Globalization and Inequality
Globalization and Inequality
Is there a link between globalization and global inequality? Some scholars avoid giving a definite answer to this question. As effects of globalization vary with countries’ population, geographical location, and history, “the causal link between globalization and global inequality is very difficult to make” (Milanovic 11). Many mainstream economists, however, argue that globalization is not the culprit for global wealth gap: the followings are brief summaries of three of their arguments. First, strongly supported by David Ricardo’s theory that all countries have a comparative advantage in some products, so they always better off by trading each other, mainstream economists contend that trade liberalization, one of key components of globalization, has driven economic growth of many countries. Many of developing countries that recently opened and liberalized their markets, such as China and India, enjoyed higher growth rate in the last two decades than before (Birdsall 6). Second, multinational corporations, which have been a major driving force of globalization, brought two significant benefits to the world; they created new middle classes in poor and developing countries by providing jobs in low-skilled sectors and benefited consumers by increasing domestic competition that put downward pressure on prices (Schuler 315). Finally, technological advances, especially in transportation and communication, have alleviated poverty in remote peripheral areas by more effectively connecting them to central developed cities. New technology also provides more efficient ways to use deficient natural resources in Sub-Saharan areas, contributing to resolve food problems (Rodrick 4). These three arguments, which cover key issues of globalization – trade liberalization, multinational corporations, and advance of new technologies, however, fail to illuminate how they do harm to poor, developing countries in various ways.
At the world level, it is
Is there a link between globalization and global inequality? Some scholars avoid giving a definite answer to this question. As effects of globalization vary with countries’ population, geographical location, and history, “the causal link between globalization and global inequality is very difficult to make” (Milanovic 11). Many mainstream economists, however, argue that globalization is not the culprit for global wealth gap: the followings are brief summaries of three of their arguments. First, strongly supported by David Ricardo’s theory that all countries have a comparative advantage in some products, so they always better off by trading each other, mainstream economists contend that trade liberalization, one of key components of globalization, has driven economic growth of many countries. Many of developing countries that recently opened and liberalized their markets, such as China and India, enjoyed higher growth rate in the last two decades than before (Birdsall 6). Second, multinational corporations, which have been a major driving force of globalization, brought two significant benefits to the world; they created new middle classes in poor and developing countries by providing jobs in low-skilled sectors and benefited consumers by increasing domestic competition that put downward pressure on prices (Schuler 315). Finally, technological advances, especially in transportation and communication, have alleviated poverty in remote peripheral areas by more effectively connecting them to central developed cities. New technology also provides more efficient ways to use deficient natural resources in Sub-Saharan areas, contributing to resolve food problems (Rodrick 4). These three arguments, which cover key issues of globalization – trade liberalization, multinational corporations, and advance of new technologies, however, fail to illuminate how they do harm to poor, developing countries in various ways.
At the world level, it is
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