Essay on To What Extent does Globalization Increase the Inequality of Income

What is Globalization?

Globalization is referred to as the process through which the companies develop international influence or begins to operate on an international level. It is worldwide movement in relation to economic, financial, trade as well as integration of communication. It is the expansion of business into the market across the world (What is Globalization?, 2015). It is demonstrated by enhancement in international investment as well as economic integration. The present essay entails to understand the extent to which globalization increase the inequality of income both within as well as between the countries. Further it also includes the reason due to which such occurs in the market.

The people across the nation have come closer than ever before. The products and services that were offered within the country were promoted to nations across the world. This was referred to as the era of globalization. Such phenomenon have influence on the economic business as well as exercise wider impact on the society. The growth in the developing nations is the major cause of globalization that has resulted in bringing opportunities as well as disadvantages for them (Too and, 2010). Globalization is the procedure and such acts as a boon in the development of the countries. With the assistance of this there has been enhancement in the industry, culture, polity as well as economy. Such results in providing solution to the problems that are related with the society. The major issue of all the governments in the world is in relation to unemployment. This causes poverty, illiteracy as well as social crime. In the developing nations the cost of labour is cheap thus the multinational firms employ the personnel in the host country (Wang and, 2010). This has been widely viewed that when the businesses cooperate with other country then they bring forward their life style, culture as well as religion. By fulfilling such the individuals in the poor nations begins to enhance their standard of living. Further they get familiar with new civilization.

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There are two sides of coin. This implies that every things has certain positive as well as negative aspects. It can be said that emergence of globalization has bought certain advantages along with disadvantages to the nation as well. The major advantage of the globalization is that it has increased free trade among the countries (Cuyvers and, 2011). Through raise in capital liquidity the investors has got opportunity to make investment in the developing countries. Thus they have got greater flexibility to carry out business in different nations across the globe. Further with the assistance of global mass media the world is tied together in an effective manner which has increased the communication flow. With this the information sharing across the globe and between the individuals has enhanced significantly. Globalization acts as a boon in speeding up and easing the transportation of goods as well as people. In addition to this it has been determined that globalization has resulted in removing the cultural barriers to a greater extend (Dickson, 2009). The is reduction in the nations that were joining together economically with politics as well as education. Further it has also eradicated the culture related barriers. Globalization has been considered as a means that spreads democratic ideals to the developed nations. Further it has offered greater independence to the developing countries. This has provided greater opportunity for the businesses in increasing their revenue to a significant level.

In contrast to the above mentioned advantages there are major drawbacks with respect to globalization that includes decrease in environmental integrity. With the globalization the polluting firms from developed nations are taking benefits of the weaker regulatory rules of the developing countries (Hartungi, 2006). Another major disadvantage of the globalization is that it leads to unemployment in the industrialized country. This is due to the reason that the factories are moving more towards the nations that have got cheap labour. In addition to this there is increasing cut throat competition among the firms with the existence of globalization. This is because it has opened the doors for international trade (Hurn, 2013). Such has greatly influenced the local market. In the present era the standard of living of the people has increased to a significant level. As a result of the this the individuals are able to pay more amount of money for the products that could be available at lesser prices. This is due to modern marketing techniques that includes advertising as well as branding. Hence the local firm suffers from huge losses due to absence of advertisements and export of the products on larger scale. Thus such results in lowering down the potential of the domestic market (Kotabe and, 2008). One of the major drawback of globalization is the increasing number of conflicts. As each of the economy wants to become market leader. The developed countries are becoming supreme power. Thus such has resulted in rising terrorism and other forms of non violence. Such not only cause loss of human life but also results in huge economic loss. Furthermore the monopoly is one of the major drawback that has been resulted from globalization. It is referred to as the situation where there is only one seller of a product. This can happen when the product is well renowned in the market. Thus with this the company exploits the customers by selling the products at high prices as they know that they are single seller in the market. As there is no single close competitor of the product thus the leader has take full benefit of this in order to increase the sales of the product. This is considered as illegal as well as unethical practice that is being practiced by the businesses (Lehner and Wurzenberger, 2013). Monopoly is regarded as disastrous situation that is increasing the gap between developed as well as developing nations.

It has critically evaluated that with the emergence of globalization the competition among the market has become aggressive. Thus the survival of the companies become more difficult in the local market. It has been said that globalization assists in transferring the goods, services as well as capital from one country to another (Bergh and Nilsson, 2010). Because of rapid flow of products across the boundaries there has been increasing inequality within the income across the regions as well as between the individuals of different countries. The new changes in the economic environment has resulted in bringing far reaching issues in the well being of the people in all the regions and specifically in all the income groups.

Globalization has brought an increased in inequality rate with respect to distribution of income. Such has took place in both developing as well as developed nations. It has been analyzed that in most of the countries the growth has slower down and there is rise in inequality. This is due to the globalization that has adverse impact on the wage distribution among the individuals who belong to different nations (Globalization and within-country income inequality, 2015). Globalization is set responsible for such ever increasing disparity in the levels of income among the people in various regions. There is positive correlation of globalization with that of inequality in incomes. Due to outsourcing of production that is being carried out by multinational corporation there has been increasing inequality among the workers that are highly skilled and those that have least qualifications (Wade, 2004). Due to uneven wealth distribution as a result of globalization it has been viewed that the rich are getting more richer and the poor are getting more poorer. Thus it can be said the globalization has not resulted in reducing the poverty of the countries. Rather than this it has resulted in accumulation of wealth as well as power majorly in the hands of developed economies. Thus the gap between the elite as well as underprivileged seems to be increasing and this leads to major cause for inequality.

There is increasing disparity with the emergence of globalization to a significant level. With the assistance of globalization there is increased way of widening the market as well as employment in the nations. But there is existence of disparity within the development of economies. The major reason for such is rise in structured unemployment. The developed nations are shifting their factories to the foreign nations. This is because with this they can gain major benefit from lower labour cost (Dreher and Gaston, 2008). Thus the host countries are able to generate less revenues as the major part of profit goes in the hand of foreign company. With this they make huge amount of profits which leads to increasing the income gap between developed as well as developing nations. With globalization the developed nations seeks for cheap labour which results in disrupting the single nations that have potential to influence other nations as well (Wan, Lu and Chen, 2007). This has been critically analyzed that globalization has assisted in increasing the employment opportunities within nation to a greater extend. As the firms are shifting towards developing nation to obtain labour force. Thus such results in generation of number of employment opportunities. The host country can have greater benefit of income generation. Along with this as the migration of the people can be done easily thus such has resulted in creating better job opportunities.

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This can be rightly said that globalization is the major cause for increasing income inequality of both within and between the countries. This can be described in relation to labour market development. Globalization has bought significant trend in the labor market. With this the developed nation has shifted their high demand towards skilled workers rather than unskilled ones. In this case skills are referred in terms of experience, classification of job as well as education. Such trend has resulted in causing drastic increase in wages. Further this has also increased income inequality between the more skilled and less skilled labor in the region or among the nations (Guscina, 2006). There is huge impact of the shift in demand on the employment rather than on income. The nations with smaller rise in wage inequality experiences higher rates of unemployment for the workers that are less skilled. There is increasing income gaps within the number of developing countries as well as advanced economies. The demand for the labour in the developing country is shifted more towards the high skill levels. Thus such has affected the growth of the economy of host country as there is increasing unemployment rate of unskilled labors. One of the major reason for income inequality is that the share of the total country's income is held by the companies from developed nation. Thus with this the developing nations have not much advantage rather they suffers from huge losses due to reduction in the sales as well as profitability of the local business with the emergence of globalization. The growth in wage inequality has resulted in causing major increase in the unemployment within the developing nations. As the firms of advanced economies searches for cheap labour this they can gain major benefit from this in order to increase their market share and growth of the business across the globe.

It can be concluded from the essay that there is increasing role of globalization in enhancing the trade between different nations. But in addition to this such has resulted in causing income inequality among the developing as well as developing nations. This affects the economy to greater extend. It has been inferred that it is essential for the businesses to reduce such disparities in the wealth distribution so that both the nation can gain equal benefits from the trade. There are several advantages as well as disadvantages of globalization that needs to be considered by the firm that are operating in international market. As it could results in its survival for longer term. It has been concluded that as the firms seeks for cheap labour in the developing nations thus by doing so they earn huge amount of profitability which results in causing income disparity within and among the nations.

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  • Dickson, T., 2009. Knowledge transfer and the globalisation of higher education. Journal of Knowledge-based Innovation in China. 1(3). pp.174-184.
  • Dreher, A. and Gaston, N., 2008. Has Globalization Increased Inequality?*.Review of International Economics. 16(3). pp.516-536.
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  • Globalization and within-country income inequality. 2015. [Online]. Available through: <>. [Accessed on 15th May 2015].
  • What is Globalization?. 2015. [Online]. Available through: <>. [Accessed on 15th May 2015].
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