Globalisation and inequality

A question from Yahoo! Answers:

Does globalisation mean that rising inequality is inevitable?

What kind of inequality are you talking about? Inequality between countries or inequality within countries?

For example, the globalization in software, pharmaceuticals, and financial services is single-handedly responsible for the fact that the gap in compensation between software developers, life scientists, and finance professionals in the U.S. and India is closing; it still exists, but it is significantly smaller than it was 20 years ago. At the same time, the gap between earnings of a college-educated Indian software developer and those of an illiterate Indian farmer has increased…

Standard economic theory predicts that wages in industries producing internationally tradable outputs will converge (in the long-run, the difference in wages will reflect only transportation costs and differences in productivity), while wages in industries producing non-tradable outputs will be determined by local market conditions.

Leave a Reply

Your email address will not be published. Required fields are marked *