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Globalization - Good or Bad?

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Globalization - Good or Bad?

Introduction

This essay essentially presents the neoliberal argument, which states that inequality and poverty has decreased because of globalization.

According to the neoliberal argument, the income distribution has become equal between the people of world over the last twenty years. Furthermore, the proportion of people that are living in extreme poverty has decreased and that too, for the first time over a period of one and a half century.

The argument ties these progressive trends to the positive effect of globalization, which had led to higher level of economic integration between countries. Globalization has helped to increase the efficient utilization of resources, as countries around the world are moving toward specializing in areas where they have comparative advantage.

According to them, countries that are rigid in terms of opening up their trades suffer. Therefore, the solution for regions that are lagging, especially Africa, is more open financial markets, and a more free domestic and international trade. This will result in a deeper level of integration with the world economy, which will enable them to benefit from globalization.

Contrary to this argument, the standard left assumption states that poverty and inequality in the world has been rising instead of falling because of globalization. For example, Jay Mazur (2000) states that Globalization has been responsible for increasing inequality between and within nations. Furthermore, the anti-globalization argument states that the powerful and rich countries have in fact little interest in increasing equality.

This paper will critically analyze the argument of globalization and whether it is contribution have been positive or negative.

Discussion

It is plausible that the proportion of population living in extreme poverty has most probably decreased over the last two decades. However, if we go beyond this, we cannot be much sure that the numbers presented by the World Bank are subject to substantial level of doubt.

Recent research has shown that the figure of 1.2 billion presented by the World Bank is questionable because of the methods employed by them for their respective calculation. The effect of this that the figure of 1.2 billion is understated and is probably biased downward.

In fact, the global inequality is widening rapidly. This can be seen if we compare the averages incomes of each country and treat each one as a single unit. Although income inequality among different countries may have become if we compare each individual country by its average income and use their population as weights. However, a major portion of this result is because of the major growth in China and India. If we exclude these two countries - the dragon and the elephant - from the calculation, we will see that the measure of inequality will exhibit no obvious trend since 1980.

With regards to income distribution, several studies suggest that the inequality of world income has risen over the last two to three decades.

Another interesting study worth mentioning relates to manufacturing pay dispersions buttresses. The study reaches the same conclusion albeit from ...