The Theoretical Gains from Globalisation and Inequality between Countries - Essay Example

EVALUATION OF THE CONTRIBUTION OF GLOBALISATION TO INEQUALITY IN THE WORLD Introduction Globalisation is the outcome of the extensive innovation and development of the transport and communications industries in the globalisation. It refers to the enhanced integration of various economies worldwide based on communication and effective transports aspects in the society. Globalisation also refers to the effective movement of individuals from different parts of the world (Donnellan, 2002). In addition, it describes the effective relationships between various countries, which influence different aspects of the respective economies. The concept of globalisation encompasses various aspects of integration between different countries worldwide such as culture, economic and political (Ghauri and Powell, 2008). The effects of globalisation on the economies of various countries reflect on enhanced economic growth and relationship between the countries. In addition, globalisation promotes skill acquisition in different parts of the country, which enhances the production in the respective countries (Huwart, Huwart and Verdier, 2013). The concept of globalisation has been effective in the world since the development of an effective sea and air transport. Globalisation affects various aspects of the economies of different countries in the world such as poverty, infrastructure development, production and employment. The effects of globalisation on the economies help to reduce poverty and enhance equality among the world populace (Huwart, Huwart and Verdier, 2013). On the other hand, globalisation promotes inequality between various countries in the world. The concept of globalisation is a sensitive issue that has attracted the attention of scholars and researchers in different parts of the world. The paper highlights the gains of globalisation as well as its contribution to enhancing inequality globally. The research highlights economic gains of globalisation through the evaluation of the infrastructure development in various collaborating countries (Salvatore, 2011). On the other hand, essay highlights the contribution of globalisation in enhancing economic inequality among different countries based on various factors such as poverty index, the employment rate, trade, production, Gross Domestic Income and social aspects. Globalisation and Inequality The economy of the world has progressively become unequal over the previous centuries. The increase in the global economy entails various encompasses an increase in international trade, migration and advancement in technology (Ghauri and Powell, 2008). Most countries in the world aim at enhancing their economic growth through forming trade collaborations with other nations. The changes in the world’s economy create various opportunities for growth of income in different countries. However, the income growth occurs mainly in industrialised economies because of the enhanced market for their products. In addition, the developing economies experience growth in different sectors of their economy due to enhancement of trade agreements with the developed countries (Huwart, Huwart and Verdier, 2013). Globalisation enables countries to establish mutually beneficial trade investment agreement. In addition, it promotes the movement of goods across different nations worldwide, which is essential for enhancing trade and production in the concerned economies (Kayizzi-Mugerwa, 2001). Globalisation has led to an increase in the level of inequality in different economies in the world. The developing countries depend on developed nations regarding the provision of different products in the country such as automobile, electronics and aeroplanes. In addition, the developing nations have high poverty levels because of poor infrastructure and lack of innovation (Kayizzi-Mugerwa, 2001). The countries also offer poor education to their citizens, which limit acquisition of appropriate and reliable skills in the competitive world. Globalisation promotes the movement of individuals from different parts of the world. It also enhances the movement of goods between different countries, which has varied effects on the economies of the participating economies. Communication is another aspect of globalisation, which contributes to enhancing inequality in the worlds economy (Salvatore, 2011). Globalisation promotes the movement of skilled labour from developing economies to developed countries, which hinders development in the developing nations. Globalisation leads to inequalities in various aspects of the economies such education, employment, income and production. The movement of migration of individuals from developing economies to developed world promotes poverty severity in developing countries (Tonkiss, 2006). In addition, manufacturing companies from developed economies compete unfairly with the local organisations in the developing nations, which limit growth in the production manufacturing sectors. Most of the returns of multinationals promote growth in their mother countries of origin and consequently creating inequality in economic development in the world. The income of the employees in developing earns minimal wages because they obtain jobs at subordinate levels in various multinationals in the world. Employees from developing countries fail to compete effectively with highly skilled personnel from the developed economies (Sokol, 2011). This unfair competition provides employers with an appropriate avenue to exploit them regarding the level of remuneration. The low earnings promote poverty in the developing economies, which enhances economic inequalities. Good remuneration in developed economies enhances the income of various individuals, which is essential in reducing the rate of poverty in their respective countries (Kayizzi-Mugerwa, 2001). The inequality in income between industrialised and developing economies has risen tremendously due to the effects of globalisation. Researchers highlight that a major cause of income inequality is the increase in the rate of unemployment in developing economies. Globalisation also promotes inequality through increased dependency of the developing economies in the technology of advanced economies. Adoption of advanced technology in developing countries limits growth because of the scarcity of skilled labour to facilitate the technologies. Organisations operating in the developing countries tend to hire expertise from developed economies in order to enhance production using advanced technologies. Adoption of advanced technologies hinders the ability of the populace of developing to contribute in the operations of the technology because of education limitations. In this case, lack of adequate and reliable education in developing economies limits the availability of human capital, which promotes economic inequality between nations. Limitations of Economic Thriving Economic growth in different countries is essential is enhancing the welfare of the population. In addition, it promotes investment in the countries, which creates employment, and effective development in the concerned nations (Kohl, 2003). Various factors hinder countries from thriving economically (Sanidas, 2005). First, the poverty trap limits development in various aspects of the countries’ economy. In this case, lack of reliable infrastructure in different regions in the country limit the country from developing economically. Rural regions in developing economies lack appropriate facilities and infrastructures to support development such as paved roads, irrigation channels, transportation avenues and electric power. In addition, the countries experience various factors that limit personnel such as diseases, illiteracy and hunger (Kayizzi-Mugerwa, 2001). Most developing countries have limited amenities to enhance the welfare of their population, which contributes to low human capital (Eibner, 2008). For example, lack of appropriate healthcare and education facilities promotes the occurrence of infectious diseases and increased illiteracy levels effectively (Kayizzi-Mugerwa, 2001). Most of the organisations in developing countries lack adequate capital to enhance the development of various sectors of the economies. This capital limitation hinders the organisation from planning effectively for future. In addition, most of the natural resources of the developing economies limit effective development. Various economic activities in the countries entail the destruction of natural resources such as trees and soils that limits agricultural activities (Drexl, Kerber and Podszun, 2011). Secondly, the physical geography of the developing economies limits economic growth. The geographical location of a particular country hinders their economies from thriving. Landlocked economies have limited control over the import and export activities, which limits economic thriving. Additionally, arid conditions in various countries hinder agricultural activities, which limit economic thriving of the countries. Tropical health conditions such as malaria limit human personnel productivity, which hinders economic thriving (Todaro and Smith, 2006). Thirdly, the fiscal trap limits economic thriving in different countries worldwide. Corruption in various countries limits development of infrastructure, which hinders economic growth (Islam, 2003). High corruption rates in a particular economy promote tax evasion among various investors, which hinders the economies of the country from thriving (Li, 2011). In addition, the income levels of the population limit effective taxation, which hinders the revenue of the country (Drexl, Kerber and Podszun, 2011). Inadequate revenue limits developing activities, which prevents the economies from thriving (Thomson, 2011). Additionally, a high debt load of an economy limits thriving because most of the country’s revenue is utilised in payment of the debts. Combating Global Poverty The growth in the global economy has increased tremendously in the previous decades due to globalisation and advancement in technology. There are no specific approaches for combating global poverty because of the dynamics of various economies worldwide (Sachs, 2005). Eradication of global poverty entails various activities that promote equitable economic growth in different countries (McGregor, 2008). In addition, improvement of various amenities in an economy is essential in enhancing economic growth, which reduces poverty (Kohl, 2003). The first initiative for combating poverty is enhancing equitable growth in the economies of the affected nations (Ravallion, 2010). The governments of the affected nations implement various policies for enhancing development such as irrigation and industrialisation. In addition, the development of appropriate infrastructure promotes investment in the country, which is essential for the creation of employment (Drexl, Kerber and Podszun, 2011). Creation of employment opportunities is a particular country enhances the income of the population hence reducing poverty. Another concept of reducing global poverty is the promotion of education (Rodrik, 2007). Education enables various individuals in a particular country to acquire appropriate skills and enhance the level of their income. Education is essential in promoting equitable distribution of income in the world’s population and consequently minimising poverty levels (Kupfer, 2012). Factors are behind Chinas success at reducing Poverty Chinas economy has been one of the fastest growing economies in the world (Li, 2011). The government of the Republic of China has been implementing various initiatives for reduction of poverty among its population (McGregor, 2008). Various factors have contributed to a reduction of poverty in China such as improvement of infrastructure, education, improved healthcare, agricultural activities and industrialisation (GOH, LUO and ZHU, 2009). The Chinese government has reduced rural and urban poverty by combining the above factors to enhance economic growth (Xia and Yao, 2006). Characteristics of Underdevelopment Underdevelopment is characterised by various factors. First, underdevelopment encompasses an increase in the level of poverty and illiteracy levels in a particular economy (Thirlwall and Thirlwall, 2011). In addition, undeveloped economies have high corruption rates as well as unavailability of the various public amenities (Seligson and Passé-Smith, 2008). The infrastructure of most underdeveloped economies is poor which hinders industrialisations. Recommendations Economic equality is essential in promoting the welfare of the populations of different countries in the world. Various governments should establish appropriate policies for the reduction of poverty in order to promote economic growth. Equitable economic growth in different parts of the world is achievable if the relevant authorities adopt economic systems that minimise capitalism. Adoption of a non-capitalist approach in the economy helps in promoting the growth of local industries, which is essential for enhancing a balanced economic growth. The affected governments should also establish appropriate policies to promote local investments and educations in order to minimise poverty levels. For example, the developed economies should adopt appropriate economic measures that enhance develooment in the developing countries. In this case, a nation like the United States should facilitate in equipping various technical institutions in third world world economies to promote acquisition of skills. Additionally, investors from the developed countries should renumerate the local workers appropriately in order to minimise poverty. Appendix Table1: Contribution of Developed and developing economies to the world’s economic growth Source: http://www.tradersnarrative.com/emerging-markets-as-global-growth-engines-4260.html Table 2: Selected Regions and countries’ economic prospects Source: IMF World Economic Outlook database, sept 2011 References Donnellan, C. 2002. Globalisation. Cambridge: Independence. 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