Globalization and Poverty "The evidence strongly suggests that export growth and incoming foreign investment have reduced poverty everywhere from Mexico to India to Poland.
Journal of Globalization Studies. In addition two other indices of globalization, non-parametric Kearney and parametric principal component analysis are used as benchmarks to compare the results. The proposed new index is decomposed into four sub-components. The index is also estimated in several forms separated by different economic growth variables and in decomposed or composite forms.
The main feature of this approach is that the estimation of globalization index and the examination of its relationship with economic development are conducted in one step. All indices are compared in respect of their level, development and correlations. The empirical analysis is based on a panel data consisting of 61 developed and developing countries observed during the period — Regression analysis is used to estimate the effects of globalization on income inequality.
To examine the sensitivity of the relationship between globalization and inequality, different inequality variables are employed. It is expected that the indices serve as useful tools in comparing the globalization process among countries and the evaluation of the globalization effect on economic development and income inequality.
This study is useful in the construction of a new multidimensional index of globalization with different and estimated weights attached to the determinant factors. Introduction Globalization can be defined from various aspects not only in respect to economic activities, but also to political, technological, cultural interactions and taking into account many key factors such as standardization, transportation, communication, trading, migration, etc.
Through the process, economies become closer and more interrelated. As countries are speeding up their openness in recent years, there have been increasing concerns related to the globalization and its impacts on issues such as economic growth, poverty, inequality, regional differences, cultural dominance, environment, or economic integration.
Countries with large heterogeneity in the degree of globalization have shown different development patterns and results. The different degrees of development have become a source of inequality or poverty. Thus, the link between economic growth, inequality, poverty and globalization has become the focus of attention of many researchers.
Despite the increasing interests in the influence of globalization on economic growth and inequality, there are not many empirical studies examining the links between them. The limited empirical evidence is a result of a lack of theoretical development, limited data and unsatisfactory measures of globalization.
In recent years, several researchers have been developing methods of measurement of globalization to test the relationships mentioned. The limited evidence also suggests contradictory views on the issue.
For instance, some argue that globalization provides benefits by enhancing economic development and the reducing inequality of people with high economic opportunity, while others are against globalization due to its restricted beneficiaries. In general there is an agreement that globalization increases inequality but it reduces poverty while its regional concentration increases.
Such development has been observed in India and China. Currently there is no standard rule of measure and measurement of globalization.
The need for research in this area has recently attracted great attention. Several attempts have been made to quantitatively measure globalization. Different measures ranging from single measures like trade to multidimensional measures with different coverage of various aspects have been produced.
The differences are attributed to the availability of data and the technical skill of the researchers. The globalization index can indicate the level or the progress of globalization of countries which is also in turn changing over time.
The globalization index can be employed to quantify its impact on the difference in development or integration of countries, and the index can be used to study the causal relationship between globalization, income inequality and poverty.
In addition, the international levels of globalization can be compared over time and across regions to investigate inter-regional and intra-regional comparisons of openness.
The main purpose of this study is to investigate the relationship between globalization and income inequality by developing a new globalization index based on economic growth.
Two existing indices of globalization, the Kearney and principal component analysis, are used as benchmarks to compare the results. The proposed globalization index is decomposed into four sub-components suggested by the Kearney index.
The new index is estimated in different forms separated by different economic growth variables. The main feature of this model is the estimation of the globalization index and examination of its relationship with economic development, which is conducted in one single step procedure.
To examine the sensitivity of the relationship between globalization and inequality, we employed different inequality variables in the different models. All indices including the newly suggested index are compared in respect to their level and development. Various variables employed in the models provide sufficient flexibility to assess the measure and impacts of globalization.
It is expected that the indices provide useful tools to compare the globalization process among countries and the evaluation of the globalization effects on the economies. This study can also be useful in the construction of a new index of globalization considering the multidimensional nature of the issue and different weights attached to the determinant factors.The remainder of the paper is structured as follows.
Section 2 motivates the discussion on the relationship between globalization and poverty, and revisits some stylized theoretical and empirical treatments on globalization and its effects.
Section 3 presents the data and methodology. Section 4 presents the results, and section 5 concludes. 2.
Globalisation, Inequality and Poverty Relationships: A Cross Country Evidence Globalization, Growth and Poverty (), robust inverted U-shape relationship between poverty and globalisation. At low degrees of globalisation, globalisation does hurt the poor. However, at higher levels.
regression analysis to study the causal relationship between income inequality, poverty and globalization. The results suggest that the construction of the index and its breakdown into several. Making a direct causal impact between globalization and poverty reduction is difficult.
According to economic and political writer Doug Bandow, Some critics of globalization have contended that the process has helped the rich and hurt the poor.
Does Globalization Harm the Poor? Is Globalization a Force for Poverty Alleviation, or a Driver of Inequality? Baylee Molloy April 4, While it has been challenging for economists to make a direct correlation between globalization and poverty reduction or increases/decreases in inequality.
The indices were also used in a regression analysis to study the causal relationships between income inequality, poverty and globalisation. "The Relationship between Income Inequality, Poverty and Globalisation," IZA Discussion Papers "The Relationship between Globalization, Economic Growth and Income Inequality," TEMEP Discussion.