The Processes of Globalization Since 1980 Resulted in a More Even Distribution of Income

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Globalization and Inequality

Unit Name: International Business and Global Change
Unit Code: 40083116_1213_9
Name: RUIKAI XU
Student Number: 10621841

Contents

1. Introduction

2. Definition and Measure of Inequality
2.1 Gini Coefficient

3. Recent trends in Inequality and Globalization
4.1 Cross-country comparisons of inequality
4.2 Income distribution within countries
4.3 Impact of Globalization on Inequality

4. Empirical Investigation
5.4 Key Factors on Inequality Improvement
5.5 Trade and Financial Globalization Impact
5.6 Conclusion of World Economic Outlook 2007

5. Critical Review and Conclusion

6. References

1. Introduction
The process of Globalization started from the 15th century with the geographical discover and overseas expansion (i.e. subjugation and exploitation) in the late 15th century, which gave birth to the economic globalization. From the late 18th century to the mid 19th century, economic globalization was taking place as the first industrial revolution was completed and the development of capitalist system. After that, the second industrial revolution and the development of monopoly capitalist system in the period of late 19th century to the early 20th century accelerated the process of globalization. The process of globalization also has its own difficulties during the period from World War I to the end of Cold War. After that, globalization developed rapidly from the 1980s (i.e. after the end of Cold War) and made the world different (Octavian – Dan, 2010). One of the results of globalization is the increasing of inequality. As globalization taking place around the world either within the country or cross-country, the inequality is increasing as a consequence. In this essay, it will be shown how the distribution of income is more unequal during the process of globalization since 1980. The definition and measures of inequality is represented in the first part of this essay. After that, the recent trends in inequality and globalization are drawn from the second part with the impact of globalization. There will be some evaluation on both trade and financial globalization which comes with a conclusion of key study (i.e. World Economic Outlook 2007) in the following chapter 4. In the last chapter before the final conclusion, there are some critical reviews with same conclusion of inequality increasing but comes from different ways. Thus a conclusion of this essay is summarised by both World Economic Outlook 2007 and self researches. 2. Definition and Measures of Inequality

Inequality has its differences with poverty but also relate to it. Inequality is a much wider concept than poverty as inequality is defined with the aggregate population rather than the poor. By contrast, poverty only focuses on the poor people with a living standard under the poverty line. Most inequality measures do not rely on the mean of distribution. This mean independence characteristic is considered as a desirable characteristic of inequality measure. Inequality measures are often calculated by distributions as income rather than expenditures such. Basically, a measurement of inequality on distribution indicates the gap between individuals making most of their income and those who making very little of income in a given country. The simplest way to measure inequality is that dividing the entire population into quintile from the poorest to the richest and figure out the proportion of income accrue to each level. 2.1 Gini Coefficient

Gini Coefficient is a most widely used measure of inequality. As based on the Lorenz curve, it is a cumulative frequency curve which contrasts the distribution of a particular variable (e.g. income) with the uniform distribution which indicates the equality. In the Gini Coefficient, there are cumulative percentages of individuals on the horizontal axis where the percentage rises from the poorest to...
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