Effect of Globalisation on Inequalities Between Nations in Australia - Case Study Example

Does globalisation aggrevate or reduce inequalities between nations Use Australia as one of your case studies. The last few decades have seen a swift increase in international trade and capital flows between countries across the world and the term used most commonly to refer to this phenomenon is globalisation. However this is essentially an econmic defintion of the word. A more accurate and indeed wholesome picture has been presented by Hoogvelt (1997). He defines globalisation as a term for an "intensifying networks of cross border interaction in all areas of human activity: social, political, cultural, financial and economic''. This is undeniably most relevant in the current state of the world where any economic change cannot be unaccomapined by cultural and social changes in the society. Infact it would not be wrong to say that this has been the trend over the last century where subordinate or colonised society's cultures are infilterated by the dominant economic power. The Australian society stands out as one such example. In the colonisation era, the affect of european culture was consistently observed in autralia up until 1948, and this has now been replaced by a distinctive American influence (which can be attributed to the strong American Economy). However contemporary globalisation is increasingly being associated with trends of inequality and wage distribution diffrences both on an intra nation and on a wider internation scale. These structural political-economic changes are generating greater social-spatial inequalities. As Rober Wade has states; ''Global inequality is worsening rapidly.... Technological change and financial liberalization result in a disproportionately fast increase in the number of households at the extreme rich end, without shrinking the distribution at the poor end.... From 1988 to 1993, the share of the world income going to the poorest 10 percent of the world's population fell by over a quarter, whereas the share of the richest 10 percent rose by 8 percent. The richest 10 percent pulled away from the median, while the poorest 10 percent fell away from the median, falling absolutely and by a large amount.'' - Robert Wade, The London School of Economics, The Economist, 2001 Such analysis of the situation supports the existing hypothesis that globalisation is inextricably linked with inequality. A look at the percapita income bteween countries reveals that an increasing trend of unequality in recent decades. The reports of World bank confirm this trend. For instance, in 1960 the average per-capita GDP in the richest 20 countries in the world was 15 times that of the poorest 20. In 2003 this gap had become 30 times (World Bank 2003). However the question that is inadvertantly would need to be raised is whether this econmic trend reflects greater openness to trade when it has been predicted that openness fosters higher not lower incomes. A historical Perspective The increasing inequality, without doubt is one of the most challenging aspects of the current wave of globalization. None the less it it important to understand the significance of this aspect, in the context of a historical persepective of globalisation. Past several decades or infact phases of globalization have coincided with increasing inequality within countries but an inequlaity between nations was never observed. The world bank has esatblished three phases of glabalisation; the pre world war I, the post world war I and the present phase.The first two phases saw much disparity on an intra nation level but the third world did not catch up with the first world or even with the then existing second world. However increasing technology and communications which are vital part of the 3rd or presnt phase of globalisation has seen what may best be termed as a global and internation effect of trends of liberalisation. If they are far reaching, we do not know, but the nature of this exisiting association shall be discussed further on. The association between globalisation and inequality There are two dimensions to the association between gloablisationa dn inequality. At the intra country level and between countries. The evidence on intracountry or within state inequlaity is largely inconclusive and indeed increasing being thought to be not a direct consequence of globalisation (Lindert 2001). Since no evidence of a systematic link between changes in trade and alterations in inequality have been established so far in this respect, this aspect can be ignored here. In terms of inequality between countries there is much conflicting evidence present in the literature most relating to the North - South divide. (Dollar 2001). It is possble to speculate that in the North (1st worls nations) globalization may have caused a wedge between social classes, while in the South, the main divideseems to be more related to between countries: while countries like India and China benefitted considerably, several other countries like those from from Latin America and Africa suffered major set backs. It may be important to note that globalisation cannot be held responsible for the latter. civil wars, international conflicts and the plight of AIDS and other healthcare problems contributed equally to such nations. In such a case it becomes difficult to identify whether the effects observed are of globalisation as a cause or just a correlation. It is alos difficult to establish the relative contribution of all the factors. Inequality manifestations In the sociological context, inequality is defined and expressed much differently from the economist view point. Inequality in the former context can be defined by differences in health and illness, demography trends, marital trends, education, crime, income, unemployment and home ownership. As is evident it has a broader base and a wider foundation than the purely economical stance of unemployment and income. Aproper unerstanding of this difference betwwen the two view points is necessary to understand the the inequality and not merely income difference that globalisation has brought in for several sociateys acroos the world. Manifestations of globalisation were meant to be in improved quality of life and faciliated networking and accesibility to alternatives spanning seeveral regions but this was perhaps a ill concieved notion. What ever be the case, the manifestations were promising policies which not only brought no improvement for the masses, but also spiked off a decline in the living conditions as social services which were vital to the social fabric of the society with such facilities becoming privatized and expensive. The large scale water privatizations in Bolivia, and Trinidad and the electricity privatization in Argentina and Chad are example of some such instances. Furthermore for many African citizens lack of incomes bleak prospects on job front led to despondency and wide scale emigration undoubtedly a product globalization and well identified by Friedrich Hayek. The educated (upper class) masses of the Northern blocks and the industrial sector with considerable financial "interests," were for purely economic reasons in favor of greater Third World migration since, either as investors abroad or consumers of cheap labor services at home, they served to profit from the low-cost labor. However for the middle class of even these nations this had severe socio econmic implications. The ultimate manifestaion of globalisation for those placed between the global top and the global bottom,i.e the lower and middle classes in the West, and those in the "failed" states, were a loss of their national sovereignty and personal income. Western economist and anthropologist alike termed the obvious worsening of economic and social conditions an international integration. However undoubtedly not the entire global community of the global society agreed with this outlook! Trends in Australia Australia has established a responsible ad economically sound macroeconomic policy framework in terms of benefits to low inflation, low interest rates and high investment and has the ongoing structural reforms in this respect. For australia the 1990s infact saw a very powerful economic growth by international standards. However there is now quite extensive evidence of growing inequality of earnings in Australia as in several othe OECD countries. The reasons for this are to be determined but there are speculations of the rapid increase in international trade being percieved as the cause of this rising inequality. The initial underlying concept of globalisation for the develped world was that open trade would create wealth and improved socio economic front based on comparative advantage of the global market. Australia has indeed been taking advantage of its greater openness by makin tax reforms and and lowering trade barrieres. There is evidence to support the hypothesis that the current changes in income distribution patterns in Autralia are a result of technological and productivity changes that have shaped sturdy growth in the service of high wage workers, in addition to part-time and casual employment. That is to say relative change in wages as a result of globalisation and cheap labour forces could not be held accountable for the trend as it may be. It has been observed that the earnings of high-skill and low-skill employees have increased by approximately same amounts between the mid-1980s and the late 1990s, and the widening of the earnings distribution owed most to swift growth in the numbers of those earning higher wage rates, as opposed to a rather disproportionate increase in those wage rates. At the within country leval it is possible to state that Australia has not been aversely affected by globalisation. This does not detract from the fact that the nation has seen a decrease in uniform wealth distribution but not statistical significance between the pattern of globalisation and the increasing in equality can be irrefutably claimed. Conclusion Trends in inequality between the per capita GDPs of countries are of paramount significance in understnading the changing global living standards. They are also useful in examining the potential causes underlying the income divide across nations in addition to inequality within each country. However to associate globalization with unfair social outcomes and consequently oppose it, is not the answer to the problem facing us. The issue of inequality needs to be further studied and very carefully addressed; this would be a need for globalization to be politically sustainable. The sutainabilty of this phenonmenon also cannot be undermined. It is, to a huge extent a need of the present day socio-ecomomic systems. Sociologists and an increasing numebr of economists are struggling to understand the coalition of ethnicity, gender and social status in their explanations of social inequalities. Globalisation and increased networking around and across the world undoutedly has a role in bringing together these different dimensions of the social framework of the society. It may even have a role in creating the considerable inequalities or at least in bringning them to the forefront, as obviously uniting the world would do. However whether this is merely a result of presenting the already existing differences i.e inequalities or infact creating and increasing differences has yet to be ascertained and calls for further work to understand and reach conclusive allegations if they must be made. Sources David Dollar and Aart Kraay, Trade, Growth and Poverty, World Bank Policy Research Working Paper No 2199, 2001. Hoogvelt, A. "Globalisation, Exclusion and the Politics of Resistance", Paper presented at the Convergence and Diversity Conference, Victoria University of Wellington, March 1-2, 1997. Pakulski, J (2004) Globalising Inequalities: New patterns of social privilege and disadvantages, allen & Unwin, NSW. Peter Dawkins, The Australian Labour Market in the 1990s, in The Australian Economy in the 1990s, Reserve Bank of Australia annual conference, July 2000, pp 316 . 352, especially pp 335 - 339. PH Lindert, JG Williamson - 2001 Does Globalization Make the World More Unequal - NBER Working Paper No. 8228 Van Krieken, R. et al (2006) Sociology: Themes and Perspectives 3rd ed. Longman Pearson. NSW World Bank. (2003). Global Economic Prospects 2004: Realizing the Development Promise of the Doha agenda Read More