Globalization and Inequality - Essay Example

GLOBALIZATION AND INEQUALITY Introduction The paper will seek to determine whether the increased social and economic inequalities can be attributed to globalization. While globalization has enhanced economic development in many counties, inequality remains a major social phenomenon. The paper will seek to address these inequalities and indicate whether they are caused by globalization. The position of the paper is that despite the discontents of globalization such as unfavourable competition between the local and international firms, there is no direct link with inequality. Statistics from the International Monetary Fund (IMF) indicates that through globalization, GDP of many countries has been on the increase. Globalization has also led to development of democracies, enlargement of markets and infrastructural development. Hence, other factors such as unequal distribution of globalization benefits, corruption, and poor leadership could be blamed for the current social and economic inequality. Globalization and social inequality Social inequality has become a major global phenomenon. There is a huge gap between the rich and poor, including between the developed and developing countries (Ravenhill, 2014). While there are a number of factors contributing to social economic and social inequality, globalization has been cited as the major contributor. This is contrary to the strongly held beliefs that globalization brings economic opportunity and assists in improving the living standards of the people. However, according to the statistics by the International Monetary Fund, globalization has addressed the challenge of poverty and assisted in creating more employment opportunities. For instance, a study by the IMF in 2001 indicated that countries, which had embraced globalization, had their real GDPs increase by about 5% (Dollar, 2001). On the contrary, the non-globalizers did not experience any significant growth in their GDP. In addition to this, it is indicated that poor countries have been growing by more than 5.4% annually (Dollar, 2001). This growth has been attributed to globalization. However, despite the economic growth of many countries, such as China and India, the number of poor remains high. This raises the question of whether globalization is actually leading to more inequality. To answer this question, the following discussion will focus on social and economic effects of globalization. Globalization and improved standards of living Globalization has brought about economic and political integration (OBrien, R. & Mark, 2013). As a result, there is interdependency between governments in an aim to alleviate different social challenges. The main beneficiaries of globalization have been the developing nations. Most of these countries have been able to access loans and grants from the development partners. Access to funding has enables many countries invest in major infrastructures such as transport and communication. Statistics have indicated that through the external financial assistance, most countries have been able to create more employment opportunities, hence assisting in poverty eradiation (Gills, 2007). Investments in the energy sector and agriculture sector have assisted in bringing down the cost of living. In the developing countries of Africa, for instance, Kenya is leading in the production of geothermal source of energy. As a result, this is creating a cheaper form of energy, which has assisted in lowering the cost of production in industries. Such development are supported by developing partners, such as the European Union, African developing bank, IMF and the World bank, in the spirit of globalization. However, despite the benefits that most of the countries have gained through globalization, socio-economic inequality remains. For instance, despite being one of the richest countries in Africa, about 50% of Nigerians are below the poverty line. The situation is similar in Bangladesh, China and India, where despite the positive economic developments in these countries, many people are still poor. However, one of the questions is whether indeed globalization is still to blame for this kind of social and economic inequality. Globalization and poverty reduction As indicated before, statistics from the IMF indicate an increase in the Real GDP of many developing countries because of globalization. It has also been noted that the number of those living below a dollar a day has decreased in many countries such as China. In this country, there was a reduction of about 20% of the population living below the poverty line. This has been attributed to globalization force, which has created more employment opportunities. For instance, China hosts the largest multinational companies, such as Apple Inc. due to the cheap and sufficient labour. It is argued that globalization has indeed led to the reduction of absolute poverty in many countries. The proponents of globalization argue that relative poverty still remains, but this can be address by the equitable distribution of resources. Globalization and immigration According to a report by the International Labour Organization (2010), it was estimated that close to 210 million people were living in foreign countries. The report attributed this huge rate of immigration to globalization that has made it possible for people to move from one country to another. Most of the immigrants are either seeking employment or in pursuit of education. Millions of immigrants have been able to send financial assistance to their families, while still investing in their countries. This has assisted in the alleviation of poverty, and fostering economic development. This is an indication that globalization has had a positive effect in improving the stand of living of millions of people globally. Market liberalisation Market liberalization is one of the main characteristics of globalization. The term refers to the idea of free markets, with no government interference (el-Ojeili, C, & Hayden, 2006). This means that the forces of demand and supply determine the price of goods and services. The free markets have attracted the entry of multinationals such as Coca Cola, Samsung and Microsoft. The spirit of free market has enhanced the expansion of multinational companies in developing countries. One of the major factors that have made the foreign corporations thrive is the existence of equal competition. The free market ensures that governments restrict incentives to local firms to ensure that they do not gain a competitive edge over the international companies. As a result, international business has grown, hence creating more opportunity. However, market liberalization has been blame for perpetuating economic exploitation of the citizens. This has been attributed to the presence of unscrupulous businesspersons who sell goods at prices above the market value (Held, 2004). On the contrary, though, market liberalization benefits people in a number of ways. Firstly, the prices of commodities keep on fluctuating depending on supply and demand. This means that when there is overproduction of a given commodity, the beneficiaries are the consumers since the price will plummet. This is unlike in a situation where governments introduce price ceilings. Secondly, the free markets have allowed the entry cheaper and more superior products. Goods from countries such as China are normally cheaper since such countries enjoy low cost of production. As a result, even the poorest people can afford to purchase important commodities such as clothes. With competition from the international corporations, local industries are able to improve the quality of their goods and embrace technology. Democracy and upholding human rights Globalization has been a huge force towards the promotion of democracy and respect to human rights. The promotion of democracy ensures that there is rule of law, and that government create a favorable working condition for international business. Transparency and accountability are some of the major developments in democracy. According to the liberalism ideology, there is a need to ensure that freedoms and rights of the people are protected. The government should ensure that people could choose the kind of leaders they want and become autonomous. The market globalization has enhanced the international trade, which on the other hand have led to creation of more employment opportunities. The multinational companies employ thousands of local people, hence assisting in addressing the challenge of unemployment, which has become a global issue. As a result, globalization has created more opportunities, which have assisted in improving the living standards of the people. From the above analysis of globalization, it is apparent that it has had major positive effects that have assisted in the creation of wealth. This has in turn helped in improving the living standards of people. However, globalization has also been accused of perpetuating social and economic inequality. Whether the current state of social inequality can be attributed to globalization will be known by focusing on the following discontents of globalization: Decreased employment While it is undisputable that globalization has led to more employment, it has been accused of leading loss of unskilled and semi-skilled labour. This has been attributed to on-going automation, and other technological developments that have emerged due to the spirit of globalization. For instance, the agricultural sector, which used to create employment to unskilled labour, has not been taken over by mechanization. This has led to loss of jobs, and subsequently leading to more social problems. Globalization seeks to increase efficiency and effectiveness in the world of business, hence the need for automation. It is argued that there is employment inequality between the skilled and the semi-skilled globally. In the United States, for instance, the number of poor increased from 46.2 million in 2011 to 46.5 in 2012. This was despite the economic recovery that the country had made, and ensuring that the unemployment rate was below 8%. At the same period, close to 16 million children were also living in poverty. In 2013, about it was estimated that close to 49 million Americans were experiencing food insecurity. This was despite the investments made to address the situation. However, the economic inequality in the United States is more among the African Americans, Hispanics and Latinos. The decreased employment opportunities have also been attributed f to the fact that globalization has affected the growth and development of local industries. As indicated before, the entry of the foreign companies and goods puts more pressure on industries. Countries such as China enjoy low cost of production due to cheap labour. This means that Chinese goods have a competitive advantage to those from countries where the cost of production is high. As a result, it has been difficult for the local products to compete favourably with goods from such countries. Many local companies have either closed down, or had to downsize in order to remain in business. This means that many local people working in such firms have lost employment. To a certain extent, this scenario may explain why, despite the gains of globalization, social and economic inequality remains. Widening disparity in income There is a great disparity between the income gained by the developing world, and that of the developed nations. Despite the increased international trade, the main beneficiaries have been the developed nations. They import raw materials from the developing nations, add value to them, and sell the finished products at a higher price. The developing nations import more than they export. The opposite is true for most developed nations. The developed nations have taken advantage of superior technology and low cost of production. The income disparities between the developing and developed countries may explain the increase economic and social inequalities existing. Critical analysis of globalization and its socioeconomic effects The above analysis of globalization focused on the advantages and disadvantages of globalization. One clear issue is that globalization has led to many socioeconomic benefits. While the disadvantages of globalization are also real, there is no clear link between them and the economic inequalities. From the above discussion, there are facts that indicate that the current level of inequality cannot be attributed to globalization. In summary, it is indisputable that globalization has led to creation of more wealth. As mentioned, globalization has led to growth of real GDP of many countries. For this reason, globalization has been able to fulfil its obligation of fostering economic development. Almost all the globalized nations, especially in the developing nations have experienced an average growth of 5% annually. The globalization has also created a wider market for goods and services, hence generating more income from trade. Through immigration, millions of people have been employed, hence being able to support their families and to invest. Finally, most countries have been able to gain from infrastructural development. Having focused on these issues, it is clear that globalization did not intend to create social inequality. There are other forces, which can be blamed for creation of inequality. 1. Unequal distribution of resources Poverty and other forms of economic inequality has been attributed to unequal distribution of resources in many countries (Stiglitz, 2002). While globalization has led to creation of more wealth, as indicated from the IMF reports, it has not been distributed equitably for all to benefit (Dollar, 2001). In the United States, for instance, there is income disparity between the white majority and other races. Further, the white population is more favoured in terms of access to employment opportunities, and promotion to higher position. Economic gender inequality in many countries remains a major challenge. Despite having similar academic qualification, skills and experiences, women are more likely to receive lower salaries. As mentioned before, a country like Nigeria is one of the richest in Africa. However, it has the largest number of poor people in Africa. This is attributable to inequitable distribution of wealth, hence the imbalanced regional development. The situation is also similar in the United States, where millions of children and adults suffer food insecurity, despite the amount of wealth in the country. The wide gap between the rich and the poor has also been blamed on lack of government intervention to ensure that wealth is equitably distributed. 2. Corruption According to the statistics by the Transparency International (2014), corruption has been one of the main challenges in many developing countries. There is still a lack of transparency and accountability despite the effort taken to promote democracy. The report noted that despite the increased wealth in many countries, corruption, embezzlement and misappropriation of funds have led to the socioeconomic inequality. While globalization has fostered economic development, the gains go to the pockets of few. For instance, many developing countries have been accused of misusing funds that were meant for economic development. With this kind of environment, it has been impossible for a number of countries to address the challenge of unemployment, high cost of energy and food insecurity. Some countries have underdeveloped infrastructures making them less attractive to investors. Nepotism and ethnicity has also been main factors contributing to social and economic inequality in many countries. it will therefore, be unfair to blame globalization for inequality, when governments are not able to tame corruption, and ensure that the national wealth is directed in the right channels to improve people’s living standards. 3. Under exploitation of resources and insecurity While many developing nations are well endowed with precious minerals and oil, this remains unexploited. The lack of exploitation has been blamed on politics, and conflicts between the community members. The cost of exploration and exploitation of natural resources remains high, making it difficult for many poor countries to afford. Some of these countries also lack the expertise, skills and experience to manage resources. Many countries with minerals and oil are in conflicts. This includes countries such as Libya, central Africa region, Iraq, Nigeria and Iraq. The level of insecurity fails to attract local and foreign investors, hence affecting local economies. While globalization opens more opportunities, such as the promotion of tourism, the current terror attacks remain a major threat. Many countries, such as Kenya, which relies more on tourism to support its economy suffered huge losses, due to sporadic terrorism attack in 2014. Many more countries have been unable to benefit from globalization due to terror attacks. 4. Poor leadership Poor leadership has been a major cause of social problems in many developing countries. The elected leaders lack the will to tackle the major economic challenges affecting society members. Most of the leadership are egocentric, hence only focus on pursuing their selfish interest. Effective leaders ensure that economic gains can be distributed equitably. For instance, they make education affordable, eliminate gender inequality, tackle corruption and address other forms of economic inequalities. Further, many leaders have been unable to foster transparency and accountability in institutions, which would assist in monitoring government activities. With the opaqueness in many government institutions, it has become impossible to avoid misappropriation of funds and embezzlement. Recommendations and conclusion Globalization has created more opportunities that are meant to improve the living standards of citizens. Many statistics have indicated that indeed, globalization has led to creation of wealth, and economic development of many countries. Globalization provides a large market where countries can sell their goods and services. It has fostered democracy and automation of services in many countries, hence leading to efficiency and effectiveness of service delivery. From the analysis of globalization, it is clear that it has no direct cause of inequality. The current social and economic inequality cannot be attributed squarely on globalization, but other factors. These include mismanagement of accumulated resources. Lack of equitable distribution of resources, corruption, poor governance and under-exploitation of resources are some of the causes of social inequality. While globalization has various advantages, it also has some major disadvantages. These include negative effect of local industries, decreased employment of unskilled labour, and unbalanced trade between countries. However, these disadvantages do not explain the social and economic inequalities. To ensure that countries benefit from the benefits of globalization, the following recommendations will be imperative: Firstly, governments ought to promote effective leadership that is aimed at fostering economic development. The governments should eliminate seek to eliminate corruption, nepotism and ethnicity. This will ensure that governments provide equal opportunities to all. Secondly, the globalization gains ought to be distributed equitably to citizens. The government should also ensure that growth and development is enhanced in all regions. Thirdly, countries should be able to exploit their natural resources and use the proceeds in the elimination of social and economic inequalities. Fourthly, governments need to work together to address the challenges of globalizations. The local industries should be protected from unfavourable competition in order to create more employment, and foster economic development. Further, despite the increased automation in many economic sectors, it is imperative to ensure that the semi-skilled and unskilled labourers are given an opportunity to work. 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