...Discussion Question: How do you accurately account for economic inequality in order to better assess living standards across and within countries? Discuss the factors affecting economic inequality and the implications on a local and global scale. Before even getting into the debate of assessing living standards, inequality and its measurement, let us first define income and consumption and how these measures are used to assess living standards in mainstream economics. According to Folbre, income encompasses all resource inflows to the household while resource outflows make up for the consumption variable (Folbre, 2009). In today’s world, living standards are assessed by looking at either of the two measures; however, most people agree that looking at living standards from the consumption angle gives us a better, more accurate feel for disparities. That being said, we recognize that these two measures do not provide a full picture: we look at resource inflows and outflows to and from households; however, we do not take into account what actually happens within the household. In recent years, more and more economists have shifted their attention to those non-market factors that directly impact standard of living among the population. In the following paragraphs, we will first examine how economic inequality is currently measured and the limitations underlying those methods. We will then elaborate on the additional parameters (household production and leisure) and their importance...
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...THE GLOBALIZATION RORSCHACH TEST: INTERNATIONAL ECONOMIC INTEGRATION, INEQUALITY AND THE ROLE OF GOVERNMENT NANCY BRUNE and GEOFFREY GARRETT* November 2004 Forthcoming in Annual Review of Political Science vol. 8, 2005 In this review essay, we address the three principal questions that have dominated the debate over the distributive effects of globalization. First, how has globalization affected inequality among countries? Second, how has globalization affected inequality within countries? Third, how has globalization affected the ability of national governments to redistribute wealth and risk within countries? We conclude that despite the proliferation of social science research on the consequences of globalization, there is no solid consensus in the relevant literatures on any of these questions. This is because scholars disagree about how to measure globalization and about how to draw causal inferences about its effects. Keywords: globalization, inequality, economic growth, government spending, privatization ___________________________________________________________ * Nancy Brune is a doctoral candidate at Yale University. She can be reached at nbrune@isop.ucla.edu. Geoffrey Garrett is Vice Provost and Dean of the International Institute, Director of the Ronald W. Burkle Center for International Relations, and Professor of Political Science at UCLA. He can be reached at ggarrett@international.ucla.edu. The authors Alexandra Guisinger, David Nickerson and Jason Sorens...
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...What are the global ‘North’ and ‘South’ and why they are increasingly unrelated to geographical locations? Like many other concepts within the social sciences, globalisation is a highly debated and controversial issue with a diversity of opinions ranging across a broad spectrum. At one end of the spectrum, there are those who view globalisation as the source of many of the major social problems currently affecting developing countries. At the other, are those who view it as a process that will dissolve boundaries between nations and promote global unification. Similarly, definitions of the terms ‘Global North’ and ‘Global South’ are just as varied with the term ‘globalisation’ also carrying many different and often contrasting meanings. According to Modelski, Devezas and Thompson (2008, p.13), globalisation is not a new concept but rather, diachronic, or ‘a process in time’. The authors viewed globalisation as a historical process, the understanding of which required tracing it far back into the past (Modelski et al. 2008, p. 13). However, Heywood (2007, p. 143) suggests, that because globalisation refers to such a wide range of things, e.g. policies, strategies, processes or an ideology, it may be concluded ‘slippery and elusive’ understanding of globalisation arises from its involvement in so many different areas of academia and the extensive and continuing discussion therein surrounding its properties. Regardless of different views on the definition and scope of globalisation...
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...a) Discuss the effects of income inequality on a nation’s economic conditions. Income inequality is the unequal distribution of income among individuals of an economy (Income Inequality, 2014). In other words, the difference between the wealthy individual’s income and middle-class to poverty-stricken individuals’ incomes continues to increase. Such disparity can have detrimental effects on the economy. Those individuals who have a low-income are less able to purchase goods. As income inequality between individuals increases, money moves from those who used it to purchase their basic needs to those who already had enough and more. This then causes a weakened aggregate demand for products because the middle-class and poor can no longer afford...
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...Globalisation has intensified inequality Globalisation has built a set of prospects for mainly large firms around the world with declines in tariffs or creation of free trade areas (Celik 2010). Although globalisation has increase economic growth substantially it does however also increase the economic and social gap within and between countries. Income inequality in particular is the effect of globalisation through foreign direct investment. According to the World Development Indicators 2005 (World Bank, 2005), the richest country Norway has a per capita income of $43, 400 whereas the poorest countries Burundi and Ethiopia have a per capita income of $90. These show the huge gap between the poorest and richest countries per capita income. These numbers raised the question “Has globalisation led to a greater income inequality or less?” In the article ‘Is globalisation reducing poverty and inequality’, Wade (2004) questions the empirical basis of the neoliberal argument. The neoliberal argument says that the distribution of income between the entire world’s people has become more equal over the past two decades and the number of people living in extreme poverty has fallen. It states that these progressive trends are due in large part to the rising density of economic integration between countries, which has made for rising efficiency of resource use worldwide as countries and regions specialize in line with their comparative advantage. This is partially true as...
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...and Rising Inequality in Australia Is Increasing Inequality Inevitable in Australia? Tom Conley Griffith University Introduction I want to dedicate my government to the maintenance of traditional Australian values. And they include those great values of mateship and egalitarianism.1 10 years ago a Mitsubishi type development would have flattened people psychologically. Now they take it in their stride … 2 Policy-makers and commentators have long been cajoling Australians into accepting that they are a part of the global economy, which means an acceptance of a whole range of ‘new realities’. One of the major themes of the pro-globalisation position is that Australia has accepted these new realities and adjusted well to globalisation by embracing economic liberalism. The results, it is argued, have been overwhelmingly beneficial. John Howard points out the Australian economy has grown for fourteen years straight – a remarkable achievement by any standards. This success story of growth has tended, however, to override more disaggregated, negative analyses of social outcomes in Australia. A less sanguine part of this new globalising ‘reality’ appears to be an acceptance of rising inequality. Indeed, it is often implied that rising inequality is a spur for growth. The argument is that everyone is better off, it’s just that some people are better off than others. While commentary is often not explicit about the association of globalisation and rising inequality, occasionally...
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...GLOBALIZATION Firm Internationalization and Capital Structure in Developing Countries: The Role of Financial Development Halit Gonenc and Daniel J. de Haan As the trend in globalization continues, developing market economies are moving to the forefront of the world market, diminishing the dominance of developed countries. Their rapid expansion is often underpinned by strong domestic firm performance. The resources and funds required to fuel the sustained future growth of these firms as they compete with global powerhouses from developed markets therefore become important factors. In recent decades the process of globalization has made it increasingly common for developing country firms to internationalize and gain access to developed country capital markets. Developping countries are playing a significant role in the developpment of their home-country economies because of a higher use of external financement, which could give these firms the opportunity of operating in countries with more developped financial markets and a better access to external funds. In addition, developed financial markets can reduce the problem of asymmetric information. To evaluate the role that both the level of financial market development and firm-level characteristics have in the relationship between internationalization and debt financing, they employ three-variable interactions. The purpose was to find out how the relationship between the level of foreign sales and financial development...
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...examine the relationship between globalisation, inequality and poverty. The term globalisation refers to the process by which the world has become more connected through advancements in technology, transport and communications and resultantly become integrated in many areas of life. For the purposes of this essay, one will be discussing the relationship between primarily economic globalisation, poverty and inequality in what many have referred to as the ‘third wave’ of globalisation, which has been prominent since the 1980s. Advocates of economic globalisation, understood as “the widening, deepening, and speeding up of worldwide interconnectedness” (McGrew in Ravenhill, 2005: 275) suggest that economic advancement through globalisation is a by-product of well-functioning markets; that countries should specialise in line with their comparative advantage; and that countries should practice free trade as a guiding principle. (Wade, 2004a: 184) Still today there exists huge economic inequality both within and between countries, and mass poverty is an issue which is still high on the agenda of world leaders across the globe. Yet data from the World Bank has shown that the number of people living in extreme poverty, of which it classifies as those living on less than $1 per day in Purchasing Power Parity (PPP) has fallen in the last two decades for the first time in 120 years. (Wade, 2004a: 163) The relationship between globalisation, inequality and poverty thus seems to be one which is...
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...To describe the major points of the inequality between nations, I have broken the following points into specific areas of inequality. Income Inequality The need to address inequality has increased since the economic crisis including increasing levels of uncertainty and social decline within the middle class with many societies. The drivers of inequalities are globalization, skill biased technology changes and policy changes. Developing countries that embrace globalization are seeing an increase in personal incomes, extended life expectancy, and improved education systems. Gender Inequality To create new sources of economic growth and utilizing everyone’s skills we would require a breakdown of barriers in gender equality in employment, education and entrepreneurship. “Greater educational attainment has accounted for about half of the economic growth in OECD countries in the past 50 years, in large part thanks to an increase in girls reaching higher levels of education and greater gender equality in the number of years spent in school. Companies with a higher proportion of women in top management do better than others” ("Inequality - OECD," n.d.). A familiar and yet disappoint static states women earn 16% less than men, and female top-earners are paid 21%...
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...GLOBAL INEQUALITY Global inequalities among nations are the outcome of centuries of nations’ struggle over global supremacy, forced circumstances and mismanaged priorities by the nations themselves and world as a whole. Historically global inequality refers to the three-world model and includes "World System Theory."The three-world model assumes that the entire world was once agrarian. Most of the worlds’ work involved farming, which was the most advanced type of economic activity. Around the middle of the eighteenth century, Europe began the transition to an industrial economy. The countries of Western Europe adopted the economic policy of capitalism and coupled it with factory technology. These (and their offspring: United States, Canada, and Australia, principally) became the wealthy countries of the world and are referred as the first world countries. At the beginning of the twentieth century, Russia adopted the socialist economic model and began to industrialize. However, it was a century and a half behind Western civilization, and socialism did not turn out to be effective in a world that was geared toward capitalism. The countries that followed this model (U.S.S.R,China, Cuba, etc.) became the Second World Countries. Countries that were unaffected by the two great revolutions (Industrial Revolution in the West and Communist Revolution in the East) are today's Third World Countries, the poorest countries in the world. World System Theory postulates that the vast majority...
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...Inequalities, both domestic and global, illuminate the inevitability and functionality of stratification. Discuss. The title of this essay covers a very wide topic of stratification, and in this essay I will look at the many different forms of stratification that exist both at home here in Ireland and also on a worldwide scale, but to begin with I’m going to describe and define what stratification really means. In short stratification is basically how society ranks in hierarchy, which in detail means the vertical or hierarchical division of society according to rank, class or caste. Caste is defined as “a form of social stratification based on inherited status or ascription.” and this definition goes on to say that “ones social destiny is determined at birth with no chance or opportunity to change this class you have been born into.1”. It remains to be argued whether this statement is true or false, ! ! personally I think it is possible to change class or to move up or down a social class. Yes ones social destiny is determined at birth but it is possible to move up and down the social class ladder, all it takes is determination. Although if one is to begin at the bottom of the ladder, born into a family with harsh surroundings, it will be much harder to move up the ranks, as your success largely depends on your cultural background. If there is no one around you to support you with your studies or with any educational things you may be interested in, then doing any of...
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...getting bigger and more complicated as globalization is spreading. What are emerging markets? They can be defined as ‘a financial market of a developing country, usually a small market with a short operating history’ (InvestorWords.com, no date). For example, BRICs, such as Brazil, Russia, China, and India are common thoughts of emerging countries. These countries have improved rapidly in terms of GDP, trade and so on. This essay will introduce the four main characteristics of emerging markets. To expand the worldwide market Magnus (2010, cited in Beausang, 2012, p.3) suggests that the GDP at purchasing power parity (PPP), which puts an importance on the related cost of living, is a proper method to explain BRICs’ contribution to the global economy. He implies that when GDP in US dollars is used as comparisons with emerging and advanced countries, it would be invalid because it is included some problematic points like exchange-rate in each country. According to the research by IMF (2001 cited in Beausang, 2012, p.3), GDP in 2001 in terms of PPP, America gave at 22 % of the whole, while BRICs were slightly smaller at 21.4%. However, ten years later, IMF (2011 cited in Beausang, 2012, p.4) showed the GDP in BRICs, at 25 %, had overtaken the GDP in America. It could be said that the BRICs’ contributions have made a large to the world GDP. They might play an important role in keeping the growth of the worldwide GDP. Why have emerging countries such as BRICs grown? These countries...
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...Contemporarily, global inequality means the extent to which income and wealth is distributed in an uneven manner among the world’s population. With international trade, more wealth is gradually being transferred from poor areas to others. As a result of this influx, the well-off are enjoying luxury yachts, private aircrafts, upscale restaurants and so forth, while only for the bread of every meal are the impoverished working around clock. A rising number of poor people are suffering from extreme poverty, injustice and illness. The most critical problems are those associated with global inequality. The purpose of this essay is to discuss the problems of global inequality, including its causes, and to identify solutions, providing reasons that support these solutions. Section 1: The global inequality, mainly referring to the increasing gap between the poor and rich nations, is an inevitable problem driven by globalization. The number of people whose daily wages were less than 2 USA dollars rose by 350 million around the world during the past ten years (APEC Study Centre n.d., para.1). One of the most significant problems is “the gap in incomes …has grown from 30 to 1 in 1960 to 82 to 1 in 1995” (APEC Study Centre n.d., para.1). According to another report, “the richest 85 people in the world are worth more than the poorest 3.5 billion” (Global Wealth Report 2003). Additionally, the richest one fifth of the world’s population had approximately 78% of the word GDP (Gross Domestic...
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...markets, if freed from state intervention, will develop any society. | | c. They would point out that traditional societies are typically low income because of a history of colonialism and oppression. | | d. They would assert that traditional societies should model their institutions after the United States if they want to develop. | Save Question 3 (1 point) There is significant income inequality in countries in which of the following regions? Question 3 options: | a. The industrial world. | | b. The developing world. | | c. Both the developing AND industrial world. | | d. Income inequality exists between nations, not within nations. | Save Question 4 (1 point) The value of a country's yearly output of goods and services, divided by its total population, is: Question 4 options: | a. global inequality. | | b. global per person output. | | c. per person gross national income. | | d. per capita product. | Save Question 5 (1 point) Which of the following statements is accurate? Question 5 options: | a. Economic development in...
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...world politics? Neoliberalism is an economic philosophy that rose in prominence from the eighties following the elections of Margaret Thatcher and Ronald Reagan. Jones, Parker and Bos (2005: 100) summarise the essence of this view as “markets good, governments bad”. Neoliberalism argues that free trade is beneficial to all nations, that governments create inefficiency and waste, and that the distribution of goods should therefore be left to individuals and firms competing in the market to maximise their utility (WHO 2010). To ensure an efficient allocation of resources, neoliberalists argue for widespread liberalisation i.e. the reduction of rules and restrictions, and the privatisation of public enterprises. However, the reality of Neoliberalism has been very different to the theory. Regulation provides the framework within which markets work and enables the moderation of the externalities they produce, thus deregulation was in fact limited and was quickly followed by regulation (Levi-Faur 2005: 13). Because of this, Polanyi (in Peck, 2010: 330) writes: “the road to a free market was opened and kept open by an enormous increase in continuous, centrally organized and controlled interventionism”. In this essay, I look at the impacts of Neoliberalism on World Politics, focusing on two in particular. Firstly I explain that the policies of liberalisation and privatisation, albeit supported by regulation, have led to increasing inequality and after this, I argue that Neoliberalism...
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