Globalization in the Developing World
Globalization is a powerful force — and it's here to stay. Guatemala's sugar and coffee industries offer an instructive look at the value chain.
Complete Video Script
When it comes to ending extreme poverty, globalization is both an opportunity and a challenge. Globalization is a powerful force, and it's here to stay. Locals say it's like a big train — get on it or get run over. Everything I'm wearing right now — and probably everything you're wearing as well — is the result of a globalized economy.
Globalization is all about the free market, and the free market is about buying and selling. For countries like Guatemala and Ethiopia to benefit from the global economy, they need to sell things. And for less-developed countries, because of rich-world trade policies, that's usually their natural resources, raw and unprocessed.
Back home I love my morning cup of coffee. And I enjoy it thanks to an efficient chain of links that connects me with the farmer who grew the beans. For economic development, each of these links is important: good soil, educated workforce, firm title to land, fair trade policies, roads, ports, container ships. This is called the "value chain."
Guatemala's huge sugar industry is a good example of being connected to the global economy through this value chain. Sugar is its leading export product. And the top producers have created an association for a stronger voice in the global market.
While cutting cane is low-paid and grueling, workers from across Guatemala still migrate to the sugar plantations to find jobs at harvest time.
The raw cane is trucked in, ground up, and then moves through a complicated process. Along with its high-tech efficiencies, this plant is embracing the worker and environmental standards now expected to successfully compete in a global market.
Huge truckloads of unprocessed brown sugar are unloaded three at a time. Then, with a steady cascade, mountains of sugar fill vast warehouses.
To add value to their raw product, as much sugar as possible is refined. Quality control is strict as the processed sugar is bagged. Much care is put into building the brand of Guatemalan sugar. Here in this warehouse — with a mix of mechanization and hard labor — sweet sacks are stacked like mountains awaiting shipment to other countries.
The best road in Guatemala connects the cane plantations with the country's one big port. And thanks to this complete and efficient value chain, Guatemala exports its sugar profitably all over the world.
The coffee industry is another example of the value chain at work in Guatemala to stoke development. Melanie Herrera of Bella Vista Coffee explains how the value chain works for coffee.
Melanie: So, let's picture this. We have this consumer in the States that wants to drink coffee but wants to know who the producer is. And let's say we have this producer here on the volcano, up on the slopes, in the middle of nowhere. How do you connect these two?
So you need the producer, you need the facility to process the product, you need the knowledge and all the technical skills, you need to have an exporter, you need to have an importer, and all of this we know as "value chain," which is "cadena de valor" en español. What we do is, we add value in every step.
The value chain for coffee is maybe best exemplified by the coffee tastings Bella Vista has on site. Representatives from around the developed world come here to taste the beans from not only the company's own plantation, but from dozens of small farmers who work with them. And it's because of this value chain, linking producers to consumers, that globalization works for the Guatemalan coffee industry.
Melanie: Globalization is here. In reality these are good opportunities for countries like ours. It opens markets, and we're able to produce many tropical things that you guys can't there, like sugar, coffee, ornamental plants — and we can be competitive in that.
This is a family business. They have grown coffee for over a hundred years.
They offer jobs and farms for over a hundred people; at the mill we have another 30 people. They have a job here, they have their things here, they have a history, a family, everything they need here. They stay here. So, if we can create opportunities here, if we can make people have jobs here, they will want to stay here.