Globalization And Inequality

Globalization, Inequality and Poverty

"The concept of globalization refers to the process that involves increasing interdependence of societies and nations around the world" (Nicholas, Dethier and Rogers 417). Globalization comes after Western European countries and the United States reached a higher level of development and trade agreements between them became more important, breakingbarriers in money liquidity. Today, thanks to advances in global trade, technology, telecommunications and transport, the phenomenon of globalization is more present than ever. However, how is globalization developing? Is this a positive process for all? If not, who benefits and for who is doesn’t? There are several theories that attempt to explain globalization, and various effects produced by theprocess in the different countries.

The main theories explaining globalization can be described as liberal, realistic and Historical structuralists. The three differ in their views of development and the consequences that are produced in nations. First, liberal theory sees globalization as a step forward concerning to humanity, due to factors such as control of governments, like technology, ormultinational corporations. Realistic theory, on the other hand, argues that globalization occurs only with the permission or encouragement of the most powerful states, and these determine the limits of the interactions between companies (Nicholas, Dethier and Rogers 418). Finally, the structural theory as liberal, believes that globalization is due to several factors, but varies on the effects onsociety, as it considers this phenomenon as a negative process for the poorest nations, it prevents to safeguard employment and welfare of the country. (Cohn 97)

It is not possible to qualify these theories as positive or negative to explain factors that promote development of globalization, and the consequences of this process. We can say that all are valid, and somehow they are all true.Globalization is advancing thanks to various aspects, and their effects can be useful or harmful, depending on circumstances in which concerns a person or a state. For instance, globalization means, among other things, the opening of world markets so it provides opportunities for development. To seek opportunities, national strategies are plotted of possibilities and requirements greater integrationinto the global economy (ECLAC 2002). But at the same time, this process involves risk of exclusion for those countries that are unprepared for the heavy demands of competitiveness in today's world (ECLAC 2002).

The main theories mentioned above, also have their views on the consequences of globalization. We start again by liberals who recognize that, in principle, globalization may have producedinequities in society, but argue that the gains from globalization, reduce inequalities in the long term. In contrast, the realists and the structuralist view that in the short and long term, globalization has winners and losers. From the realist perspective, the great nations take advantage of globalization to reaffirm its position of power, while for underdeveloped countries, globalization is aprocess that is happening to them and which they must respond. Accordingly, the structuralist theory considers that the main beneficiaries of globalization are the most powerful states and multinational corporations who get rich at the expense of third world states and the most vulnerable social groups. (Nicholas, Dethier and Rogers 421.422)

Despite their divergent views, the three theoriesagree that globalization has had and has, as immediate beneficiaries, developed economies. This can be evidenced if we consider as a factor of economic globalization, foreign direct investment (FDI). Most FDI comes from the countries of Western Europe, North America and Japan, and in turn, are those countries that receive more FDI. In 1995, developed economies accounted for 92.1 percent of capital...