Globalization of world economy (ECON 1103)
1a) Since 1980, income inequality has declined across countries but risen within most countries.
How can we relate globalization to these two opposite trends? Briefly explain.
b) Many government policies are results of rent-seeking. Give another examp...
The integration of the global economy through the globalisation of finance and trade has
been able to reach unprecedented levels thathave surpassed the pre-World War peak. The new
wave of globalisation has a lot of implications on the economic well-being of citizens among all
income groups in various regions (Hasell, Morelli and Roser 2019, p206).According to the MF, a
lot of trade integration was experienced in the 1990s when the former Eastern bloc countries
were merged into the global system of trading (International Monetary Fund 2007, P31). All
groups within developing countries and emerging markets have been able to catch up with the
high-income countries in terms of trade openness (International Monetary Fund 2007, P31). This
reflects the high spread convergence within low and middle-income countries’ trade systems
compared to the more open trading regimes that had been earlier adopted (Jaumotte, Lall and
Papageorgiou 2013, p272).
Understanding the various causes of income inequality is essential in devising the policy
measures that allow an increase in prosperity (Jaumotte, Lall and Papageorgiou 2013, p272).
New opportunities have been created by globalisation and often limit the productive capacity of
the economy since it because impossible to efficiently match labor and capital (Atif, Srivastav,
Sauytbekova and Arachchige 2012, p11).Making cross-country comparisons on income
inequality are generally faced with a lot of problems such as lack of coverage, poor reliability,
and inconsistent methodology (Jaumotte, Lall and Papageorgiou 2013, p275).
The primary analytical link between the liberalization of trade and income inequality is
derived from the Stolper-Samuelson theorem (Jaumotte, Lall and Papageorgiou 2013, p283). The
theorem implies that in a two-country factor framework, an increase in trade openness within
2 |9 P a g e
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller BityB. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $7.89. You're not tied to anything after your purchase.
