Globalization

Has globalization increased or decreased social and economic disparities around the globe? Present and defend your position.

Globalization increases economic disparities by allowing multinational companies to maximize profits. One of the driving forces of Foreign Direct Investment is the flow of natural resources to regions featuring the lowest unit production cost (Abakumova & Primierova , 2018). Third-world nations are preferred due to the low labor expenses and minimal environmental regulations governing these regions’ operations. These companies contract unskilled local laborers and raw materials at considerably low prices from these regions. Notably, the third world nations feature minimal environmental legislation; thus, these companies are not fined for their toxic emissions. Subsequently, the multinational operations incur lower operating expenses leading to increased profits. Unfortunately, multi nations avoid tax; hence their revenue benefits do not benefit the states they are situated in. These benefits flow to their mother countries, therefore increasing the equality gap. Hire our assignment writing services in case your assignment is devastating you.

Globalization also increases inequality as it promotes specialization in trade. Globalization is fueled by business, which requires countries to utilize their comparative advantage in producing low-cost goods and services. This specialization leads to increased poverty as households may prefer imports that are low-cost compared to the products offered by the local industry (Abakumova & Primierova , 2018). This importation results in a decrease in demand for local products leading to a decline in these sectors and an increment in poverty rates. On the other hand, the foreign nations importing the finished products would earn higher returns. Notably, most developed countries specialize in manufacturing and processing commodities and thus benefit the most from global trade as retail value-added goods. On the other hand, third-world countries import crude natural sources; for example, South Africa imports coal and titanium. Thus, these states do not maximize profits obtained from this trade.

References

Abakumova, J., & Primierova, O. (2018). Globalization, Growth, And Inequality: Testing Causality And Asymmetries. Ekonomicko-manazerske spektrum, 12(2), 83-95.

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