Globalisation has intensified inequality

Globalisation has intensified inequality

Globalisation has intensified inequality
Globalisation has built a set of prospects for mainly large firms around the world with
declines in tariffs or creation of free trade areas (Celik 2010). Although globalisation has
increase economic growth substantially it does however also increase the economic and social
gap within and between countries. Income inequality in particular is the effect of globalisation
through foreign direct investment. According to the World Development Indicators 2005 (World
Bank, 2005), the richest country Norway has a per capita income of $43, 400 whereas the
poorest countries Burundi and Ethiopia have a per capita income of $90. These show the huge
gap between the poorest and richest countries per capita income. These numbers raised the
question “Has globalisation led to a greater income inequality or less?”
In the article ‘Is globalisation reducing poverty and inequality’, Wade (2004) questions the
empirical basis of the neoliberal argument. The neoliberal argument says that the distribution of
income between the entire world’s people has become more equal over the past two decades and
the number of people living in extreme poverty has fallen. It states that these progressive trends
are due in large part to the rising density of economic integration between countries, which has
made for rising efficiency of resource use worldwide as countries and regions specialize in line
with their comparative advantage. This is partially true as globalisation helps improve the
integration within countries and between countries however they must be aware of the difference
in the three groups of countries (developed, developing and newly industrialising countries). In
his article, Wade (2004) argues that world inequality and poverty have been rising not falling,
due to forces unleashed by the same globalisation. He suggests that the Bank’s international
poverty line underestimates the income or expenditure. He is confident that...

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