Globalisation Inequality

1359 Words6 Pages
Globalisation has been perceived as a solution to reduce income inequality across the globe. This could be explained by improvements in infrastructures and communications, which allow the developing countries to close the gap with the richer developed countries. Moreover, the theory of comparative advantage also supports this stand. However, the article suggested that despite this supposedly positive global phenomenon, inequality has instead worsened within many developing countries. One possible explanation to this issue could be the problem of outsourcing, where there is a distinctive difference with regards to the rise in productivity between the skilled and unskilled workers. The article also utilised economic theories such as the Kuznets Hypothesis to explain the problem of rising inequality as a result of globalisation. In my paper, I will seek to provide an in-depth analysis to explain why globalisation may struggle to promote equality within the world’s poorest countries. The most commonly used measure of income inequality is the Gini coefficient. A Gini coefficient of one suggests that a country’s entire income goes to one person, representing perfect inequality. On the other hand, a Gini coefficient of zero suggests that the country’s income is perfectly divided, representing perfect equality. The Gini coefficient is estimated using the Lorenz curve, as illustrated by Figure 1. It is measured graphically by dividing the area between the line of perfect equality
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