Growing Inequality Gap

Introduction

Recent trends in the global economy show an ever-widening gap in the equality of wealth and income. Both on the individual national and international levels, countries are becoming further separated on the level on personal wealth. This has come mainly as a result of the process of globalization. Countries are becoming more and more competitive with one another, attempting to remain afloat the expanding globalization process they have put their countries social development at great costs (Human Development Report, 2005). Many of the policies countries enact in order to remain competitive have failed in their ability to help the people. Liberalizing policies, such those specific to trade and finance, have caused greater inequality and stability in terms of employment, income, as well as hindered a countries control over their own policies. In fact, many policies have disabled a countries ability to retain control of both monetary policies and exchange rates (HRD, 2005). One of the best ways of measuring income distribution, an important aspect in the determination of wealth, is through the Gini coefficient. Little (2005) states that the measurement shows the dispersion of income across varying income levels within a country. While the process of globalization has mainly contributed to negative effects in developing countries, the gap of wealth inequality has been growing in the developed world as well. In addition to the numerous policies that are affecting these countries negatively, transnational companies are capitalizing off the impoverishment of farmers. In fact, certain companies are now earning higher profits, while farmers are being paid less for their goods than they were in the past (Siva, 2000). It is necessary for new structural reforms to be implemented if there is to be an improvement in the equality between people within nations as well as internationally. It is necessary that structural adjustments be implemented if there is to be any improvement in the growing inequality of wealth. The expanding gap of inequality has come as a result of the liberalization of policies, which have worsened the income and wealth of those in developing and can be reversed through structural adjustments and a greater responsibility on the part of transnational companies.

Growth and Inequality

The developing world in particular is of great interest in terms of increasing inequality due the more rapid increase in the gap as well as its relation to poverty. Many of the challenges, aside from inequality, that the developing world faces are centered on poverty. Poverty cannot be solved, or at the very least be reduced, without specific attention being placed on the wealth gap. Many countries are attempting to reach that sought after "developed" status without playing close enough attention to the problems that are arising as a result of their goals. The concept of growth has had great importance placed upon in it when attempting to solve the problem of inequality and poverty. The idea of growth and inequality are tied together in the sense that one may not directly solve the other. In some cases, as stated in the Report on the World Social Situation (as cited in Ravalion, 2004), the impact of growth on poverty is less likely when inequality is increasing. The relation between growth and inequality should be one of greater concern to the developing world, as attempts to solve both poverty and inequality cannot be done with just one policy. It will take a number efforts working collectively to face the challenge of greater equality and shared wealth.

Policies and Protection

Currently policies or issues that focus around the further development and benefit of large corporations while diminishing not only the well-being, but rights of others as well are dominating the world. Issues of free trade, property rights, and liberalizing policies currently are the focus our globalizing world but it's the implementation of mechanisms to protect developing countries which should be looked at closer. Policies or agreements such as NAFTA or the FTAA are only certain agreements that promote greater trade and increased interdependence. But there are certain issues far greater than those, which are harming the people who need help the most. We see issues such as intellectual property rights occurring all over the world, which are of particular importance to the international agenda, in order to protect piracy of goods (Siva, 2000). When in fact, it is those who stress the importance of these policies that use them to benefit themselves at the cost of others. There are patents and property rights held companies on products such as cotton, soya bean, and mustard and they will in fact sue farmers for saving seeds or sharing (Siva, 2000). The world has in fact come to a point where a farmer can no longer survive off the very food he tries to make. As a result, the rich are only getting richer while the poor plunge greater into poverty.

The fault however does not lie solely on the actions of the rich and powerful as many countries cede to the institutionalization of these policies. It is often external pressures, often but not always from multinationals, exerted upon countries to stay afloat the expanding global economy that have forced them to overlook social policy in exchange for greater competitiveness (The Inequality Predicament, 2005). Liberalizing policies in general have become very popular abroad over the past few decades, both in terms of finance and trade. As a result of these policies there has been increasing instability in countries abroad, certain policies have increase poverty rates as well as caused greater inequality in income distribution (The Inequality Predicament, 2005). In addition to that, there has been mixed results as to the effect of foreign direct investment on employment and growth (International Labor Organization, 2004). In fact, while the purpose of these policies have been to aid countries in gaining foreign investment. The investments have often been highly saturated to areas that have complied with certain conditions needed for investment. While investment to other areas have been minimal and in some instances only further exacerbated inequalities between countries (International Labor Organization, 2004).

With an emerging global economy, it is only presumable that there have been increasing trends towards the break down of trade barriers. Both developed and developing countries alike have been damaged by the effects of trade liberalization. As stated in The Inequality Report (2004), on the one hand we have the "widening of within-country inequalities in