Globalization and Inequality

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Does globalization concentrates on making the world an equal place to reside for all sections of the society or does it help in making the rich richer and the poor poorer, rather poorest? With the emergence of WTO as a factor behind the liberalization of business globally, this issue has assumed greater significance than ever.

We are advancing towards the 21st century with no agreement between the social analysts and the social scientist regarding what the future has in store for us in terms of economics, politics and social equality. Certain presumptions have been connected with the word ‘globalization’ with little or no truth behind them. This new era of globalization has comprehensive connotations for the financial fitness of the world population and equality among the income groups.

Comparisons between the distributional outcomes of globalization

While one school of thought maintains that globalization results in growing income between all the sections of the society and even low-income groups have emerged as winners, the second school of thought propose that globalization may increase total incomes but the advantages are not equally distributed among the national population, indicating clear losers. Moreover the ever-increasing social disputes not only increase the welfare and social issues but also restrict the factors of growth due to the lesser utilization of prospects opened by globalization. The extensive backing up by the citizens is the major factor for the sustainability of globalization, which could be negatively influenced by growing social inequality.

The research data recommends that the income inequality has increased across the nations over the last twenty years and at the same time the average real incomes of the weaker sections of the society has elevated. The evaluations reveal that growing business and economic globalization have had equal and opposite effects on income distribution pattern. The factors which are connected with lower income inequality are liberalization of business and export growth, whereas higher inequality is associated with growing economic openness.

Bizarre Inequality

In a world where 400 highest income earners from the United States earn as much money annually as the total population of 20 African countries, something seems to be intensely wrong.

Global inequalities exist at astounding levels. As per the data from the International Monetary Fund ten percent of the richest global population is 117 times higher than the poorest ten percent. This is a massive increase from the percentage in 1980, when the earnings of the 10 percent of richest population was around 79 times greater than 10 percent of the poorest population.

In spite of these numbers, there is a considerable debate among economic analysts about whether the entire global disparity is increasing in the time of corporate globalization. That is because of the impact of China and India, huge nations have been developing while most of the developing economies have been dormant or decreasing financially and most of the developed economies have been growing sluggishly.

Inequality within the countries is increasing which is evident in developed nations of the United States and the European Union. Organizations like the World Trade Organization, the International Monetary Fund (IMF) and World Bank can be held responsible for such state of affairs and for laying guidelines of the global economy.

Other factors which are equally contributing are domestic power scuffle over national tax strategy, corruption, investment decisions in education and healthcare, etc.

But these forewarnings albeit, corporate globalization in many ways does produce, contribute to and strengthen increasing and constant bizarre disparities, both between and within nations.

Below is the list of factors responsible for social inequalities:

  • Financial liberalization and financial instability
  • Debt which the developing nations together owe $2.3 trillion to foreign creditors.
  • Higher interest rates
  • Trade liberalization – increasing wage disparity
  • Agricultural layoffs and agricultural business liberalization
  • Business liberalization which divides the profit between capital and labor
  • Flexibility of labor market
  • Intellectual property fortification
  • Privatization of market – transferring public wealth to private assets
  • Privatization of water and other public services
  • Uneven disease liability and economic disparity

Corporate Globalization

Last Updated on 5/18/2011