Essay About Negative Effects-Income Inequality And Growth Rate

Globalization
Tri LamMarika RuumetEssay 4 Final Draft1007 words countGlobalizationGlobalization is a naturally evolution of the world’s national integration. It has narrowed the world into a small place without barrier. In history, the Silk Road played a significant role in ancient nations; it opened a long-distance economic and political relationship, established major trades, and spread out religious. Nowadays, as globalization emerges, it certainly generates advantages, and opportunities for developing countries such as political awareness, economic integration, technology development, natural habitat and social behavior. In fact, living standard and productivity have been improved in developing countries. Nevertheless, it also brings out several negative effects-income inequality, environmental degradation, and economic instability. Thus, the effects of this phenomenon need to be assessed in many aspects in order to acknowledge globalization, and how it has impact on people. First, on account of increased globalization, it helps developing countries have opportunity to boost their economy, reduce poverty. In the past, because of trade barriers, developing countries were not able to access the global market, so they were falling further behind developed countries. Since the post 1980-globalization accelerated, growth rate has increased from 1.4 to 2.9 percent GDP growth a year (Dollar and Kraay). Globalization encourages developing countries to open up their resource, market, abolish heavy tariffs and free up economy. In return, they gain access to conceivably profitable Western markets and oversea investments. Apple, for example, its products is designed in the U.S., yet many parts of the product are spread out all over the world because Apple wants to maximize profit with abundant and cheap labor. In exchange, labor providers such as China have chance to increase jobs for poor people. As globalization allows the U.S. and other countries to import and export without significant restriction. Along with free trade, globalization also forms competition. It’s clear that the business rules for trading will never be the same. Companies is no longer independent and achieve profit. They need to cooperate to be successful. As a result, both developing and developed countries profit from globalization, and furthermore, they rely on each other, tighten up relationship between nations. Even though globalization has many advantages in economy, there are a few downsides for particular countries. One of the downsides is income inequality. Globalization opens a free labor market, and high-skilled labor is significantly benefited from international opportunities, leading to a tremendous amount of jobs shifted overseas. Countries that have limited job find difficulty to keep skilled workers, and low-skilled workers face wage stagnation because of globalization policies. Thus, the rich becomes richer and the poor’s getting poorer. “20 riches countries had per capita incomes of more than US$30,000, while the sixty poorest countries had per capita incomes of less than $3,000 per year in 2006”(Clark and Wallace). Thus, although globalization helps developing countries increase their economic growth rate, it also contains several negative effects on the economy.