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The present scenario depicts how the globalization has created a prosperity
and wealth gap across the world economies. It was meant to be great
equalizer for every emerging markets or Newly Industrialized countries including China, India, Mexico, and Vietnam, but instead has intensified the
various nations wealth disparity. Under the cloud of globalization trend,
skilled labor, technology, large amounts of trade and investment, gradually
pool in to developed countries which exercise a mandate over world
economy. Everyone thought that there will be easy flow of goods, services
and capital from one country to another.
Most of the developed countries are driven by profits and they grudge at
transferring technologies, shifting outdated industries of low value and heavy
pollution to developing countries. Globalization does seem to contribute to
increasing inequality with in nations, but it does not seem to contribute as
much too increasing inequality between nations. It is arguable that
globalization is making developed countries to treat developing countries as
colonies. The developed countries are exploiting the developing countries by
buying cheap things without helping developing or poor countries, without
really helping those countries progress to the point at which they can
compete with developed countries in producing things that are more
profitable.
The other main factors include historical and cultural aspects of developing
or poor countries. Poorer countries neither seek creations at home nor can
acquire advanced technologies from other developed countries. High and
sustained levels of inequality, especially inequality of opportunity can entail
large social costs. Entrenched inequality of outcomes can significantly
undermine individuals education and occupation choices. Further inequality
of outcomes does not generate the right incentives, if it rests on rents. In
that event, individuals have an incentive to divert their efforts towards
securing favored treatment and protection, resulting in resource
misallocation, corruption and nepotism, with attendant adverse social and
economic consequences. In particular citizens can lose confidence in
institutions, eroding social cohesion and confidence in the future.
Cons:
The general complaint about globalization is that it has made the rich
richer while making the non-rich poorer. It is beneficial for managers,
owners and investors, but hell on workers and nature.
Globalization is supposed to be about free trade where all barriers are
eliminated but there are still many barriers. For instance161 countries
have value added taxes (VATs) on imports which are as high as 21.6%
in Europe. The U.S. does not have VAT.
The biggest problem for developed countries is that jobs are lost and
transferred to lower cost countries.