Impact of Globalization on Economic Growth: Examine the Relationship Between Globalization and Income Inequality in Developing Countries
DOI:
https://doi.org/10.59890/cbqyaq78Keywords:
Developing Countries, Globalization, Economic Growth, Income Inequality, InvestmentAbstract
Globalization has been a widely debated topic in the field of economics, with various studies examining its impact on economic growth and development. One of the critical issues associated with globalization is its relationship with income inequality in developing countries. While globalization can bring economic benefits, such as increased trade and investment, it can also exacerbate income inequality. On the one hand, globalization can lead to increased economic growth, creating new opportunities for income generation and poverty reduction. Foreign investment and trade can create a new job opportunities, especially in sectors such as manufacturing and services. However, the benefits of globalization may not be evenly distributed, and the wealthy may reap most of the benefits. On the other hand, gobalization can lead to wage disparities, as skilled workers may benefit from new opportunities while unskilled workers may face downward pressure on wages. This can exacerbate income inequality, potentially leading to social and economic instability. Empirical evidence suggests that globalization can increase income inequality in developing countries, particularly in the short term. To mitigate the negative effects of globalization on income inequality, policymakers in developing countries can implement policies such as progressive taxation, social protection, programs, and labor market regulations. By implementing these policies, developing countries can work towards reducing income inequality and ensuring that the benefits of globalization are shared more broadly. Ultimately, the relationship between globalization and income inequality in developing countries is complex, and policymakers must carefully consider the potential impacts of globalization on their economies and societies
References
Acemoglu, D. (2002). Technical change, inequality, and the labor market. Journal of Economic Literature, 40(1), 7-72.
Bhagwati, J. (2004). In defense of globalization. Oxford University Press.
Cornia, G.A (2004). Inequality, growth, and poverty in an era of liberalization and globalization. Oxford University Press.
Dollar, D., & Kraay, A. (2004). Trade, growth, and poverty. Economic Journal, 114(493), 22-49.
Feenstra, R.C., & Hanson, G.H.(1997). Foreign direct investment and relative wages. Evidence from Mexico's maquiladoras. Journal of international Economies, 42(3-4), 371-393.
Freeman, R.B. (2010). Labor market institutions and earnings inequality. Journal of Labor Research, 31(2), 31(2), 137-153.
Goldberg, P.k., & Pavcnik, N.(2007). Distributional effects of globalization in developing countries. Journal of Economic Literature, 45(1), 39-82.
Hanson, G.H., & Harrison, A. (1999). Trade liberalization and wage inequality in Mexico. Industrial and Labor Relations Review, 52(2), 271-288.
Milanovic, B. (2005). Worlds apart: Measuring international and global inequality. Princeton University Press.
Ravallion, M. (2001). Growth, inequality, and poverty: Looking beyond averages. World Development, 29(11).1803-1815.
Ravallion, M. (2009). The developing world's bulging (but vulnerable)
