Globalization is responsible for the growing interdependence of the world's populations, cultures, and economies. It has been facilitated by the flow of investment, information, and people and cross-border trade in services, technology, services, and goods. Globalization has helped improve international trade, which has enabled economic growth across the world. However, some studies suggest the rise in globalization has also increased poverty levels and income inequality across the globe. There have been debates on globalization's impact on poverty and income inequality. Some argue that globalization holds the key to poverty eradication, while others argue that it has facilitated poverty and income inequality. The study will attempt to demonstrate that globalization has resulted in the rise of poverty and income inequality that has impacted people's quality of life across the globe.
Background Information
Globalization is a broad term that has been used in different ways; however, the principle underlying idea behind the term is the gradual homogenization of societies and economies. It is propelled by new economic associations, novel technologies, legislations, and regulations on various factors, including civil society, international organizations, labor, governments, and businesses at the international and national level. Globalization has different dimensions, including economic, social, and political aspects. The social dimension describes globalization's effect on the work and life of people, their families, and their communities. Issues and concerns have been brought forth about the consequence of globalization on poverty and income inequality. Different studies connect globalization to poverty. The issue has been debated, and findings have been inconclusive. The study will explore both sides of the matter. Pessimists believe that globalization is the cause of poverty and inequality, while optimists believe globalizations offer a solution to poverty and inequality (Rahim et al., 2014). Exploring both sides of the debate will offer a better understanding of the issue and help researchers develop better strategies to alleviate poverty and reduce income inequality.
Delegate your assignment to our experts and they will do the rest.
Poverty presents a great challenge to nations across the world. The term has two central meanings; the first, a standard of living depicted in meeting the fundamental survival needs, and the second, the income gap between the poor and rich (Rahim et al., 2014). Studies demonstrate that globalization has resulted in unequal distribution of wealth (Taran, 2011). This has resulted in inequalities that exclude populations from economic and social privileges that place the poor at a disadvantage in society. Globalization is perceived as the process of concentrating power upwards and away from marginalized groups in society. Some opponents of globalization believe that transnational companies gain a lopsided amount of market and political power and use this power to increase their profits while harming the poor (Rahim et al., 2014). There are documented incidences where workers' treatment, particularly immigrants, contradicts specific international legal standards and the internationally agreed human rights principles (Taran, 2011). In developed countries, concerns about the negative impacts of capital movements and international trade on income distribution emerged in the 1980s when the wage gap grew with the rising skill premium (Kang-Kook, 2014). On the other hand, developing nations suffer from rising inequalities and persistent poverty because of the fierce international competition from other nations across the globe taking part in the globalization process (Kang-Kook, 2014). Most developing countries have more low-skilled workers than developed nations, which means they cannot produce goods that require high-level skilled workers. Globalization underwrites poverty and income inequality in developing and developed nations.
Statistical Data
Poverty during globalization is the globe’s biggest challenge. Inequality in the global wealth distribution system is terrifying. According to Rahim et al. (2014), about 80% of 7 billion people live on less than $10 each day. A mere 5% of the global revenue is produced by the poorest 40% of the globe’s populace. The wealthiest 20% makes approximately 75% of the worldwide population's income (Rahim et al., 2014). Although global poverty rates had decreased from 10.1% in 2015 to 9.2% in 2017, many people live below the international poverty line. According to the World Bank, over 689 million individuals live on less than 1.9 dollars a day (World Bank, 2021). In 2017, 24.1% of the world’s populace lived on less than $3.2 each day, while 43.6% of the populace lived on less than 5.5 dollars (World Bank, 2021). Poverty and income inequality have adverse impacts on society, resulting in violence, conflict, and fragility (Poverty, 2021). Lower population-wide satisfaction, higher rates of social and health problems, lower rates of social goods, and lower economic growth levels are also associated with income inequality and poverty. Globalization has resulted in the rise of income inequality and poverty, which has substantially impacted society as it lowers the quality of life and supports social evils.
Rebuttal
Some perceive globalization as the primary and suitable engine of sustainable growth in the fight against poverty and income inequality. Findings from the World Bank demonstrated that globalization could be used to alleviate poverty. Between 1987 and 1998, the populace's size in transition and developing nations living on less than a dollar every day dropped from 28% to 24% (Rahim et al., 2014). People suffering from poverty worldwide reduced by 200 million between 1980 and 1998 (Rahim et al., 2014). Proponents believe globalization increases investment flows, international trade, higher living standards, economic growth, new economic opportunities, diffusion of technological and management skills, and accelerated innovations. Proponents argue that persistent poverty and income inequality in developing nations are mostly attributed to inappropriate government interventions, corruption, and a lack of openness. However, the proponents fail to consider the drawbacks of globalization that underwrite income inequality and poverty. Firstly, globalization is not equally distributed (Globalization and poverty reduction, 2021). It tends to be concentrated among relatively few countries, especially developed ones. Developing economies in African have not been able to reap the advantages of globalization. Additionally, free trade flows appear to benefit products that are of importance to developed economies. Such aspects create income inequality which has resulted in global poverty.
Proposed Solutions
There is a need to develop lasting solutions that nations can employ to reduce poverty and income inequality worldwide. One possible solution is implementing the 2.5-point approach proposed by the World Development Report (WDR). The strategy may be seen as a program package aimed at increasing the poor's assets and income. It also offers them basic insurance against vagaries of the global economy. To implement this approach, the company must encourage the effective utilization of the poor's most copious resource, i.e., labor. Governments can develop policies and legislations that harness market incentives, political and social institutions, technology, and infrastructure (Gill, Revenga, & Zeballos, 2016). Countries can also offer fundamental social amenities to the poor. It entails critical education, nutrition, family planning, and quality health care. These two aspects are mutually reinforcing. The 2.5-point approach may be seen as a public-private partnership, and it was employed to reduce poverty rates in nations such as Taiwan and Korea. If the plan is implemented, then global poverty rates would continue to drop.
Figure 1
The image shows the gradual decline in the percentage of the population living on less than $1.90 a day from 1980 to 2030 because of the 2.5-point approach.
Source: Gill, Revenga, & Zeballos (2016). Grow, invest, insure: A game plan to end extreme poverty by 2030.
The WDR has developed a 3-point strategy that can be used to end extreme poverty in developing nations. The decrease in poverty levels in the 1990s and 2000s validates the implementation of the 2.5-point approach. However, there is a need for a new strategy to help alleviate extreme poverty in developing economies. The strategy suggests that social insurance should be integrated with the first two components of the 2.5-point approach. This approach is ideal because there is a need for social assistance in every nation. People living in abject poverty are the hardest to reach because they dwell in remote areas or disadvantaged groups. Social insurance is designed to protect labor-intensive growth and investment in human growth and protect workers from fluctuations in the economy (Gill, Revenga, & Zeballos, 2016). The plan covers against disasters and pandemics because most nations with large populations living below the poverty line are vulnerable to large-scale natural disasters and pandemics. Countries can look to implement social insurance by offering non-contributory social assistance programs, social insurance programs, and global insurance mechanisms (Gill, Revenga, & Zeballos, 2016). Implementing this approach will help decrease income inequality and extreme poverty in developing economies.
Developing nations should also look for lasting solutions to reduce income inequality and poverty. One way developed countries such as the U.S. can reduce poverty and income inequality is by increasing their minimum wage. According to Powell (2011), research demonstrates that a higher minimum wage will help approximately 4.6 million individuals get out of poverty and grow their total real income by almost 2 billion dollars. The study also demonstrated that an increase in the nation's income does not harm economic growth. Another approach to reducing poverty is by increasing the earned income tax (EITC). Increasing the EITC has a positive income on families, and it helps lift approximately 4.7 million kids above the poverty line each year (Powell, 2011). Another critical approach that can be used to alleviate poverty and income inequality is by promoting micro-finance. Governments should increase micro-finance access to empower the poor, particularly women, and support income-generating activities, reduce vulnerabilities and encourage the entrepreneurial spirit. Numerous studies demonstrate micro-finance has helped to improve the level of education, nutrition, and health among poor communities (Singh & Chudasama, 2020). For micro-finance to be operative, governments should ensure technological support, competencies development training, and approaches related to improved health and sanitation, and education (Singh & Chudasama, 2020). Implementing these approaches will help improve reduce the prevalence of poverty and reduce the existing wage gap.
Limitations
The researcher encountered several limitations while studying the impact of globalization on poverty and income inequality. One limitation is, the implementation of globalization in developing countries and developed nations is different. As such, the causes of poverty and income inequality are different. For example, developing nations are afflicted by rampant corruption, inappropriate economic interventions, and poor leadership underwrites poverty and income inequality. On the other hand, unequal distribution of resources underwrites poverty and income inequality in developed nations. Another critical limitation to the study is the lack of modern literature that offers comprehensive information on the relationship between globalization's social dimension and its impact on poverty and income inequality. Most studies focus on the economic aspect of globalization and its impact on poverty. One area of future research should be attempting to determine the association between globalization's social dimension and its impact on poverty and income inequality.
Conclusion
Globalization has resulted in the rise in inequalities in the distribution of wealth. As a consequence, it has resulted in the exclusion of entire populaces from social and economic well-being. Research suggests that high levels of poverty and income inequality caused by globalization result in more serious social and health care issues, lower economic growth levels, lower rates of social goods, and lower population-wide satisfaction. There is a need to develop initiatives that countries can use to alleviate poverty and reduce income inequality. The 2.5-point approach is ideal for nations with moderate-income poverty levels, while the 3-point strategy is ideal for nations with extreme poverty levels. Developed nations can increase the minimum wage, provide higher earned income tax for families and facilitate micro-finance to mitigate poverty and reduce income inequality. Globalization has been critical in the growth of the global economy, and it has enhanced collaboration between nations. However, it has also resulted in higher income inequality and poverty levels. There is a need to implement the proposed solutions to mitigate globalization's impact on poverty and income inequality.
References
Gill, I., S., Revenga, A., & Zeballos, C. (2016). Grow, invest, insure: A game plan to end extreme poverty by 2030. World Bank Group.
Globalization and poverty reduction. (25 February, 2021). United Nations . https://www.un.org/development/desa/dspd/2015-undesa-dspd-expert-group-meetings-panel-discussions/more-expert-group-meetings/globalization-and-poverty-reduction.html
Kang-Kook, L. E. E. (2014). Globalization, income inequality, and poverty: Theory and empirics. Social System Research, 28, 109.
Poverty. (25 February, 2021). World Bank . https://www.worldbank.org/en/topic/poverty/overview
Powell, J., A. (25 February 2021). Six policies to reduce economic inequality. The University of California. https://belonging.berkeley.edu/six-policies-reduce-economic-inequality
Rahim, H. L., Abidin, Z. Z., Ping, S. D. S., Alias, M. K., & Muhamad, A. I. (2014). Globalization and its effect on world poverty and inequality. Global Journal of Management and Business , 1(2), 8.
Singh, P. K., & Chudasama, H. (2020). Evaluating poverty alleviation strategies in a developing country. PLoS One, 15(1), e0227176.
Taran, P. A. (2011). Social dimension of globalization: globalization, migration, and labour: imperatives for a rights-based policy. Journal of Globalization Studies . 59-76.
