Effects of Globalization and Inequalities That Have Resulted from it in Various Countries - Coursework Example

GLOBALISATION AND GLOBAL INEQUALITY Introduction Current advancements in information and technology have been the chief causes of globalisation in many economic and social human systems in the world. Business activities have adopted modern practices that enhance the flow of information and enhance efficiency in other business systems. In the same way, sufficient evidence exists about people’s increased movements and interactions with people in other parts of the world. The invention of the internet has meant that world becomes a global village, where people enjoy faster means of information transfer among others (Heijdra 2009. 17). These are just a few of the advantages that human societies and business activities enjoy from globalisation and its related activities. Globalisation is a term used to describe various macro-economic regulations and policies that influence various cross-border transactions and other systems that lead to increased interdependence in the citizens of many countries globally (McGregor 2008, 13). It is believed that globalisation activities in the world started in the 1990s. However, it is important to understand that trends in globalisation had began a few years before the 1990s (Ghauri & Powell, 2008, 54). Globalisation is said to have led to increased quality, efficiency and effectiveness in the quality of goods and services that were being produced by countries. Many companies began to improve in the supply management and distribution of goods and services, something that led to their growth and development, with expansions to other regions and countries. Globalization played a big role in economic integration, something that led to the economic growth and development in these countries. Currently, many countries are involved in various integration something that some people say has led to increased economic inequalities in different economies. This paper examines the effects of globalization and perceived inequalities that have results from it in various countries. Economic Globalisation The process of economic integration describes the rising economic integration as well as the interdependence witnesses in the national, regional and the local economies in many parts of the world. This process is often experienced in the intensification of the cross-border movements and transfers of products and services, capital and other important technologies used in economic activities. In as much as globalisation is described as a set of various processes that happen in the economic networks, cultural interchange as well as the in political circles, the rapidly growing economic globalisation often motivated by the increasing efficiencies information transfers. Additionally, advancements in science and technology also have a great share of these developments. Overall, the process of economic globalisation is primarily composed of globalisation witnessed in various fields like markets, technology, finance and production of goods and services in countries through their corporations and the entire economic environment. It is important to note that economic globalization has been fast rising since the times of the trans-national trade. Since that time, the practice has grown at a tremendous pace in the past decades especially with the involvement of the World Trade Organisation, which has helped many countries globally to reduce trade barriers. It is important to note that the recent boom that has been witnessed in economic globalisation has been responsible for the integration in many of the developing economies in the world. This has been facilitated by the increased foreign direct investment in these countries; these countries have also reduced trade barriers in their economies, opening up their economies for increased economic activities. Economic integration has enhanced movements of human capital in many countries, something that has been facilitated by the growth and expansion of multinationals and corporations across the world. Economic integration has seen most of the less-developed economies improve their infrastructure in a bid to spur equal development in most of the regions in these countries. Economic integration has been viewed as the best way by which less developed economies can increase economic activities between countries in the same regions. Free movement people and other resources characterizes many economic integration structures in developed countries, something that is deemed to be important in the growth of the economies of these countries. Globalisation and Global Inequalities It is important to note that inequalities in the world have often existed even before the period of economic globalisation. However, various studies have given evidence that this inequalities have increased significantly in the years that have come after globalisation (Bishop 2010, 34). One of the areas of concern in this analysis is financial inequality. According to economic analysis, this widening gap in many of the developed and developing economies has been fueled by the philosophies related to extension and increasing global capitalism as well as the neoliberal economic policies motivated by the West. Many of the scholars that have shown an interest in this development have often decried the economic injustices and the political spectrum in the prevailing trends as well as the apparent unwillingness and inability of powerful economies to intervene and argue on the side of the developing economies. It is said that the poor economies and those that are developing are the most hard hit with the inequalities emerging from the globalisation process in the world. The capitalist policies adopted by most of the developed nations have seen a global wealth transfer to the nations that have the resources and other systems that advance their globalisation aims. These countries often dominate in businesses because of their economic muscles and bargaining strengths in the global markets. In fact, most of the policy makers and the liberal scholars that support the various ideas as far as liberal capitalism is concerned posit that the current economic globalisation is simply a misguide affair. In the first place, policy makers and liberals in the world economics do not show any concern for the economic inequalities existing in different societies (Nel, 2003, 615). This is because; according to them, they are normal conditions of life in the society that have not just been facilitated by globalizations, but existed since time immemorial. Second, they are of the view that at one point in time, poverty levels in the country will decline. To support this view, the explain that current developments in world trade and the transitions in systems of democracy by most countries of the world will lead to liberalization of economic activities, something that will enhance economic growth and development even in the less developed economies as time progresses. However, it is important to note that the poverty levels are not reducing at the expected rate in the face of economic globalisation and related processes. Instead, the rich are continuing to be richer while the poor are continuing to be poor. In this case, the positive effects of globalisation stand to be questioned especially with the liberals and policy makers on the global economic platform. Something that is evident in the current globalisation practices in the world is that power differences are evident. Globalised and developed economies have a much bigger say on the global seen, controlling many of exploitation of key resources and market systems. On the other hand, the less developed economies have remained to backtrack and follow in the footsteps of the developed economies, which even control their level of development. The emerging inequalities in terms of power have become obvious especially about entrenchment of the old as well as the new social hierarchies. The process of globalisation can be viewed as mere form of economic project, with far reaching insinuations for the economic, ecological, political and identity of people and nations in entirety. In this case, majority of the inequalities emerging in the globalization era, and affecting institutions, sector, people, regions and countries can be seen as a special feature, having profound changes in the social, political, economic and social relations. Concepts of the Global Economic Inequalities Whenever people think about the global economic inequalities, often, the initial reaction is the thought of those inequalities within the borders of their countries. This is an important point of view, because a nation’s micro and macroeconomic policies play a significant role in determining an individual’s level of income through economic activities, education and access to a variety of benefits from government expenditure. Additionally, it is important to note that the political sphere of any country is often organized in the existing systems of governance; in this case, people have to be concerned about the prevailing social, political and economic systems present in the country. However, the face of globalisation presents a different perspective of looking at the concept of inequalities within a country (Graham 2007, 57). In this case, people are expected to go beyond their borders and have a global outlook on the concept of global economic inequalities between people and nations (Kaneff 2011, 36). It is imperative to understand that as the world continues to be highly integrated, the dimension of the global economic inequality is also likely to change. Two reasons are crucial in the understanding of this development; first, it is because of the movements of various factors of production that are happening across the borders of many countries (Konnov 2007, 62). Secondly, it is because of the influence of people’s standards of life especially those coming from other countries. The movements and transfers in technology, ideas, goods as well as capital are facilitating the connectivity in people around the world. This means that economic, political and social systems across the globe are bound to increase it terms of efficiency and effectiveness. However, the question that many people remain to ask is whether these developments will play any role in reducing the global economic inequalities (Crow & Lodha 2011, 28). In as much as globalization has continued the standards of life among people in many countries and economic activities, on a broader perspective, it is blamed for the increased economic inequality gap between the developed nation and those developing economies. Effect of countries’ GDP The first impression that the global economic inequality brings focuses on the inequality that exists between various countries in the world. This particular inequality statistic arises from the GDP taken from various countries in the globe. It is often taken from the mean incomes that are got from various household surveys in different countries, excluding the population weighting. In this case, developed and developing economies have significant differences in term of their GDP. Besides having great amounts of wealth and income per capital, developed economies have a robust of economic activities, most of which are meant for export (Dowd 2009, 29). This often improves their balance of payment accounts and terms of trade. Most of the exports from the developed economies are exported to developing countries, most of which end up having deficits in their balance of payments. This factor perhaps promises an increase in the economic gap between developed and developing economies in the face of increased globalizations activities. The Gini Coefficient of Wealth Distribution In any society, it is hard to expect that all people will be the same in term of income distribution and other social and economic factors. The Gini coefficient is one of the tools used in the measurement of how even a county’s income is distributed in the entire country or region. In calculation of the Gini coefficient, the wealth distribution in the selected population is taken into consideration. Most often people’s income in a country is taken and the information expressed in terms of cumulative percentages against cumulative shares of the income earned. In this case, the kind of curve derived is referred to as the Lorenz curve. Fig 1, Gini coefficient and the Lorenz curve (Schneider, 2004) The graph above provides a perfect illustration of the proportions of income that goes to the poor countries, middle-income and the advanced economies. In actual sense, the rich and poor people will always exist; however, the main point of concern is how even the wealth can be distributed among governments, while keeping the coefficient at their lowest levels possible. The Gini coefficient often ranges from 0 to 1 It is important to understand that the Gini coefficient is used in the representation of income distribution among people in various countries. This coefficient is the most commonly used in measuring economic inequality among countries of the world. On the Gini coefficient, a measure of zero often expresses a perfect equality; in this case, incomes of people are represented in the population are perfectly equal (Griffiths 2008, 72). This is sometimes thought of as a hypothetical case because in the current globalisation, capitalist approaches in many of the developed countries gives room for economic inequalities. On the Gini coefficient, a measure of 100% often represents and expresses maximal inequalities. A particular scenario is where one country has all the resource necessary for the growth and developed of their economies. Indeed, this is the practical case in the current world of globalization. While some countries have all the resources within their reach for growing and developing their economy, many are often lacking and have to keep depending on these developed countries for their economic growth (Moghaddam 2010, 57). The rich countries, since they have all the resources, will often prefer building some of the economic systems of these countries; they often give loans and other credit facilities for their capital growth and development. In this case, the poor countries have to remain at the mercies of these developed economies. The last probable outcome in the Gini coefficient is that which involves a value that is greater than one. This often happens in cases where some people make a negative contribution to the economy. For the case of developed economies, this is often an unlikely scenario because the existing economic structures and policies enhance sound economic policies that provide employment and business opportunities to all people. Most of the less developed economies are faced with the challenges of unemployment. In most of the underdeveloped economies, poor macroeconomic policies coupled with leadership challenges often resulted in unequal distribution of resources, something that results in unemployment and other macroeconomic challenges (Cowen & Tabarrok 2010, 42). The reduced income from the little economic activities often means that these countries have to depend on the developed countries for aid and other forms of assistance to boost their economies. This underlies the fact that global economic inequalities will most likely continued to exist in the world amidst the current developments in globalisation. Conclusion So far, strong evidence exists to show that inequality in the global economy has been rising steadily. Statistics taken from the Gini coefficient and analysis from policy makers and economic liberals indicate that these income gaps have increased significantly in the previous two or three decades. This is the time through which globalizations activities and processes have on the rise. The economic systems and macroeconomic policies in the developed and developing economies show that it will have to take time before this gap has to be filled completely (Hellier 2013, 28). The adoption of the capitalist approach to economic governance in countries has been instrumental in the development of the present global economic inequalities among the rich and poor countries, something that has been replicated among the nationals of these countries. It will have to take economic planning in order to improve the global economic situation and that within particular countries. Bibliography Bishop, J. 2010. Research on economic inequality. Emerald, Bingley, UK. 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