The Idea of Good Governance and the Politics of the Global South: An Analysis of Its Effects by Haroon A Khan

Author:Haroon A Khan [Khan, Haroon A]
Language: eng
Format: epub
Tags: American Government, Political Science, Public Affairs & Administration, General
ISBN: 9781317567202
Google: _fxWCgAAQBAJ
Goodreads: 26372760
Publisher: Routledge
Published: 2015-08-11T00:00:00+00:00

Inequality

One of the concerns of globalization is whether it causes income inequality. Dollar and Kraay (2001) claim that foreign assets and the share of trade in GDP have been increasing year by year while transportation and communication costs decreased: there is an increase in income inequality.

It is widely acknowledged that the more industrialized countries and the newly industrializing economies in Latin America and Asia benefit from globalization, the developing countries such as Argentina and Turkey remain outside the global market and that the gap in living standards between the North and South is growing.

(Abella, 1998, p. 1; Ertekin & Dural, 2011, p. 47)

According to the UNDP (United Nations Development Programme), in 1975, in high-income countries the GDP was 41 times higher in comparison with the low-income countries such as Kenya and Nepal, and eight times higher than in middle-income countries such as Mexico and Latvia. In 2013 figures, the GDP of Bangladesh was $150 billion, $66.5 billion in Sudan, $1.8 billion in Canada, and in the USA is $16.7 trillion (World Bank, 2014). The difference, which increased dramatically in the last 30 years, is a strong incentive for international migration (Murru, 2008, p. 154). There is a positive correlation between the net migration flows (immigration minus emigration) and the income (or real wages) per person, in the country receiving additional immigrants (Solimano, 2001).

Divergence between the rich countries of the west, and in most developing countries, created an attractive difference in wages and caused a very new immigration stream (Stalker, 2000, p. 21). While countries such as

India and China have experienced increased growth rates, rising standards of living and a general reduction of poverty, the gap between the have and the haves-not has grown exponentially. Per capita urban incomes were 2.2 times higher than in rural households in 1990 which increased to 2.6 in 1999 and further to 2.8 in 2000. This has mainly been ascribed to rural unemployed not being able to find jobs owing to their lack of technical skills and education.

(Ibid.)

Based on a compiled panel of 51 countries over a 23-year period from 1981 to 2003, Jaumotte, Lall, and Papageorgiou (2013) estimate a greater impact of technological progress than globalization on inequality. The impacts of globalization reflect two offsetting tendencies: whereas trade globalization is associated with a reduction in inequality, financial globalization—and foreign direct investment in particular—is associated with an increase in inequality (ibid.). FDI causes income inequality in advanced countries.

Elmawazini, Sharif, Manga, and Drucker (2013) found that, based on their study on Southeast Europe and the CIS (Commonwealth of Independent States), globalization deepens income inequality. Globalization has a negative impact on inequality within Southeast Europe and CIS countries. It supports the thesis that globalization widens income inequality within countries. On the other hand, others claim that FDI reduces poverty and income inequality within countries (Heshmati & Lee, 2010; Dollar, 2005; Dollar & Kraay, 2001; Cline, 1998). However, Cornia and Sampsa (2001) show that inequality within countries has increased from the 1960s to the 1990s in 48 developed and developing countries.

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