Economic

Globalization,
Poverty, and
Inequality
“The way globalization is occurring could be
better, but the worst thing is not being part of
it.”

Economic and trade globalization is the

result of companies trying to outmaneuver
their competitors.

While you search for the cheapest place to buy

shoes, companies search for the cheapest place
to make those shoes. They find the cheapest
sources of materials and labor.

This results to the labor-intensive products like

shoes are often produced in countries with the
lowest wages and the weakest regulations.
This process creates winners and
losers.

The winners include corporations and

their stockholders who earn more profit.
And also consumers who bought
products at a cheaper price.

The losers are high wageworkers who

used to make those shoes. Their jobs
moved overseas. But what about the low
wage foreign workers? Are they winning
or losing?
A lot of workers are thrown into hazardous
working conditions but it is also true that many
workers in developing countries are at least
making more money. These jobs pay above
average wages.
People want these jobs and although the pay
would be unacceptable in developed countries,
they are often the best alternative.
Multiplier Effect
means an increase in one economic
activity can lead to an increase in
other economic activities. For
instance, investing in local
businesses will lead to more jobs
and more income.
Opponents of economic
globalization
globalization called the outsourcing of jobs as
exploitation and oppression, a form of economic
colonialism that puts profits before people. A few call
for protectionist policies like higher tariffs and
limitations on outsourcing.

Others focus on the foreign workers themselves by

demanding they receive higher wages and more
protection. The root of many arguments against
economic globalization is that companies do not have
to follow the same rules they do in developed
countries.
Some developing countries have no minimum wage laws. They do not
have regulations that provide safe working conditions or protect the
environment. Although nearly every country bans 'child labor, those
laws are not always enforced. In the absence of regulation, it is still
possible that workers would not be horribly mistreated.

First, public awareness is growing along with the pressure from the
international community to take steps to protect workers. For example,
the United States produces an annual publication called the list of
goods produced by child labor or forced labor. If a company is buying
products from that list, they are likely to be blasted by officials and the
media.

The second step comes from those that support globalization. The pro-
globalization set argues that as developing economies grow, there are
more opportunities for workers, which leads to more competition for
labor and higher wages.
Economic globalization has helped millions of
people get out of extreme poverty but the
challenge of the future is to lift up the poor while
at the same time keep the planet livable.

One of the best ways to help those in extreme

poverty is to enable them to participate in the
economy. This applies to developing countries in
the global marketplace and to individuals at the
local level.
Global Income
Inequality
Globalization and inequality are closely related. We can
see how different nations are divided between the North
and the South, developed and less developed, and the
core
and the periphery. These differences mainly reflect one
key aspect of inequality in the contemporary world—
global economic inequality.
There are two main types of economic inequality: wealth
inequality and income inequality. Wealth refers to the net
worth of a country. It takes into account all the assets of a
nation—may they be natural, physical, and human—less
the liabilities. In other words, wealth is the abundance of
resources in a specific country. This means that wealth
inequality speaks about distribution of assets.
In order to measure global economic inequality, economists
usually look at income using the Gross Domestic Product
(GDP). Income is the new earnings that are constantly being
added to the pile of a country's wealth. When we talk about
income inequality, we mean that new earnings are being
distributed; it values the flow of goods and services, not a
stock of assets (Economist, 2012).
According to the Global Wealth Report 2016 by the Credit
Suisse Research Institute, global wealth today is estimated to
be about 3.5 trillion dollars and it is not distributed equally.
Countries like the United States and Japan were able to
increase their wealth.
Due to currency depreciation, however, the United
Kingdom had a significant decline. Furthermore,
the report showed that income inequality continues
to rise: "While the bottom half collectively own
less than 1 percent of total wealth, the wealthiest
top 10 percent own 89 percent of all global assets"
(Credit Suisse Research Institute, 2016). Branko
Milanovic (204 an economist who specializes in
global inequality, explained all this by describing
an "economic. big bang" wherein the Industrial
Revolution caused the differences among
countries. Through this "explosion" of industry
and modern technology, some nations became
economically developed while others were
developing.
Ultimately, the result is the economic gap among
countries. The gap between the richest and the poorest
nations are greater today than in the past. For instance,
back in 182o, the Great Britain and The Netherlands were
only three times richer than India and China, but today the
ratio is 100:1 (Milanovic, 2011). Although it is the
Industrial Revolution that allowed a significant inequality
in the past, economic globalization and international trade
are the forces responsible in today's global income
inequality. Many economists believe that the world's
poorest people gained something from globalization. The
rich, on the other hand, earned a lot more.
"The triumph of globalization and
market capitalism has improved
living standards for billions while
concentrating billions among the
few.“

In other words, the poor are doing a

little better and the rich are
becoming richer due to global
capitalism:
Richard Freeman
Harvard Economist
Access to technology also contributed to worldwide
income inequality. It complemented skilled workers but
replaced many unskilled 02workers. In modernized
economies, jobs are more technology-based, generally
requiring new skills. This is what economists referred to
as skill-based technological change. As a result, workers
who are more educated and more skilled would thrive in
those jobs by receiving higher wages. On the other hand,
the unskilled workers will fall behind. They will be left
or overtaken by machines or more skilled workers. In
addition, manufacturing jobs that require low skills are
moved overseas. The result is a widening gap between
the rich and the poor as well as between high-skilled and
low-skilled workers.
 The Third World
and the Global South
The origin of dividing countries into the North-South
Divide arose during the Cold War of the mid-20th
century. When Western policymakers began talking about
the world as three/distinct political and economic
blocs .Western capitalist countries were labeled as the
First World. The Soviet Union and its allies were termed
the Second World. And everyone else was grouped into
Third World.
After the Cold War ended, the category of Second World
countries became null and void, but somehow the terms
First World and Third World stuck around in the public
consciousness. Third World countries, which started as
just a vague Catchall term for non-alliance countries,
came to be associated with impoverished while the First
World was associated with rich, industrialized countries.
There are more than 100 countries that fit the label of Third
World, but they have vastly different levels of economic
stability. Some are relatively poor, but many are not.
For example, Botswana and Rwanda landed into the same
category however it doesn’t make much sense because the
average income per capita in Botswana is nine times larger
than in Rwanda.
Nowadays, social scientists classified countries into groups
based on their specific levels of economic productivity. They
use the country’s Gross Domestic Product (GDP), which
measures the total output of a country, and the Gross
National Income (GM).
A new and simpler classification, North-South, was created
as Second World countries joined either the First World or
the Third World.
First World countries, such as the United States, Canada, Western Europe, and developed parts of Asia are regarded as the Global North.
While the Global South includes the Caribbean Latin America, South America, Africa, and other parts of Asia. These countries were used
to be called the Third World during the Cold War by noting that countries are south of 30° north latitude they are able to say that these
areas share common problems and issues having to do with economy and politics.
The terms “Global North" and "Global South" are a way for countries in the South to make a stand about the common issues, problems,
and even causes in order to have equality all throughout the world. These distinctions point largely to racial inequality, specifically between
the Black and the White.
The Global City
Global City is also called Power City. It is also used to
describe those booming powerhouses of cities that seem
to take over world news and the world economy, for
they are centers of innovations and businesses. A global
city, also called a power city, world city, alpha city or
world center, is a city which is a primary node in
the global economic network.
There are several ways in which a city can be considered as a global city:

Firstly, a city should have a combination of powerful, strong and unique

culture, style and history.
This is because culture is one of important businesses in a city that provides
many tourist attractions. Rome for instance, has been very powerful and influential
in the development of world culture. It is one of the richest and dynamic cities in
Europe. During the previous years, cultures in Rome have been contained within its
borders. However, as the rate of communication increases due to globalization, the
culture in Rome is now rapidly mixed on a global scale. A culture may not
necessarily mean the traditions and values in that particular city but also the art,
food and architecture.
 Secondly, a global city is a city of demographic and economic change. It contains
international organizations, different firms such as law firms, headquarters for the
multinational countries as well as stock exchanges that influences the world’s economy.
Also, in a global city, the cost of living is better than other cities and there are a number
of billionaires.
For instance New York City, it is the most populous city in the United States of
America. It is also the center of international business, a command center in the world’s
economy and also the main center for business such as legal services, world trade,
insurance, banking etc. Due to its increase in the economic growth, New York City has
become the largest city in the world in terms of economy (Sassen, 2001: p39). New York
City is considered to be a global city because it has powerful organizations that are
linked to the other parts and many of the major corporations and multinational
companies are headquartered in this city.
CHARACTERISTICS OF A GLOBAL CITY
1. Large population
2. International financial institutions, law firms, stock exchange
that have influence on the world economy.
3. Advanced communication infrastructure
4. Major international airport that provides flights to different parts
of the world
5. An advanced transportation system that offers multiple modes of
transportation
6. Cultural institutions such as museums and universities
CRITERIA OF GLOBAL CITY
1. Economy
2. Research and Development
3. Cultural interaction
4. Livability
5. Environment and Accessibility
TWENTY-ONE (21) MOST INFLUENTIAL CITY IN THE WORLD:
1. New York City - viewed as the world's most important city
2. London - remains the world's second-most-influential city and is vital for the world
economy.
3. Paris - which the Global Cities Index says is also the best city in the world for the
exchange of information.
4. Tokyo - Japan's sprawling capital, home to nearly 40 million people in its
metropolitan area, is one of the best-educated cities on the planet, with a high
proportion of people with tertiary degrees.
5. Hong Kong - Formerly controlled by Britain, Hong Kong was handed back to
China in 1997 and as such has a unique place in the world. One of Asia's biggest
financial centers, it is also a major port city.
6. Los Angeles - Home to Hollywood, Los Angeles means showbiz, with movie
studios, TV stations, and more. Its West Coast location also makes it a key hub for
trade with Asia.
7. Singapore - Singapore's container port is one of the world's largest. It is also a major
hub for the oil industry — almost half of all oil consumed in the world passes through
Singapore.
8. Chicago - Trading defines Chicago's importance as a major international city, with
two of the biggest commodity exchanges based there. Agricultural products like wheat,
corn, and pork are among the products that are traded on the city's mercantile
exchanges.
9. Beijing - The capital and political hub of the world's second-largest economy is
understandably influential. It is also home to more companies in the Global Fortune
500 than any other city.
10. Brussels - Politics and bureaucracy dominate the agenda in Belgium's capital, the
home of the European Union. 
11. Washington DC -  In addition to American institutions like the White House and
the Capitol, the city hosts international institutions including the World Bank and
International Monetary Fund.
12. Seoul, South Korea - It is also a major commerce hub and home to major brands
including Samsung.
13. Madrid - A major hub for commerce in the Spanish-speaking world, Madrid scored
highly in the business-activity category.
14. Moscow - The capital of the largest country in the world is also a major hub for
Russia's huge commodity industry. The Global Cities Index calls it the best place in the
world to visit museums.
15. Sydney - Sydney is Australia's main city for commerce and finance, and it links the
English-speaking world to Asia.
16. Berlin - best performance in the Global Cities Index is from the business-activity
sector.
17. Melbourne, Australia - was ranked as the top place for international students
18. Toronto - has the world's seventh-largest stock exchange by market capitalization.
19. Shanghai - the world's busiest container port, making it a global hub for all kinds
of trade.
20. San Francisco - Technology lives in San Francisco, which is just a stone's throw
from the headquarters of Facebook, Google, and many other tech giants.
21. Vienna - home to the headquarters of OPEC, the cartel of oil-producing nations that
has a dramatic effect on global oil prices.
Thank you for listening, God bless!