Globalization and Inequality

Globalization and Inequality


Globalization is the reason for the availability of totally new opportunities for people around the world. It has introduced the exchange of ideas and technologies to each other, which has eased the availability of resources and provided better methods to approach development. But with the advancement of globalization, the difference between the rich and the poor has been noted to increase at a significant rate. The global inequality has been noted to increase from 1820 to about 1990. The major events that affected the global inequality were World War One and World War Two, which has created a difference in the growth among countries. However, the pattern has been noticed to change, and inequality has been observed to decline globally and surprisingly rise within the countries. Let us look at how globalization is increasing inequality across the nations.

Increase in specialization and trade

specialization and trade

The growth of import and export have provided to the GDP of the nations. But it has resulted in the reduction of the prices for the domestic materials. The merchants prefer to import goods from other regions to find a better deal, which, on the other hand, reduces the economic growth for the domestic industries resulting in underemployment and decline in value. Lesser profits will lead to underdevelopment of the infrastructure of the domestic industries and unavailability of the new technologies. On the other hand, the industries exporting the materials from the other countries will have additional profits and lead to advancing their infrastructure and technologies.

Higher profits for multinational companies

The most benefiting sector in the globalization is the multinational companies which enjoys the maximum rates of profits. MNCs deploy their branches in several parts of the world and functions separately. However, all the branches are headed by one single headquarter, which generates the overall profit report. MNCs also employ the residents of their area of function. The salaries of the employees also differ based on which branch they are operating from, which is also a cause for global inequality. MNCs can easily shut down their least performing branches which leave hundreds of people unemployed.


Demand for higher skilled workers

The companies employ people based on their skill in the field. This results in increasing the salary expectations for higher skilled workers and lowering the expectation for low skilled workers, which creates a huge gap between the employees working in the same department and can be easily identified as inequality. The difference in salaries can be tremendously huge between 1-2 years of expertise in a certain department. It has also been noticed that the salary of persons working in same positions differ based on the region they work in. A person working in a metropolitan city will have more salary than a person working in a developing region for the same department in the same company.

The paradox of globalization is that if the inequality between the rich and poor reduces within the country, it increases while comparing to other countries and vice-versa.  The government work towards providing knowledge and skills to benefit from the cross land trades and investments, and aim towards making globalization a boon rather a bane that it has become today in noted ways.