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Globalization and the main areas of debate

Globalization is making our planet a smaller and smaller place. It takes its root long time ago into the human history. It began with the Roman Empire, the Parthian empire, and the Han Dynasty, when the Silk Road started in China, reached the boundaries of the Parthian empire, and continued onwards towards nowadays. It was not until 19th century when the rapid growth of this process was seen. With the continuous innovation of technology, worldwide communication and trade has become possible. After years of intensive progression globalization has numerous consequences on the development of our world, some of which are moving our world towards the brighter future, and some are not. Many results of this process are so much ambiguous that is difficult to say definitely whether it is a positive one or not. In this work the main areas of debate will be looked at.

Income inequality is one of the hottest debate that globalization brings about. While some economists argue that globalization has led to the reduction of the gap between the rich countries and the poor, the others have an absolutely opposite opinion. Each of the side has its logical reason for that.

During the latest years rich countries had an average growth of GDP of 3 percent, developing countries on average realised 7 percent..
Due to the United Nations Conference on Trade and Development (UNCTAD) there has been a moderate reduction in the gap between developing and developed countries. "In 1980 the real per capita GDP of developed countries was 23 times higher than that of developing countries, but it narrowed to 18 times in 2007," the report says.
The South has started to play an important role on the world market such as India and China thriving economy.

However, if we look at individual’s income separately, but not on the whole country, the figure would be quite different. In 1999 it was 25% of the richest population holding 75% of all income, but today this figure is slightly more dramatic there is only 20% of the population which hold around 80% of the total world income.

Another side of the problem is the 'nationalisation' or 'localisation' of inequality. Indeed, inside most countries, income inequality is on the rise. In Russia this figure is 39.9 which relatively high comparing to European countries. The main cause for that inequality is believed to be concentration of country’s production in one hands and because capital incomes have been doing quite well and capital (stocks, real estate...) is very unevenly distributed amongst the population. It is estimated that about 15% of population holds about 70% of all securities.

Table 1. Comparison of Gini indexes

The latest World Bank review of purchasing-power parities (PPP) show that both global inequality and global poverty are vastly greater than previously assumed (Milanovic 2008). It is reported that worldwide income inequality is not 65 Gini points, which would roughly equate to the level of South Africa, but 70 points. An inequality level of 70 was never recorded before anywhere.

The second area of debate concerns developing countries and the effect globalization has upon them. Poorer countries are at disadvantage: While it is true that globalization encourages free trade among countries, there are also negative consequences. Due to the lack of protections, the shift to outsourcing companies from powerful industrialized nations are able to offer workers enough salary to entice them to endure extremely long hours and unsafe working conditions, though economists question if consenting workers in a competitive employers' market can be decried as "exploitated". So called sweatshops are created, which are believed to be the main negative consequence globalization has upon developing countries, especially in Asia. Sweatshops are said to be the main cause for continuous poverty in those countries.

The main problem here is not sweatshops and bad conditions of work, but the main problem is poverty. Without poverty, there wouldn’t be any sweatshop. Surprisingly, many economists believe that sweatshops are actually turning things around for those in developing countries. The greatest evidence of the benefits offered by sweatshops is the comparison between India, which rejected sweatshops as part of economic development and countries like Taiwan and South Korea, which accepted them as a necessary evil.

It is evident that the main beneficiaries of the game are rich countries, who mainly dictate the rules of the game. They receive the most benefit and it seems that there is nothing to complain about.

It is true that Europeans are losing jobs and that is posing a problem for them since the companies are outsourcing work to the Asian countries since the cost of labor is low and profits the company considerably.
There is immense pressure on the employed Europeans who are always under the threat of the business being outsourced.
The tendency of growing inequality in income distribution has become one of the most serious problem arises in developed countries.
Owing to intensive outsourcing, there is a increasing amount of capital and technology flow from developed to developing countries.

What is the position of Russia on the global arena? What advantages and disadvantages has globalization brought to Russian Federation?
Many large Russian corporations have started to operate in the global arena. At the same time Russia is a lure for foreign investors to invest in, and the number of such investment is ever increasing.
On the other hand, one of the negative consequences of globalization is present in Russia. The growing inequality in income distribution requires more progressive measures of income re-distribution to be taken.
Another problem is unemployment, especially of unskilled labor force.Russian workers are less competitive to those from South Asia and neighboring countries, as a result a growing unemployment. The above problems are also injuring Russia at an ever deepening level. Globalization is inescapable. nevertheless, it is possible to choose a way of ‘playing the game’ so to diminish the possible negative results even if the positive ones are not maximized.

If we try to put a link between globalization and the current financial crisis, I think it is quite obvious. Initially, there exists globalization. Due to globalization separate markets and countries experience greater interdependence on each other. When there happened a crush of one of the largest economy and financial market in the world, the spread over is inescapable. However, thanks to globalization countries are able to unite their effort to find a truly global solution to the global problem. The evidence of that is the summit of G20 on 2nd April in London, where the world leaders gathered together to work out a ‘cure to the common disease’.

What can be said about globalization after having looked at all the contradictions that globalization brings about to our world? My personal view is very optimistic towards globalization. I believe that Globalization is an inevitable process. It is our human nature that leads to globalization. While globalization is believed to be the cause of many problems, it itself serves as a sound treatment against these difficulties.


• ‘Has Globalization Deepened Inequality?’ Dieter Braeuninger, YaleGlobal, 6 February 2008, http://yaleglobal.yale.edu/display.article?id=10309
• ‘Globalization and Inequality, The World Economic Outlook’ , International Monetary Fund, 2008, http://www.imf.org/external/pubs/ft/weo/2007/02/index.htm.
• ‘US Global Trends report: Key Points’ , BBC, http://news.bbc.co.uk/2/hi/americas/7741241.stm.
• Global Policy Forum, Globalization.

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