburbanites in the USA or Europe with multiple career options to dictate what choices poor and poorly educated girls from rural villages in China should make in their lives? Is it fair for us as foreign teachers to tell our students, who come from very different cultures and backgrounds from ourselves, how they should live their lives?

Some of us foreign teachers might teach wealthy children in private schools, others of us might teach underprivileged kids in a rural government school. Some might be working at top flight universities with the best and brightest, other of us might be working in second or third level universities with the underachievers. Some of us are teaching English, others of us might be teaching a variety of academic subjects. What we can all do is try out best to help increase the knowledge and therefore the future options for as many of our students as possible but respect the choices our students make and not expect them to make the exact same decisions we would.

My upcoming book

The Private Sector's Role in Poverty Reduction in Asia

Some of my previous work can be found below.

Business Practices in Southeast Asia: An interdisciplinary analysis of Theravada Buddhist countries

The Nature of Asian Firms: An evolutionary perspective

Expatriates in Asia: Breaking free from the colonial paradigm


In case anyone else hasn't noticed, it's no longer the multinational death corps that are swallowing up the developing world, it's China.

By Geoff, Isaan, innit. (24th July 2012)

"Poor countries are normally ignored by international businesses, not exploited by them."

What do you have to back up this statement? The natural resources of nearly EVERY poor country in Africa, Asia, and South America are being extracted by multinational corporations in 'cooperation' - or not so much - with local governments who weren't in a position to operate an industry until they showed up with everything ready to go.

What do you mean by 'poor' and what do you mean by 'ignore', I suppose is my question.

By Matthew, United States (13th May 2012)

'Is it fair for us as foreign teachers to tell our students, who come from very different cultures and backgrounds from ourselves, how they should live their lives?' You should be saying the same thing to all the exchange teachers and professors who come to teach their subjects in Western English speaking countries.

Let's talk about all the Chinese and Indian doctors who are advising their patients in Western countries on what to eat and how to live their lives.

By Lisa, (13th May 2012)

The "reporter" in this story obviously let his political viewpoints and personal biases interfere with his job, we should be careful of not following the same path.

May I suggest you stop being a hypocrite and deal with reality.

I had no idea that a factory worker in China had the same options of an ESL teacher in Thailand. In addition, there is no slavery in China? Furthermore, I had no idea that poor countries were ignored by international businesses. Have you ever heard of cheap labour?

This article is nothing but vulgar propaganda that would make Stalin cringe.

By matt, Vietnam (19th April 2012)

Just wanted to say 'thanks' for an interesting article. Cheers.

By Matthew, United States (29th March 2012)

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