Economic Globalisation Is the Main Reason for an Increased Income Essay

Economic Globalisation Is the Main Reason for an Increased Income Inequality in the World Economy - Essay Example Such theories have been explored and looked for insights if the international trade liberalization and economic globalization truly allocates the resources efficiently amongst the countries. Economic Globalization Globalization is broadly defined as the integration of technological, cultural, political, social and economical aspects between the nations throughout the world (Hamilton, 2008, p.10). The term is also used synonymously with economic globalization that involves investments and trades between two countries. This, however, has impact on every aspect of the society. The proponents of globalization view the globalization as means of economic development and improved standard of living. Trade assists in the creation of a nation’s wealth and healthy political relations with other nations. It also promotes competition and free trade between the corporations which in turn provide cheaper and diverse range of goods and services to consumers around the world. These benefits c an be measured in a number of ways such as comparison of relative output and external trade between countries, price convergence for homogeneous or identical goods and services in different economies, comparison of national direct investment with the foreign direct investment and the size of total foreign assets and liabilities. However, globalization has also been subject to criticism for the mere fact that while the market integration for capital, goods and services has occurred, the labour markets around the world are barely integrated. It is observed that all the factors of production technology, plants, and capital except land can be shifted between the countries but it is the labour that globalizes at a very slow pace (Reich, 1991 cited in Dehesa, 2006, p.7). Labour mobility between the developing and developed countries has slowed down over the years and this has led to diverged per capita income across countries. This shows that migration surely does not contribute towards t he income equality. Anti-globalization sentiments stress the perils of globalization in the form of contributions towards poverty in already poor nations and environmental degradation. Another argument against globalized economy has stemmed from biased development of North (developed countries of Northern hemisphere) as compared to the South (developing and under-developed countries in Southern hemisphere). Through the establishment of GATT and WTO, the removal of economic disparity through trade flow between these two hemispheres has been unsuccessfully tried. However, there are many factors as to why such objective could not be accomplished. One of them could possibly be the anti-globalization sentiment of rich countries in North while the perception of globalization as positive force in the South countries (Bhagwati, 2007, p.8). Income Inequality and Unemployment Income inequality refers to the unequal income distribution across the population, genders and races. There are many f actors that cause income inequality such as work experience, productivity, gender, race, inheritance