How might economic globalization help to reduce poverty and inequalities within and between countries - Essay Example

Indeed, it is globalization in terms of trade and the actions of multilateral organizations, which create variations among different states. Globally, there is economic disparity among different countries, which is dependent on the level of development (Bertucci and Alberti 1). In addition, each country has rules governing trade and foreign direct investments, which also differ from one country to another. Notably, the stringent nature of the rules determines the level of interaction between the country and others (Bertucci and Alberti 1).

Therefore could create room and freedom for investment, or drive the potential investors away. In essence, the restructuring the rules in favor of trade and FDI, could enable them to contribute more directly and positively to reductions in poverty and inequality worldwide. Furthermore, the rules should also favor the host country, where such trade and FDIs take place. There are significant contributions that the investments and trade have in reducing poverty and equality. For example, trade opens opportunities for prospective entrepreneurs to exploit the local resources for export (Bertucci and Alberti 2).

Through increase in exports, the country gets enough foreign exchange that could help it address its balance of payment. Considering foreign direct investments, the host country benefit from increase in job opportunities for its young graduates, taxes and duties they collect from the industries. Moreover, the country would reap from improvement in infrastructure such as road networks, communication and administration systems, among others (Wade 7). Wade also claimed that, if indeed, globalization was responsible for increasing inequality and poverty between, and within countries; it would significantly reduce global demands and subsequently economic growth (Wade 16).

The scenario would create