Globalization, Conspicuous Consumption and the International Demonstration Effect Reconsidered

It has long been recognized that consumption behaviour in poor countries is influenced by the consumption standards prevailing in the richer, more industrialised societies. Indeed, as far back as 1957, Nurkse referred to the notion of an international demonstration effect, by which he meant that ‘the attraction of advanced consumption standards exerts itself fairly widely, though of course unevenly, among the poorer two-thirds of mankind’ (Nurkse, 1957: 65). Especially in the past ten years or so, however, the international demonstration effect has been greatly intensified by advances in information technology, which, via the mass-media, international trade, foreign investment and other factors that collectively define globalization, expose advanced consumption standards ever more widely across the Third World. The growing importance of this phenomenon means that it needs to be conceptualized more clearly and its welfare effects better understood, than has hitherto been the case. In particular, what is seldom recognized is that Nurkse adopted a highly specific view of the mechanism that gives rise to this effect and as a result, he was predisposed to favour just one possible description of its consequences.