The current stage of our world`s development brings us to the conditions of global integration, meaning that most local economies become no longer just individual, but mostly interdependent between each other. Some people see a range of advantages for the individual`s standard`s of living in globalized society, while others try to find mostly disadvantages. So, due to that, we have got two opposite points of view, but which is more likely to be fair, and what other surprises globalization has prepared for us? In this essay we will try to reach the truth and find out the answers to these and many other questions.
First of all, it should be said that there exists a lot of definitions of globalization, but the essence all of them is approximately the same. In short, [1] globalization means the speedup of movements and exchanges (of human beings, goods, and services, capital, technologies or cultural practices) all over the planet. One of the effects of globalization is that it promotes and increases interactions between different regions and populations around the globe. For sure, it is not new concept. Traders traveled vast distances in ancient times to purchase commodities that were rare or expensive for sale in their domestic countries.
Perhaps, one of the most prominent representor and symbol of globalization is an American-based multinational fast food chain McDonald's, which connects people all over the world. [2] Based on its annual report for 2021, McDonald's operated 40,031 total stores worldwide in over 100 countries. [3] Since, more businesses are built in different places, more local people are hired, which is directly increasing the standards of living by enlarging employment percentages, helping people earn for their families and also provides the opportunity to deliver good services to the customers. Furthermore, not only food industries play active role in globalization, banking, automotive and technological companies also are involved in this process.
So, on the one hand, considering our first example, you might think that people only benefit from globalization, but not everything is so rosy as it seems at first glance, because when it arrives somewhere, it must disappear somewhere. Such prerequisites of globalization may affect inequality in various ways. Firstly, it makes a difference in wages and other factor prices and thus changes the distribution of market incomes. Secondly, globalization affects political decisions and leads governments to change the tax system and public spending including spending on the welfare state. And thirdly, it causes a redistribution of resources and income among the population of different countries.
For instance, when a big company decides on moving its production to another country with cheaper labor and resources to minimize its costs and make the product more available for customers, the domestic labor market often suffers. Workers with a narrow profile massively lose their jobs and stable income, and therefore the opportunity for normal living conditions. The same situation arises when a foreign company displace a domestic manufacturer in one or another country. That is, what should have caused a certain benefit for society, on the contrary, resulted in a significant decrease in the level of income and deterioration of living standards. [4] The economist Branko Milanovic, using data from the World Bank, argues that the losers from globalization are working people in rich nations. Milanovic’s research demonstrates that a large portion of the lower middle class in the U.S. and Western Europe have seen little to no gain in income since 1988. At the same time, 200 million Chinese, 90 million Indians and nearly 30 million people in Indonesia, Brazil, Egypt and Mexico have profited from globalization.
Based on Florian`s Dorn study, we also can say, that the effect of globalization on income inequality is likely to differ depending on the development and income level of countries. [5] OLS fixed effects estimates in Table (which you can see in my Exel file) show a positive and sіghnifiсаnt соrrеlаtіоn bеtwееn glоbаlizаtіоn and іnсоme іnеquаlity within the sample of the 106 emerging markets and developing economies (columns 3 and 4), but no statistical significance within the 34 most advanced economies (columns 1 and 2). OLS fixed effects estimates show, however, a positive and significant correlation between globalization and income inequality for all 82 higher income countries (columns 5 and 6). The higher income sample includes the advanced economies sample and the 48 emerging economies having a per capita income level above a minimum threshold. All subsample-results confirm the baseline results indicating that the relationship between globalization and income inequality is significant. The results also suggest that the relationship between globalization and income inequality is larger for less developed countries than for more advanced economies.
Globalization really have a huge impact on changing of standards of living and income inequality in the united world, but the results of this influence vary for people from countries with different levels of economic growth. As was mentioned before, population in highly developed states may suffer from losing stable income due to increasing of open trading, and vice versa people from developing countries acquire opportunity to make their life better in material way. This process provides all of us with variety of goods, services, information resources etc, also domestic businesses acquire much more opportunities to grow on international scale. Globalization leads to massive migrations from rural to urban areas, rapid grows of cities and trade hubs and then to increase in incomes and higher standards of living, but at the same time leads to crime, homelessness and poverty. It also causes many possible risks for ordinary working people and country`s local companies due to high competition with foreign manufacturers. But still, considering all this proc and cons of globalization, we should understand that despite of its partly harmful influence of people`s material stability we should get used to such conditions of living, because it is unstoppable process and only thing that we could do is to regulate globalization wisely with the help of legal instruments.
List of used resources:
1. What is Globalization? Examples, Definition, Benefits and Effects https://youmatter.world/en/definition/definitions-globalization-definition-benefits-effects- examples/
2. McDonald's Stock: King Of Fast Food Is Here To Stay (NYSE:MCD)
Investments
https://seekingalpha.com/article/4499843-mcdonalds-king-of-fast-food-is-here-to-stay
3. McDonald's and Globalization: Impacts on Society
By: Henrique Bertulino et al.
https://studybay.com/blog/globalization-and-impact-of-mcdonalds/
4. Income Distribution - World Bank
From the Fall of the Berlin Wall to the Great Recession
Christoph Lakner Branko Milanovic
https://documents1.worldbank.org/curated/en/914431468162277879/pdf/WPS6719.pdf
5. European Commission, official website
Globalization and Income Inequality Revisited
https://ec.europa.eu/info/index
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Supervisor: Khmil Oxana Oleksandrivna, teacher of the department of foreign philology and translation, State University of Trade and Economics, Kyiv, Ukraine
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