Vous êtes sur la page 1sur 14

GLOBALIZATION’S SHADOWS AND IT

EFFECT ON INEQUALITY
I. The shadows of globalization

A. Globalization and its effects

"I know that globalization has also created many negative effects, but I believe it's always
better to look to the future with optimism and hope. Tomorrow, hopefully, we will be able
to minimize or even eradicate the evil forces that give globalization a bad name. Thus, we
will be able to move forward with peace and harmony"(Kulkami A., 2009)

 We are all beneficiaries of Globalization’s positives sides in a lot of aspects:


The most noticeable is Technology. We all have easy access to the Internet and millions of
information, we use smartphone, connected TV, social medias to share and discuss with every part
of the word.
Globalization also improved cultural exchanges between the West and the Est for example we can
find more and more European and American influence in Asia (malls, fast food, languages,
lifestyle) but also languages, cultures, traditions, etc. This became possible with the rise of tourism
that is no more reserved to rich people thanks to the creation of charter and low-cost companies
for example. With globalization, MNE (multinational companies) can easily use cheap labor cost
and raw material to save more money and offer lower prices to consumers. This allow customers
to buy more with the same purchasing power.

 However, not everything in the garden is rosy. Globalization has a lot of bad effects in the
world we are living in.
It is not only about exchanging services and goods, having cheaper product, speaking different
languages and traveling for cheaper costs. It is also about money and economy. Financial
globalization is the establishment of one unified financial market (in the world). What is the
negative effect of this? If a developed country like United States has a financial crisis the whole
world will be affected because American MNS invest a lot in developing countries (2007/2008
Financial crisis). With crisis, consumers have a lower purchasing power and want to buy cheaper
products. To answer to customers’ expectations, companies used globalization to have cheaper
labor costs by relocating in poor countries (like India, Bangladesh, Pakistan) and countries where
there is lack of work legislation (child labor in Africa and South Asia). This represents more than
200 million children under 17 years old working.
This kind of negative effect is difficult to fight and it became worse with corruption. MNE
become sometimes more powerful than Government so that they can modify rules for their own
profit like Ode Brecht (Brazil leader construction company) did for years. They gave bribes to
South American and African politicians in order to have big international projects. Globalization
also emphasizes “brain drain” phenomena and especially in Europe. Two years ago, around
110,000 fresh graduated Spanish left Spain to go in North Europe and South America. In France,
more and more young people leave the country to work in America and Asia because in developed
countries job market is instable and people have work insecurities. There are economic, political
and social negative impacts of globalization but we cannot forget to speak about environment. The
internationalization of companies and their eternal search of economy of scale make them produce
their products in less developed countries. One of the main reason is because in developed
countries, there are strict policies for companies that pollutes the environment (like “Right to
pollute” in EU for fighting climate change). So those companies have “to pay to pollute”, it become
cheaper to go abroad (like Asia or Africa) where policies are not so strict. However, reading the
news everyone is aware of the disappearance of Amazon forest that make thousands of people
homeless and Asia will maybe become a region where no human being can live before 2100.

B. Is globalization reducing poverty and inequality?


The planet is 45 times richer in 2000 than in 1900. General consumption of goods and services is
twice as important in 2003 than in 1980. Life expectancy has increased by 20 years on average in
developing countries for 30 years. And finally, three times more humans have access to drinking
water in 2006 than in 1975.
Is globalization reducing poverty and inequality ?

 Reduction of global inequalities


According to the World Bank, between 1988 and 2008, the gap between the average income of
rich and poor countries has narrowed for the first time since the Industrial Revolution. This is
linked to a decrease in extreme poverty in the world, a situation from which the Chinese and the
Indians came out. 1.5 billion people would have been removed from extreme poverty.

 Reduction of poverty in the world

Globalization has not increased poverty on the planet because it has been declining for 30 years.

The share of the world population living below the extreme poverty line (US $ 1.90 purchasing
power parity per day) has declined from 42.2% in 1981 to 10.7% in 2013. This decrease is not
uniform. It is mainly related to its decline in East Asia, but remains high in sub-Saharan Africa.

Otherwise, this figure has decreased by about a billion in 30 years, from 2 billion in 1981 to
about 700 million in 2015. This is an evolution because, at the same time, the world population
has increased from 4.5 to 7 billion people.

 But progression of internal inequalities

According to the same source, between 1988 and 2011, globalization, but also technological
progress, favored the richest 1% of the planet whose incomes rose rapidly, while those of the
poorest 5% do not seem to have benefited. Globalization has also benefited the middle classes of
emerging countries, mainly in Asia, while the middle classes and the popular categories of the
developed countries seem to have suffered because their incomes stagnated during this period.
 An extreme concentration of wealth

The total fortune of the 1,810 billionaires identified by Forbes magazine in 2016 was 6,480
billion $. This represented around 8.5% of global GDP. The cumulative total of the world's 48
largest fortunes is roughly equal to the GDP of sub-Saharan Africa with its 974 million
inhabitants.

Currently, all inhabitants of the United States and the Euro area represent 9% of the world's
population and get 40% of global incomes.

There is therefore a very unequal territorial division of wealth. 1% of the richest have an
accumulated income equal to the sum of 57% of the poorest humans; 20% of the richest receive
83% of the world's income and the 20% of the poorest only 1.5%.

 Conclusion

While globalization does not necessarily increase poverty, it would seem that it increases
inequalities

II. How the globalization affects the


inequality?
A. Inequality among rich countries and poor countries
The classification of poor and rich nations is based on the economic status including GDP, GNP,
capita income, industrialization, and living standard (Surbhi, S., 2015). Globalization has
contributed the earth more equal due to the communication gets cheaper, and transport gets
faster. But within many developing countries, the story is less rosy.
1. Uneven Wealth
Household wealth includes welfare benefits, investments and properties (homes and land but
excludes wages). According to Voanews.com (2009): in 2000, the American average wealth of
household earned $144 thousand / person, which is much higher than the capita assets of India
and Indonesia about $1,100 and $1,400 respectively.
According to World Bank, there were 6.5 billion people, in which 1.1 billion counterparts lived
on over 1 dollar / day in the world. In contrast, the developed nations' residents could earn over
$17,000 on the average annual / capita income (Voanews.com, 2009).
The figures show that the gap of incomes between developing and rich countries is about 16%. It
means that with 1 dollar a high-income nation earned, the average earning in a poor nation would
be 16 cents.

2. Sweat Shops
According to Rcg.org (n.d.): In fact, a lot of multinational enterprises minimized the labor costs
by outsourcing the business operation in the developing countries like India and China. For
instance, the US and UK clothing firms used Indonesian workers to manufacture the goods and
then selling back home. Such business like that just exploited the labors in poor countries force
them to poor working conditions in sweat shops with the low salaries. In fact, it made profit for
the rich countries and multinational companies. Additionally, the profit was not invested in the
developing communities whose workers and resources they consumed. Furthermore, the large
corporations invested in developing nations since they could take advantage of low wage for
labor forces and access the natural resources there.

3. Pollution
Yue Maggie Zhou (2017): Donald Trump declared that US committed to maintaining the air as
well as water clean; however, did not forget that economic growth enriched the environmental
protection, on 22nd Apr 2017. In fact, the message seemed to be the governments' assertions in
developing nations which attracting jobs were more important than environmental standards.
Besides, a lot of poor countries relied on loose environmental standards to attract the developed
countries' enterprises to move the manufacturing there over the last few decades. Actually, the
policies also brought the heavy pollution to the host nations. In addition, the reporter and her co-
author Xiaoyang Li found that a dramatically number of US enterprises had eliminated the
contamination at hone by offshoring manufacturing to poor countries.
Jinhuarun Chemical Factories in Qianjiang City, Hubei Province, China
Source: Suzanne Goldenberg (2014)
According to Suzanne Goldenberg (2014): Chinese greenhouse gas output and elsewhere were
rose steadily by producing commodities, which were used in US and Europe. The image
illustrates that the carbon contamination to China and other developing countries has been more
and more increasing.
Indeed, employment is important for both poor and rich nations. However, in case of
globalization, the leaders should consider more on jobs to accompany with environmental
protection, from which they do not come at the environment's expense.

B. Income Inequality

Reasons of inequality of income:


Several theoretical explanations have been presented about rising income inequality in
developing countries together with globalization (Goldberg and Pavcnik, 2007).

First, developing countries are facing fierce international competition with other countries after
the 1980s when almost all countries started to participate in the globalization process. This
makes the results predicted by international trade theory not hold (Wood, 1999).

Others focus on the differences in initial endowments related with global outsourcing and trade
for intermediate goods. Relatively high-skilled and richer workers in developing countries
produce goods that were produced by low-skilled workers in developed countries before.

Then, the growth of international trade and outsourcing could worsen the situation of low skilled
workers in developed countries, while it could do opposite to high-skilled workers in developing
countries, leading to rising income inequality in both countries.
More FDI and more import of capital goods in developing countries generate the same result
since these are related with production that needs relatively high-skilled workers. Moreover,
developing country governments protected vulnerable industries with mainly low-skilled
workers, and thus liberalization and opening may exert negative effects on these poor workers.
Increased penetration of foreign direct investment which is a product of globalization has
continued to widen the gap of inequality among the developing nations. The issue being that
besides multinational companies outsourcing activities that rely heavily on low qualified cheap
labor, they also introduce new technologies that previously never existed in the developing
nations.
Initially, the introduction of these new technologies will create a demand for highly skilled
workers to operate these machines leading to an increase in their wage levels, and consequently
this creates inequality as well as market segmentation.

Examples:

1. Mexico
Mexico undertook far-reaching reforms between 1985 and 1994 that opened its economy to trade
and capital flows. Over the same period, the earnings gap between high- and low-skilled workers
began to widen, generating a substantial body of literature that examined whether this increasing
gap was caused by the process of opening up. In broad terms, researchers have found that the
patterns of trade liberalization may have contributed to increasing the earnings gap.

Other studies with a slightly different focus find that although globalization may have
contributed to widening earnings inequality in Mexico, low-skilled workers have benefited in
absolute terms as a result of the policy changes. Nicita (2004 ) shows that during the 1990s, tariff
changes raised disposable income for all households, with richer households enjoying a 6 percent
increase and poorer households enjoying a 2 percent increase, leading to a percent reduction in
the number of households in poverty.

2. China
The dramatic increase in trade liberalization in China has been accompanied by a large fall in
poverty rates, but also an increase in income inequality, with the overall Gini coefficient rising
sharply from 0.28 in 1998 to 0.42 in 2004 . The observed increase in overall inequality is mostly
attributed to growing differences between rural and urban household incomes and uneven growth
in incomes among urban households
3. India
India intensified reforms aimed at opening up its economy in the early 1990s, through reduction
in tariffs and nontariff barriers, lowered barriers to foreign direct investment, and liberalization
of restrictive domestic regulations. Kumar and Mishra (forthcoming) evaluate empirically the
impact of the 1991 trade liberalization in India on industry wages. Since different industries
employ different proportions of skilled workers, changes in wage premiums translate into
changes in the relative incomes of skilled and unskilled workers.
4. Others:
An insight into the dynamics of globalization, inequality and well - being for some countries.
Income inequality shows a positive trend with globalization in most of the countries.
For instance, Globalization Index (KOF) in China increased by 74% between 1990 and 2010
accompanied by 31% increase in Income Inequality Index (Gini) during the same period. Only
few countries demonstrate absence of change in income distribution (Malaysia and Uganda) and
reduction in inequality (Pakistan, Brazil, Ecuador).
It is hypothesized that increased globalization worsens income distribution in developing
countries. This hypothesis is investigated using panel data econometric techniques to examine
income inequality index and the index of globalization for panel data of 68 developing countries
over the period of 1990 - 2010.
C. Gender Inequality
 THE UNDENIABLE TRUTH OF GENDER INEQUALITY
o Women have not received the appreciation from the society because of their traditional
roles in their families. For the most part, they are allowed to do little and solely need to
be housewives. While, men are always seen as the breadwinners in the home and have
the right to do something unacceptable and shocking
o In Germany, for example, which the United Nations' Gender Inequality Index ranks as
the fourth best country in the world for sexual equality, a third (32 percent) of men believe
that it is justifiable for a man to beat his wife or partner under certain circumstances.
o From the aforementioned evidence, we can clearly see that women have suffered from
the unjust things in society for a very long space of time.

 HOW GLOBALIZATION HAS AFFECTED GENDER INEQUALITY


o Women are those who especially get hurt in the sweatshop during the process of
globalization. They have no other choice but to take this kind of job is because they do
not seem to find better options from the destruction caused by globalization.
o In the first phase of globalization, with the breakthrough of technology, low-skilled
females have been displaced by males.
o Take Malaysia as an example, low-skilled women made up to 80 percent of
manufacturing workers but that percentage had decreased to 67 percent by 1987. And, it
still has since continued to decline evidently.
o This trend also takes place in Latin America, low-skilled female workers in light
manufacturing lost their occupations, particularly electronics.

o In other cases, low wages and poor working conditions in the strategy for keeping costs
low are the key factors to the detriment of women working in the informal sector
o In a number of countries such as India, Pakistan, the Philippines, Sri Lanka, and Thailand,
subcontracted workers are in a long-term fight for their right with a lack of adequate job
security. Especially women who have to mesh that thing with the responsibilities of their
families.

 BRAIN OR BRAWN?
o Although men are seen the powerful creature in many countries, women seem to be
preferable when it comes to some aspects
o Traditionally, males are often employed to do brawn-related occupations (they are
stronger than females). Therefore, computers should favor women even if they have no
advantage in acquiring computer skills.

 GLOBALIZATION HAS THE POTENTIAL TO CONTRIBUTE TO GREATER


GENDER EQUALITY
o Globalization could not be the sole force to completely get rid of gender inequality. There
are still some shortcomings in various areas. The aim of public action is to take action in
endowments, agency and access to economic opportunities to fully take advantage of the
potential of globalization for development and greater gender equality

III. Conclusion:
In conclusion, globalization is not totally guilty of causing inequality worldwide. In fact, there
has been declining poverty in the age of globalization. However, it has increased inequality
within countries and between countries due to the large increases in living standards in global
economies. But income do not tell the whole story, measures of social conditions show that
developing countries have made considerable progress.

If globalization plays a key factor that increase the inequality, what are the remedies? Walden
Bello and Focus on the Global South proposed an approach “de-globalization” which have
different key proposals such as: production for the domestic market must again be the center of
the economy rather than production for export markets, using subsidies to encourage production
of goods, trade policy like quotas or tariffs should be use to protect local economy,
deemphasizing growth and emphasizing upgrading the quality of life, centralized global
institutions like the IMF and the Work Bank should be replaced by regional institution built on
the purpose of “transcend the logic of capitalism”… However, many other analysts think that
de-globalization is not a solution. It sounds radical but it isn’t really new. On the other sides, the
World Bank and IMF propose some solutions as redistribution income as using more progressive
income tax policies. They believe that fiscal policy is the main tool to affect income distribution.

In fact, we never thought about globalization and inequality before joining this class. We know a
bit about the definition of globalization and how it affects economy, culture, technology… But
we never imagined that it may influence directly to ourselves. About the term “inequality”, we
just think simply that there is significant gap between rich and poor people in Vietnam and
around the world. As students, we aim to earn more knowledge and skills, study something that
is hot and trendy… to easily find a good job after graduation. There are no longer many well-
paid jobs for people without college degrees. All of us would like to earn at least one bachelor
and speak English fluently to find a job in an international company, because we all recognize
that we can have higher wages, more benefices and more opportunities to develop our career in
these multinational enterprises. For those who are not citizens of Ho Chi Minh City, we all think
about staying here after graduation and not being back to hometown. Because there are huge
gaps between wages in big cities and small cities. Now we understand clearly that this thought is
one of globalization’s effect.
After doing research in this subject, we understand why the inequality has increased significantly
and how the globalization, especially the integration of multinational companies and Foreign
Direct Investment (FDI) has affected Vietnam economy and increased the inequality of different
labor classes. Vietnam economy has grown fast but inequitable. We wonder if this unequal
growth will be sustainable and the problem of income inequality will raise other issues in
society. However, we still think that globalization brings more advantages to our country, help us
to access to larger capital, opportunities and knowledge. Globalization may boost the wages of
skilled workers, while crimping unskilled resources. But the impacts may be small and inequality
is not a negative thing. In any society, people have to deal with inequality. So in this case, we
will make more efforts and become better. Besides, we believe that the globalization has helped
to reduce gender inequality in Vietnam. Now women have more chances to join social activities
and take higher positions in enterprises and government, while husbands change and share
household chores with wives.

Additionally, we agree with the argument that the inequality may not typically the result of
globalization, but rather the country’s political regime and government policies. To the purpose
of reducing the inequality, Vietnam government should manage a more stable policy but still
flexible. The National Assembly should focus on reducing poverty in rural areas, especially
mountainous areas. For example, they can cut state budget allocations to big cities and invest
more for underprivileged localities. The government policy should be designed to ensure every
person has a chance to access basic services, especially education and healthcare. The investment
in high quality education and workforce training also needs to be increased and sustained.

References:

https://www.huffingtonpost.com/pablo-erick-solon-romero-oroza/deglobalization-is-the-
globalization_b_4985403.html
https://tifwe.org/does-globalization-harm-the-poor/
https://www.economist.com/blogs/economist-explains/2014/09/economist-explains-0
http://www2.hawaii.edu/~baybars/McLaren%20and%20Yoo.pdf
http://arno.uvt.nl/show.cgi?fid=122590
http://www.imf.org/external/np/fad/inequality/
http://www.alliance87.org/global_estimates_of_child_labour-results_and_trends_2012-2016.pdf
http://noticias.universia.es/practicas-empleo/noticia/2016/12/28/1147844/5-paises-jovenes-
espanoles-buscan-empleo.html
https://www.ukessays.com/essays/economics/positive-and-negative-effects-of-globalisation-for-
business-economics-essay.php
https://www.slideshare.net/fathima_sy/globalisation-its-challenges-and-advantages
http://www.economie.eaufrance.fr/content/marché-de-droits-à-polluer
http://advances.sciencemag.org/content/3/8/e1603322
https://www.sciencedirect.com/science/article/pii/S0305750X04000075
https://pdfs.semanticscholar.org/9d96/0fb6002026524706f41afd6326b5fbf669a4.pdf
https://cebr.com/reports/globalisation-can-reduce-poverty/
http://ftp.iza.org/dp2223.pdf
Voanews.com (2009) The Global Rich and Poor Gap Widens. Available at:
https://www.voanews.com/a/a-13-globalrichandpoor2006-12-22-voa6-66512112/553270.html
[Accessed on Jan 13 2018].
Surbhi, S. (2015) Difference between Developed Countries and Developing Countries. Available
at: https://keydifferences.com/difference-between-developed-countries-and-developing-
countries.html [Accessed on Jan 12 2018].
Rcg.org (n.d.) The Future of Globalization. Available at:
https://rcg.org/realtruth/articles/070223-001-globalization.html [Accessed on Jan 13 2018].
Suzanne Goldenberg (2014) CO2 Emissions Are Being 'Outsourced' By Rich Countries To
Rising Economies. Available at: https://www.theguardian.com/environment/2014/jan/19/co2-
emissions-outsourced-rich-nations-rising-economies [Accessed on Jan 13 2018].
Yue Maggie Zhou (2017) When Some US Firms Move Production Overseas, They Also Offshore
Their Pollution. Available at: http://theconversation.com/when-some-us-firms-move-production-
overseas-they-also-offshore-their-pollution-75371 [Accessed on Jan 13 2018].
https://www.usnews.com/news/articles/2017-05-08/globalization-boosted-income-inequality-
study-says
http://www.ritsumei.ac.jp/acd/re/ssrc/result/memoirs/kiyou28/28-05.pdf
http://www.academia.edu/1600985/The_Effects_of_Globalization_on_World_Income_Inequalit
y
https://www.imf.org/~/media/Websites/IMF/imported-flagship-
issues/external/pubs/ft/weo/2007/02/pdf/_c4pdf.ashx.
http://www.hoinongdan.org.vn/sitepages/news/1145/46134/binh-dang-gioi-thuc-trang-va-giai-
phap
http://hoinongdan.org.vn/sitepages/news/1145/54853/bat-binh-dang-gioi-–nguyen-nhan-chinh-
cua-bao-luc-gia-dinh
http://cafef.vn/oxfam-bat-binh-dang-moi-nam-cuop-di-9000-ty-usd-cua-phu-nu-
20170308170511223.chn
https://vi.wikipedia.org/wiki/Chỉ_số_bất_bình_đẳng_giới
http://www.rfa.org/vietnamese/news/programs/WomenMagazine/Global-Gender-gap-is-closing-
but-there-exist-concerns-VH-10262010202447.html
https://www.huffingtonpost.com/nake-m-kamrany/gender-inequality_b_1417535.html
http://hdr.undp.org/en/content/gender-inequality-index-gii
http://vneconomy.vn/the-gioi/mat-can-bang-gioi-tinh-va-he-luy-toi-kinh-te-chau-a-
20170417123831984.htm
http://www.thp.org/get-involved/unleashed-women-leaders-initiative/
https://www.huffingtonpost.com/jin-in/what-is-womens-empowerment_b_9399668.html
https://www.vic.gov.au/women/gender-equality/a-victorian-gender-equality-strategy/case-for-
change/gender-inequality-affects-men-too.html
https://www.theguardian.com/global-development-professionals-network/2016/mar/14/gender-
equality-women-girls-rights-education-empowerment-politics

Vous aimerez peut-être aussi