As other. Inequality across the world developed with

Topic: EconomicsEconomic Problems
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Last updated: September 11, 2019

As described by Jan De Vries globalizationcan be distinguished between ”soft” and ”hard” globalization. Soft globalization – It startedduring the times of 1571 via manila where “silver” trade was conducted betweenColumbian & Magellan. Hard globalization – It is de?ned by O’Rourke and Williamson as ”integration ofmarkets across space from the 18th century onwards. The,globalization which was started in the West in 1st half of 18thcentury, when markets in Europe, within Europe & the U.S.A.

, started tointegrate with each other.Inequality across the world developedwith rise of Industrial Revolution, in 19th century starting, whichhelped few countries to grow exponentially.  This revolution helped them to maintain thefront row till the time of globalization took off.  Due to globalizationsome emerging nations turned as global engines of growth.

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  The economic inequalityacross countries declined since mid-1990’s.  Components of GlobalizationThecomponents of globalization include GDP, Human Development Index and Industrialization.The GDP measures market value of all finished goods and services producedwithin a country’s boundary within a given year, which helps to calculateoverall economic output. The Human Development Index has 3 components: Country’spopulation’s life expectancy, Literacy rate & Income, Education & Knowledge.Industrialization helps to drive technological innovation, economic development& social change The Economic Impact on Developed Nations Dueto Globalization1)     Risk reduction through diversification can be achieved easily  2)     Companies can deal with international financial institutions forbetter support  3)     Increase partnership with local and MNC’s. 4)     Advanced technology/techniques can be used for production at the international,national and sub-national levels.  5)     World’s different financial markets can integrate in a more better& efficient way  6)     Evolved production methods will change the working process, laborconditions etc.

 7)     New technology can be accessed and can be utilized in business processes 8)     Improves specialization, economic integration & economies ofscale    9)     Help to tap new & wide range of distribution channels   10)   Entry for new business organizations is providedeasily, which will increase the FDI in that country.  Globalization Played Againstthe WestThe world we live in has beencontinuously evolving since many ages and this led to inequality amongdifferent nations. The income gap between a citizen of India or an Africannation compared to Western countries upper class society is very high. When Europeans first opened to globaleconomy for countries like Asia, Latin America & East Europe, they did notexpect that globalization, will make things or services so cheap, turn up thestandard of living of the people and increase innovation & technology.  It did not anticipate the huge migration ofpeople between nations.  But the real fact is that, thebiggest losers of the globalization process are the “global upper middle class”,who lie in the 75th to 90th percentile ofincome distribution they are usually the poorer section of the population inWestern countries. These groups have not seen rise in their income levels forthe last 2 decades and their income stood stagnant, while others got increased Western nations competitive edgeindustries like hi-tech firms, aerospace corporations, pharmaceuticals are now facingtough competition from industries of emerging countries and these companies areeating up the share of previously well-established companies.

The privatecompanies in Europe are not able to offer any employment benefits to their employeesafter retirement and the government run corporations might stop giving thebenefits to the employees in few years because of their collapsing economies. American situation is no way betterthan european nations and their real disposable incomes are fixed for 14-years.Industries like textiles, shoe-making, machine tools etc. have vanished overthe years in these nations. There was a new middle / upper middleclass has emerged in Asia, middle classes in the Western nations have not seenany development. This leads us to the risk of western governments to halt ortighten the globalization process through trade barriers & strict immigrationpolicies.

This stagnant situation of middle-class in West may last long toanother 5 decades or more.According to me there are 2 maingroup which hugely benefit from globalization i.e., “top 1%” & “emergingmiddle class” in countries like India, China etc.

 We have to look that theincome of “emerging middle class” has risen more fastly than “top 1%” section. The”below poverty line” segment has also risen significantly in these countries.It also suggests that continuedpolicy action is needed to ensure that prosperity can be truly shared by all,that the gains of globalization are not captured by a “happy few”, but on thecontrary that all can take advantage of the opportunities offered by theglobalization process, including those who earn the least. At present 9/10 peoplearound the global, who benefited from globalization, are of “Asia.”People from rural China, around 150million has seen rise in their incomes at a rate of 2.5; urban & ruralpeople of Indonesia (40 million) had real incomes increased 2 times. urban peoplein India, 35 million had 50 % increase. The 3 big nations: The U.

S.A Japan . The U.S.

A have experienced growth of less than 1% annually. In case ofGermany, it was 4% and Japan showed “negative” growth over the past decade.Sure enough, the world as a whole is getting a wholelot richer. In the past decade alone, the global economy has doubled in size. Thefree market system has become distorted to the point of virtual collapse.

There’sa simple, if challenging answer: by returning to the way we were and doing morethings locally. And that starts with washing our own sprouts for the Christmasdinner table.But most of the benefits of this explosion in activityhave gone to the developing world and, in the West, the already rich, highlyeducated and talented. The wealth divide has widened to record levels almosteverywhere. Temporary trade imbalances are another big concern for the westnations.

There is conflict between interests of political leaders and citizensof the west, to say that if the process of globalization is not stopped at theright time, their economies will completely collapse and major part of thepeople will lose their livelihood.  It is a known fact that one’s incomedepends on where one lives. In today’s world the role of social class is notgreater than when compared to place of residence. The message is clear eitherone should develop their own country economy or should settle in a growing /richer country. 

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