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    GLOBALISATION Has Made The Planet More Equal

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    agustinmariasalazarloaiza
    Globalization has reduced inequality between developed and developing countries as trade and communication have increased. However, inequality has risen within many developing countries. The Gini index, which measures inequality, increased substantially in places like Sub-Saharan Africa and China over recent decades. While economists traditionally argued that globalization would reduce inequality through comparative advantage, evidence now shows it can increase inequality by boosting wages for skilled workers through outsourcing and technology transfer, while wages remain low for unskilled workers. Other theories suggest inequality naturally increases in early economic development before redistribution policies take effect. As a result, globalization may not promote equality within the poorest countries.

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    GLOBALISATION Has Made The Planet More Equal

    Uploaded by

    agustinmariasalazarloaiza
    22 views1 page
    Globalization has reduced inequality between developed and developing countries as trade and communication have increased. However, inequality has risen within many developing countries. The Gini index, which measures inequality, increased substantially in places like Sub-Saharan Africa and China over recent decades. While economists traditionally argued that globalization would reduce inequality through comparative advantage, evidence now shows it can increase inequality by boosting wages for skilled workers through outsourcing and technology transfer, while wages remain low for unskilled workers. Other theories suggest inequality naturally increases in early economic development before redistribution policies take effect. As a result, globalization may not promote equality within the poorest countries.

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    Globalizacion, clase de ingles texto para exposicion ingles 3 cuarto semestre

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    GLOBALISATION has made the planet more equal

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    Globalization has reduced inequality between developed and developing countries as trade and communication have increased. However, inequality has risen within many developing countries. The Gini index, which measures inequality, increased substantially in places like Sub-Saharan Africa and China over recent decades. While economists traditionally argued that globalization would reduce inequality through comparative advantage, evidence now shows it can increase inequality by boosting wages for skilled workers through outsourcing and technology transfer, while wages remain low for unskilled workers. Other theories suggest inequality naturally increases in early economic development before redistribution policies take effect. As a result, globalization may not promote equality within the poorest countries.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    22 views1 page

    GLOBALISATION Has Made The Planet More Equal

    Uploaded by

    agustinmariasalazarloaiza
    Globalization has reduced inequality between developed and developing countries as trade and communication have increased. However, inequality has risen within many developing countries. The Gini index, which measures inequality, increased substantially in places like Sub-Saharan Africa and China over recent decades. While economists traditionally argued that globalization would reduce inequality through comparative advantage, evidence now shows it can increase inequality by boosting wages for skilled workers through outsourcing and technology transfer, while wages remain low for unskilled workers. Other theories suggest inequality naturally increases in early economic development before redistribution policies take effect. As a result, globalization may not promote equality within the poorest countries.

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    GLOBALISATION has made the planet more equal.

    As communication gets cheaper and transport


    gets faster, developing countries have closed the gap with their rich-world counterparts. But
    within many developing economies, the story is less rosy: inequality has worsened. The Gini index
    is one measure of inequality, based on a score between zero and one. A Gini index of one means a
    country’s entire income goes to one person; a score of zero means the spoils are equally divided.
    Sub-Saharan Africa saw its Gini index rise by 9% between 1993 and 2008. China’s score soared by
    34% over twenty years. Only in a few places has it fallen. Does globalisation have anything to do
    with it?

    Usually, economists say no. Basic theory predicts that inequality falls when developing countries
    enter global markets. The theory of comparative advantage is found in every introductory
    textbook. It says that poor countries produce goods requiring large amounts of unskilled labour.
    Rich countries focus on things requiring skilled workers. Thailand is a big rice exporter, for
    example, while America is the world's largest exporter of financial services. As global trade
    increases, the theory says, unskilled workers in poor countries are high in demand; skilled workers
    in those same countries are less coveted. With more employers clamouring for their services,
    unskilled workers in developing countries get wage boosts, whereas their skilled counterparts
    don’t. The result is that inequality falls.

    But the high inequality seen today in poor countries is prompting new theories. One emphasises
    outsourcing—when rich countries shift parts of the production process to poor countries. Contrary
    to popular belief, multinationals in poor countries often employ skilled workers and pay high
    wages. One study showed that workers in foreign-owned and subcontracting clothing and
    footwear factories in Vietnam rank in the top 20% of the country's population by household
    expenditure. A report from the OECD found that average wages paid by foreign multinationals are
    40% higher than wages paid by local firms. What is more, those skilled workers often get to work
    with managers from rich countries, or might have to meet the deadlines of an efficient rich-world
    company. That may boost their productivity. Higher productivity means they can demand even
    higher wages. By contrast, unskilled workers, or poor ones in rural areas, tend not to have such
    opportunities. Their productivity does not rise. For these reasons globalisation can boost the
    wages of skilled workers, while crimping those of the unskilled. The result is that inequality rises.

    Other economic theories try to explain why inequality in developing countries has such heights. A
    Nobel laureate, Simon Kuznets, argued that growing inequality was inevitable in the early stages of
    development. He reckoned that those who had a little bit of money to begin with could see big
    gains from investment, and could thus benefit from growth, whereas those with nothing would
    stay rooted in poverty. Only with economic development and demands for redistribution would
    inequality fall. Indeed, recent evidence suggests that the growth in developing-country inequality
    may now have slowed, which will prompt new questions for economists. But as things stand,
    globalisation may struggle to promote equality within the world’s poorest countries.

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