Has Globalization Increased Inequality - Literature review Example

Globalisation & Inequality of Income both Within and Between Countries Number Department Introduction There are many thoughts on globalisation, with some arguing in its favour, while others gainsay it. Those who gainsay globalisation, argue, not to the effect that it does not exist, but on the account that its advent and facets have only perpetuated inequality of income both within and between countries. In itself, globalisation can be qualified as the decoupling of space and time through the provisions of information and technology [IT], so that there is less emphases on the importance of geopolitical boundaries. Faster travel, instant communication and faster transportation of goods and services. The drivers of communication have mainly been technological advancements in the field of IT, diplomacy, the establishment of international organisations and multinationals and world economic treaties. Even though there are some who may take the persuasion in favour globalisation, fact remains that globalisation has largely entrenched inequality of income both within and among countries, as shall be seen in the discussion which ensues forthwith. In the first instance, it is important to acknowledge the fact that globalisation easily mingles with and depends on neo-liberalism. For this purpose, it is always pointed out that there should be modalities placed on world trade to create a level playing field among all states or countries which are participating in international trade. In this light, World Trade Organisation has always prevailed upon participants to abolish the exacting of trade tariffs and the issuance of trade and farming incentives such as subsidies, aids and grants. Instead, governments should open their markets and allow a laissez fare to sustain market competition among all the participating countries. Nevertheless, even this strategy has only entrenched inequality since this arrangement works on the presumption that all states are economically at par, which is not factual. On the contrary, less developed countries [LDCs] because of their fledgeling nature, depend on the tariffs they exact on imports, as a source of revenue, while developed economies such as Britain, Germany, the US and Canada are full-fledged enough to forgo the gains which would be accrued from tariffs. Because of this, LDCs get too shortchanged to gain from international trade, while developed countries continue to thrive in international trade. This development fosters and further entrenches economic inequality among LDCs and developed economies. In a closely related wavelength, it is important to take to stock, the fact that unlike the situation in developed economies, farmers in LDCs are poor and therefore, mainly operate small-scale farming. Because of this, farmers in LDCs are not economically endowed to do without government grants, loans and subsidies. The corollary to this is that such farmers cannot also carry out independent agricultural research undertakings, cross-breeding and artificial insemination, as opposed to their counterparts in developed countries who are able to carry out all these exploits, and to access and afford disease-and-drought-resistant seeds. The same inequality above is replicated in the field of technology, as far as agricultural exploits are concerned. Farmers in developed countries are able to use and readily access reliable sources of information such as the World Wide Web, agricultural, marketing and agronomical journals, mainly by the virtue of the Internet. In like manner, Ezcurra and Rodriguez-Pose (2013, 92) point out that farmers in developed countries benefit from an advanced IT superiority and a more liberalised media. The liberalised media is a readily manifest reality in developed countries than in LDCs because developed countries are majorly mature democracies. Mature or stable democracies such as the UK, the US, Canada, Netherlands, Germany and Italy have liberalised their media so that information is not controlled by the government, but by media empires and moguls. This state of affairs has enabled both farmers and traders in developed countries to make strategic decisions and penetrate the local and international markets. On the contrary, farmers and traders in LDCs operate in economies where information is very scanty. All these aspects of inequality in agricultural and trading activities between farmers and traders in LDCs and their counterparts in the developed world hurt LDCs’ economy to a very great extent since most of the LDCs practice agriculture as their economic mainstay. According to Gaston and Dreher (2008, 532- 533), the inequality of income among different states would be underscored by the fact that LDCs depended on agriculture as their economic mainstay. This meant that LDCs’ could neither generate its income adequately, nor sustain its civil service. It is for these reasons above that led to riots in Cancun Mexico, in 2003. The riots had been staged in response to World Trade Organisation [WTO] meeting, where farmers and leaders of LDCs sought to make their plight clear. The protests were informed by this unequal agronomic relationship between the developed countries, and the LDCs. In almost the same vein, Weede (2008, 415) observes that it is important to note that globalisation fosters the liberalisation of the market. The liberalisation of the market demands that governments desist from controlling the market so that the market is controlled by the market forces of demand and supply, instead. In this light, there is a need to have modalities which allow for freer and faster flow of goods and services across the borders. The same also means that there has to be an abandonment of tariffs on imports. The crux of the matter herein is that with this arrangement, an unequal form of exchange ensued between the LDCs and developed economies. This is because, unlike developed countries, LDCs still have fledgeling industries. Conversely, Krugman (2005, 880) rightly observes that developed economies are graced with full-fledged industries and industrial bases because developed countries are mostly European which had gained from industrial revolution between 1820 and 1840. Because of this, developed countries are able to produce more aesthetic, stronger, more durable and higher quality products, while LDC industries could only produce low quality, less aesthetic and less durable products. In a similar wavelength, industries in the developed world could produce surplus products because of technological advancement, research, abundance of information, and a stronger pool of capital. This enabled the developed countries to infiltrate LDC markets with their surplus products, and at a far much cheaper rate. Moreover, LDCs got filled LDC markets with reconditioned or secondhand goods such as clothes. Consequently, the demand for LDCs’ industrial products waned and gave way for cheaper, more beautiful and more superior secondhand products from developed countries. According to Lee (2007, 513, 514), the culmination of the foregoing would be a significantly shrinking local market for LDC industries, lower volume of sales, subsequent downward adjustments of salaries and wages on workers in the LDC industries and finally, spates of downsizing exercises in LDC industries. The fact that the industries in LDCs are still in the hand of the government, the retrenchment exercise also suffused into the public sectors of the LDCs. The industrial bases also fell in LDCs, and gave way for cheaper and more durable products from Europe and the United States. In a different wavelength, globalisation has also been underpinned by other economic and political drivers which have been enshrined in international organisations such as the two Breton Woods institutions, the World Bank and the International Monetary Fund [IMF]. The IMF and the World Bank have not only been the main proponents and overseers of the aforementioned policies above, but also served as the conduits through which the economic inequality and disparity in income among different countries have been ratified. It is the IMF and the World Bank which compelled LDCs to implement these policies and to carry out a calculated retrenchment exercises as a way of adjusting to the setbacks brought about by the aforementioned policies. It is also important to note that the inequality in income which is perpetuated by globalisation also has its underpinning in inequality in industrial development and technological advancement. Mills (2009, 7) observes that on one hand, all countries which are less developed or are still developing do not have industrial or technological development, despite being endowed with an immense pool of natural resources such as rubber [or latex] tea, coffee, oil, diamond, gold among others. On the other hand, developed countries have industrial and technological advancement, so that the LDCs have to depend on their developed counterparts to have their raw materials processed into finished products. This makes the developed world have the monopoly to set the prices at which raw materials are bought and the rate at which they are sold back to the developing countries. As an example, Britain receives and processes the largest amount of the world’s coffee and tea. After these raw materials have been processed into finished products, developed countries which processed them sell them to the world market at more exorbitant rates. Similarly, because of the lower GDP which characterises the LDCs, most developing countries can only afford second rate finished products from the West. The corollary to this is that in nearly all forms of international trade, developed countries benefit economically, at the expense of their developing counterparts. References Ezcurra, R. & Rodriguez-Pose, A. 2013. “Does Economic Globalisation Affect Regional Inequality? A Cross-Country Analysis.” World Development, 52 (4), p. 92. Gaston, N. & Dreher, A. 2008. “Has Globalisation Increased Inequality? Review of international Economics.” Review of International Economics, 16 (3), pp. 516 – 536. Krugman, P. R. 2005. “Globalisation and Inequality of Nations.” The Quarterly Journal of Economics, 160 (8), pp. 857 – 880. Lee, M. P. 2007. “Contemporary Economic Sociology: Globalisation, Production and Inequality.” The British Journal of Sociology, 58 (3), pp. 513 – 514. Mills, M. 2009. “Globalisation and Inequality.” European Sociological Review, 25 (1), pp. 1 – 8. Weede, E. 2008. “Globalisation and Inequality.” Comparative Sociology, 7 (4), p. 415. Read More