How does globalization affect inequality between and within nations? There are a number of schools of thought on this question, but it’s helpful to first borrow a perspective from economics and see that globalization involves trade-offs. Trade-offs refer to situations where making one choice that is beneficial means diminishing or losing another benefit or opportunity.

3.8.1 TRADE-OFF A: Reduction of Extreme Poverty, but Increased Competition for Rich Countries

Let’s first look at a trade-off related to reduction of extreme poverty and increased competition. Dani Rodrick, Professor of International Political Economy at Harvard’s John F. Kennedy School of Government (figure 3.27) points out that extreme poverty around the world has decreased, but globalization has also caused less skilled workers in richer nations to have to compete with workers of poorer nations, reducing their economic standing in their own countries. In a video produced by The CORE Project, he gives China as an example, and explains the competition now faced by unskilled workers:

Figure 3.27. Photo of Dani Rodrick, Professor of International Political Economy at Harvard’s John F. Kennedy School of Government

3.8.2 TRADE-OFF B: Lower Prices and Quicker Distribution, but Socio-economic, Environmental, and Ethical Costs

Another trade-off involved with globalization is related to distribution and “costs.” Members of richer nations benefit from lower prices and quicker distribution of items such as smartphones but there are many socio-economical, environmental and ethical “costs” that are associated with that benefit. The people who are disproportionately affected by those costs are those in the poorer income brackets of society. Watch this 4:12-minute video, The “Cost” Of Globalization (figure 3.28). As you do, pay attention to what those “costs” are.

Figure 3.28. The “Cost” Of Globalization [YouTube Video]

3.8.3 The Fair Trade Movement

Also known as alternative trade, the principles of fair trade have their origins in the ancient cultural values of indigenous communities. Namely, the values of solidarity, reciprocity and collaboration that have been crucial to indigenous peoples’ production of food, shelter, and survival (Contreras Días 2017).

Fair trade is a movement that emerged to respond to the negative effects of globalization on more economically vulnerable people in poorer nations. Initiated in Europe in the 1960s fair trade has grown to become an international household word, and associated with a multitude of products, from coffee offered by Equal Exchange, to clothing offered by Patagonia, to bath products offered by the company LUSH. Here’s how LUSH describes fair trade:

Put simply, fair trade means buying goods at a fair price from people who produce them. In exchange, producers use sustainable production practices and uphold fair working standards for their employees, benefiting both the earth and the communities involved. (What Is Fair Trade? 2022)

Critics of fair trade point to the challenges of monitoring the established fair trade standards and the concern that increased profits are collected by businesses or leaders of producer groups. However, it appears that many consumers are comfortable supporting people who live in poverty with their purchase choices by paying higher prices for fair trade products (Winter et al. 2006).

3.8.4 Positive-Globalist View

Swedish physician and statistician Hans Rosling spent his career working to make global inequality understandable with statistics, computer software, and props. His perspective is a good example of the positive-globalist view of globalization. In the 4.47-minute video: “Hans Rosling’s 200 Countries, 200 Years, 4 Minutes,” he enthusiastically summarizes how inequality trends in global health and wealth—both between and within nations—has shifted over 200 years (figure 3.29). He also introduces some reasons why.

Note that this video was published in 2010. While illustrations mapped out with current statistics would show some differences, his work is useful to identify global changes such as war, that create significant shifts in global equality. Pay attention to those global changes and consider the role of globalization  as you watch.

Figure 3.29. Hans Rosling’s 200 Countries, 200 Years, 4 Minutes – The Joy of Stats – BBC Four [YouTube Video]

Rosling asserted that most people today “live in the middle”. He does acknowledge that huge differences exist “between the best of countries and the worst of countries” and that great inequalities exist within countries. However, his analysis is that in 200 years the world has made significant progress in reducing inequality.

3.8.5 Globalist-Pessimist View

The globalist-pessimists view is perhaps best described by Indian scholar and activist Vandana Shiva. She summarizes that much of globalization has been based on the use of force, driven by greed, and resulting in stolen lands and displacement. For example, Native Americans experienced a first wave of globalization in 1492 and they continue to experience the consequences (Shiva 2005).

Globalist-pessimists see a dramatic and rapid deterioration of the natural world diversity in agriculture (less crop varieties and livestock breeds), loss of wild species, spread of exotic species, pollution of air, water and soil, accelerated climatic change, exhaustion of resources, and social and spiritual disruption. Global free trade inherent with globalization deteriorates social and economic conditions and is making the world a less healthy place overall. Global-pessimists see that this kind of globalization has not ended; it just appears in a different form; a new form of colonization, now with partnerships between multinational corporations and powerful governments

3.8.6 Trends Across Time

There’s a lot of information to digest when it comes to understanding global inequality and how it’s related to globalization. However, there are also trends that emerge as we look historically. Understanding these trends, we can make projections about how global inequality might shift in the future.

3.8.6.1 Looking Ahead

What does the state of global inequality look like for the future? It depends who you ask. Despite persistent and extreme inequalities (both across countries and within countries), we are closing the gap between Western and non-Western countries. Rosling projects that in the future, everyone can “make it” to the healthy and wealthy plots on the graph. ​​Few will debate whether technology and global corporations have made important contributions to the world population. New medicines, improvements in communications networks, more efficient distribution of essential goods and services, and the creation of millions of jobs are but a few of the benefits provided by these entities (Warner 2005).

At the same time, global inequality is drastic. Oxfam summarizes some projections:

Hundreds of millions of people will still be living in extreme poverty by 2030. The poorest people will also increasingly be concentrated in certain regions: The World Bank estimates that 87% of the global poor will be concentrated in sub-Saharan Africa by 2030… and more than three-quarters of households in developing countries are living in contexts where income inequality is greater today than it was in the 1990s. (Seery and Seghers 2019, page 6)

The World Social Report 2020 published by the United Nations points to four megatrends we are seeing that contribute to global inequality: technological innovation, climate change, urbanization and international migration. The authors explain that “While technological change can support economic growth, improve services such as health care, and education, while speeding communication and productivity, those same technical changes can also increase differences in wages and force workers to emigrate for employment.” The benefits of upcoming technological changes and urbanization are likely to intensify these divisions further (Verbeek and Rodarte Israel 2015).

Climate change impacts the poorest countries and groups most impacted by social inequality. Urbanization plays a role as people emigrate to cities, their quality of life does not tend to improve, and international migration is often associated with unsafe conditions (UNDESA World Social Report 2020, p. 6).

What will be the consequences of these global trends? On one hand, there’s good reason to be concerned about these trends exacerbating disparities and divisions. On the other hand, professionals and activists see ways that we can work with these social changes to encourage a more equitable and sustainable world. In Chapter 4 we’ll explore what we’ve learned from decades of humanitarian and aid work that can help us move further in that direction.