Globalization And Income Inequality

Wednesday, February 2, 2022 7:31:26 AM

Globalization And Income Inequality



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Inequality and Globalization

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Through liberalization of the financial markets in some of these countries, such economic aspects enhanced home savings and easy adoption of modern of technology from the global north to the global south Mahutga Inequality increased as it only favored the rich and the middle class in these countries. Indirect channels in this case comprised of improvements in institutional and macroeconomic policies, all brought about due to internationalization. Some of these policies included free trade; export oriented industrialization and privatization Mahutga In short, in the global south, the inequality changed in a similar way as that in the global north. Partly because liberalization opened up global markets, all the countries were affected by similar international changes in market forces.

Alderson, Arthur and Francoise Nielsen. Dicken, Peter. London, UK: Sage Publishers, Mahutga, Matthew. A network Analysis of International Trade Rueda, David and Jonas Pontusson. Need a custom Essay sample written from scratch by professional specifically for you? Globalization and Income Inequality Relationship. We use cookies to give you the best experience possible. If you continue, we will assume that you agree to our Cookies Policy. Table of Contents. Introduction Globalization and income inequality Income inequality and poverty The trends Within and between-country income inequality The trend of within-country income inequality since the s Globalization contributed to this trend The trend in global income inequality since the s Works Cited.

Learn More. We will write a custom Essay on Globalization and Income Inequality Relationship specifically for you! This essay on Globalization and Income Inequality Relationship was written and submitted by your fellow student. You are free to use it for research and reference purposes in order to write your own paper; however, you must cite it accordingly. Removal Request. If you are the copyright owner of this paper and no longer wish to have your work published on IvyPanda. Cite This paper. Select a referencing style:. Copy to Clipboard Copied! Reference IvyPanda. But this is hardly a consolation for those who are worse off.

This highlights a complex reality: There are aggregate gains from trade , but there are also real distributional concerns. Narratives that focus on winning and losing countries miss the point. Globalization impacts the standard of living of different types of workers to different degrees within countries, in all countries. The negative effects of trade on earnings tend to be concentrated in specific areas and industries. Aggregating across regions and firms gives us a different picture. Trade also affects consumer prices; not just wages. Most studies approximate the impact of trade on welfare by looking at how much wages can buy, using as reference the changing prices of a fixed basket of goods. This fails to consider welfare gains from increased product variety and obscures complicated distributional issues, such as the fact that poor and rich individuals consume different baskets so they benefit differently from changes in relative prices.

Studies measuring the distribution of welfare gains, across all the main relevant welfare channels are only beginning to emerge. Evidence from Chinese imports and their impact on factory workers in the US. Exposure to rising Chinese imports and changes in employment across local labor markets in the US — Autor, Dorn and Hanson Evidence from the expansion of trade in India and the impact on poverty reductions. Evidence from other studies. He finds railroads increased trade, and in doing so they increased real incomes and reduced income volatility.

He finds the effect was progressive: poor households gained more than middle-income households, because prior to the reform, trade protection benefitted the rich disproportionately. Distribution of total household welfare gains from the arrival of foreign retail chains in Mexico — Atkin, Faber, and Gonzalez-Navarro Two points are worth emphasising. It is expected that the indices serve as useful tools in comparing the globalization process among countries and the evaluation of the globalization effect on economic development and income inequality. This study is useful in the construction of a new multidimensional index of globalization with different and estimated weights attached to the determinant factors. Keywords: globalization, income inequality, economic growth, index.

Globalization can be defined from various aspects not only in respect to economic activities, but also to political, technological, cultural interactions and taking into account many key factors such as standardization, transportation, communication, trading, migration, etc. Through the process, economies become closer and more interrelated. As countries are speeding up their openness in recent years, there have been increasing concerns related to the globalization and its impacts on issues such as economic growth, poverty, inequality, regional differences, cultural dominance, environment, or economic integration.

Countries with large heterogeneity in the degree of globalization have shown different development patterns and results. The different degrees of development have become a source of inequality or poverty. Thus, the link between economic growth, inequality, poverty and globalization has become the focus of attention of many researchers. Despite the increasing interests in the influence of globalization on economic growth and inequality, there are not many empirical studies examining the links between them. The limited empirical evidence is a result of a lack of theoretical development, limited data and unsatisfactory measures of globalization. In recent years, several researchers have been developing methods of measurement of globalization to test the relationships mentioned.

The limited evidence also suggests contradictory views on the issue. For instance, some argue that globalization provides benefits by enhancing economic development and the reducing inequality of people with high economic opportunity, while others are against globalization due to its restricted beneficiaries. In general there is an agreement that globalization increases inequality but it reduces poverty while its regional concentration increases. Such development has been observed in India and China. Currently there is no standard rule of measure and measurement of globalization. The need for research in this area has recently attracted great attention. Several attempts have been made to quantitatively measure globalization. Different measures ranging from single measures like trade to multidimensional measures with different coverage of various aspects have been produced.

The differences are attributed to the availability of data and the technical skill of the researchers. The globalization index can indicate the level or the progress of globalization of countries which is also in turn changing over time. The globalization index can be employed to quantify its impact on the difference in development or integration of countries, and the index can be used to study the causal relationship between globalization, income inequality and poverty. In addition, the international levels of globalization can be compared over time and across regions to investigate inter-regional and intra-regional comparisons of openness. The main purpose of this study is to investigate the relationship between globalization and income inequality by developing a new globalization index based on economic growth.

Two existing indices of globalization, the Kearney and principal component analysis, are used as benchmarks to compare the results. The proposed globalization index is decomposed into four sub-components suggested by the Kearney index. The new index is estimated in different forms separated by different economic growth variables. The main feature of this model is the estimation of the globalization index and examination of its relationship with economic development, which is conducted in one single step procedure.

To examine the sensitivity of the relationship between globalization and inequality, we employed different inequality variables in the different models. All indices including the newly suggested index are compared in respect to their level and development. Various variables employed in the models provide sufficient flexibility to assess the measure and impacts of globalization. It is expected that the indices provide useful tools to compare the globalization process among countries and the evaluation of the globalization effects on the economies. This study can also be useful in the construction of a new index of globalization considering the multidimensional nature of the issue and different weights attached to the determinant factors.

The empirical analysis is based on a small panel data consisting of 61 developed and developing countries observed during the period —

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