How does globalization affect inequality between and within countries? There are a number of schools of thought on this question. In this section we’ll look at how inequality between and within countries is connected, the economic concept of trade-offs, and the arguments between optimist and pessimist globalists.

Connecting Inequality Between and Within Countries

Improvements have been made over the last 30 years in reducing inequality between countries. However, we know that within-country inequality is greater than 30 years ago. Low-income countries, especially in Latin America, the Caribbean, and sub-Saharan Africa, experience much wider within-country inequality than rich countries (World Bank 2016).

When we look at long-range trends, we can see that inequality between countries started decreasing at the beginning of the 21st century. However, within-country inequality grew, especially during the most recent decades (World Bank 2016).

The reasons for inequality increasing within countries but decreasing between countries are complex and debated. One connection that some scholars make is that high-income countries have more resources to bring education and health care to their remote rural areas than low-income countries (Permanyer and Smits 2020) (figure 4.24).

Other scholars point to countries lacking the kind of labor markets and access to skills and capital that give people of all backgrounds a chance to earn a decent living. Access to education is important, as is how specialized a country’s industry offerings are. Market regulations, good governance, and labor market reforms are equally important. For example, Brazil and Mexico have supported poorer citizens by implementing minimum wages laws, plus progressive tax and benefit policies (Gradín et al. 2021).

Trade-Offs

As we grapple with the question of how globalization is related to inequality, it’s helpful to borrow a concept from economics. “Trade-offs” refer to situations where making one choice that is beneficial means diminishing or losing another benefit or opportunity.

Reduced Extreme Poverty vs. Increased Competition

Let’s first look at a trade-off related to reduction of extreme poverty and increased competition. Dani Rodrick, professor of international political economy (figure 4.25), points out that extreme poverty around the world has decreased, but globalization has also caused less-skilled workers in richer countries to compete with workers of poorer countries, 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:

Over the last three decades or so we have had 300 or 400 million Chinese [people] that have lifted themselves out of extreme poverty, extreme deprivation. The world’s greatest poverty eradication ever experienced would not have been possible if China had not turned itself towards the world markets [and] had become an exporting superpower.

New employment opportunities for people who come from villages or the farm can be employed in textile and garment and footwear and steel factories producing for world markets. That creates new jobs, new incomes, higher productivity, and a country like China has benefited hugely from that, along with a number of other Asian countries.

Globalization is held in very mixed regard in the advanced countries. Something like a third of the respondents in surveys in the United States fear for their economic future because of the presence of countries like China. If you are an engineer, manager, an accountant, you would do very well because your skill is in greater demand, and not just domestically but in the world economy, because those are the kinds of goods that advanced countries tend to export, but relatively less-skilled workers of the advanced countries have not done all that well under globalization.

So a single mother in Southern California working in a textile plant, now you have to compete with Bangladesh, with Vietnam, with India, and that means that there is a downward pressure on your wages and on your employment opportunities” (The CORE Project 2015).

Cost and Efficiency vs. Human and Environmental Costs

Another trade-off involved with globalization is related to distribution and “costs.” Members of richer countries benefit from lower prices and quicker distribution of items such as smartphones. But there are many socioeconomic, 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” [Streaming Video] (figure 4.26). As you do, pay attention to what those “costs” are.

https://www.youtube.com/watch?v=v0CdoXp8x44

As the film described, lower prices and quicker distribution likely involves companies outsourcing cheaper labor in poorer countries. This often results in hiring workers that migrate thousands of miles in search of employment. They can work in deplorable conditions as they struggle to feed their families, and they exist without basic necessities such as health care because they pull in less than a living wage.

Optimistic vs. Pessimistic Views

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 optimist globalist view of globalization we introduced earlier. His analysis is that over the last 200 years, the world has made significant progress in reducing inequality.

Rosling asserts in the video 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 as well. Watch the 4-minute video “Hans Rosling’s 200 Countries, 200 Years, 4 Minutes” [Streaming Video] (figure 4.27). Rosling enthusiastically summarizes how inequality trends in global health and wealth—both between and within countries—have shifted. As you watch, pay attention to the reasons for that shift.

https://www.youtube.com/watch?v=jbkSRLYSojo

Despite persistent and extreme inequalities (both across countries and within countries), we are closing the gap between Western and non-Western countries. In Rosling’s video, he projects that in the future, everyone can “make it” to the healthy and wealthy plots on the graph. Note that this video was published in 2010. While illustrations mapped out with current statistics would show some differences, Rosling’s work is also useful to identify global changes, such as war, that create significant shifts in global equality.

Other optimist globalists will note that technology and global corporations have made important contributions to the world population. Improvements in medicine and 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).

The pessimist globalist view of our inequality trends is described by Indian scholar and activist Vandana Shiva (figure 4.28). In her article, “The Polarised World of Globalisation,” 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 wave of globalization in 1492, and they continue to experience the negative consequences.

She shares that the current gap between the many who labor each day and the wealthy few who earn profits with no labor has never been greater. She also blames globalization for contributing to the deaths of thousands of children in her home of India. Global market systems created a need for agribusiness, which destroyed the public system that was in place for giving out food. “The world of the 99.9% has grown poorer because of economic globalization,” she states (Shiva 2005).

Pessimist globalists see a dramatic and rapid deterioration of the world’s natural diversity in agriculture (less crop varieties and livestock breeds); loss of wild species; spread of harmful invasive species; pollution of air, water, and soil; accelerated climatic change; exhaustion of resources; and social and spiritual disruption as consequences of globalization. The global free trade inherent with globalization deteriorates social and economic conditions and is making the world a less healthy place overall. Pessimist globalists 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.

Licenses and Attributions for Globalization and Inequality

Open Content, Original

“Globalization and Inequality” by Aimee Samara Krouskop is licensed under CC BY-SA 4.0.

Open Content, Shared Previously

Figure 4.24. USA/Canada border sign published by Communitynets and courtesy of The Center for Land Use Interpretation, licensed under CC BY-NC-SA 3.0.

Figure 4.28. “Vandana Shiva – Global Citizen Festival Hamburg” is on Wikimedia Commons, by Frank Schwichtenberg, and licensed under CC BY 4.0.

All Rights Reserved Content

Figure 4.25. “Dani Rodrick, Professor of International Political Economy at Harvard’s John F. Kennedy School of Government” is published by the UBS Foundation of Economics in Society at the University of Zurich and included under fair use.

Figure 4.26. “The ‘Cost’ Of Globalization” by HumberEDU is licensed under the Standard YouTube License.

Figure 4.27. “Hans Rosling’s 200 Countries, 200 Years, 4 Minutes” by BBC is licensed under the Standard YouTube License.