Why has globalization led to an increasing income gap between rich and poor countries?

Responses

Countries with well-established infrastructure and productive capacities have more competitive industries.
Countries with well-established infrastructure and productive capacities have more competitive industries.

Laborers from developing countries migrate to developed countries in search of better-paying jobs.
Laborers from developing countries migrate to developed countries in search of better-paying jobs.

Reduced transportation costs have enabled developed countries to extract more natural resources from their colonies.
Reduced transportation costs have enabled developed countries to extract more natural resources from their colonies.

The reduced production costs provided by low wages in developing countries enable companies to make larger profits.

1 answer

Globalization has indeed contributed to the increasing income gap between rich and poor countries through several mechanisms. Let's analyze the provided responses:

  1. Countries with well-established infrastructure and productive capacities have more competitive industries.
    This is a key factor, as developed countries typically have better infrastructure (like transportation, communication, and technology), which allows for more efficient production. This gives them a competitive advantage in the global market, enabling them to dominate industries and drive economic growth, while poorer countries struggle to compete.

  2. Laborers from developing countries migrate to developed countries in search of better-paying jobs.
    This migration can lead to a brain drain in developing countries, where skilled labor moves to wealthier nations. This exacerbates the income gap as the source countries lose their most talented individuals, reducing their ability to improve their economies while increasing the labor supply in richer countries, which can drive down wages there.

  3. Reduced transportation costs have enabled developed countries to extract more natural resources from their colonies.
    While historical colonialism has had lasting effects on global inequality, the context of globalization in recent decades is more about the economic structures established than direct extraction. However, developed countries often still benefit disproportionately from resource extraction agreements with poorer countries, reinforcing existing inequalities.

  4. The reduced production costs provided by low wages in developing countries enable companies to make larger profits.
    This is a significant aspect of globalization. Many multinational corporations take advantage of the lower labor costs in developing nations to maximize profits. While this creates jobs in those countries, the profits often do not translate to significant economic development locally, resulting in wealth concentration and exacerbating the income gap.

In summary, all the listed responses contribute to understanding how globalization has led to increasing income disparities between rich and poor countries. The interplay between competitive advantages, labor migration, economic structures, and corporate strategies under globalization further complicates the landscape of global inequality.