With globalization, there has been a significant shift in economic power from developed countries to developing countries, leading to a widening gap between the rich and the poor. Developed countries have experienced job losses and declining manufacturing sectors, while developing countries have seen a rise in low-wage labor and informal economies. This has resulted in a concentration of wealth among a small elite in both developed and developing countries.
Factors contributing to this growing economic inequality include:
- Trade liberalization: The opening up of markets to international trade and investment has allowed corporations to relocate their production facilities to countries with lower labor costs, leading to job displacement and wage stagnation in developed countries.
- Technological change: The rapid advancement of technology has transformed the nature of work and led to a demand for highly skilled workers. This has created a divide between those who possess these skills and those who do not, resulting in unequal access to opportunities and income.
- Financial globalization: The increased flow of capital across borders has allowed wealthy individuals and corporations to invest in financial assets, leading to a concentration of wealth in the hands of a few.
- Tax policies: Tax policies that favor the wealthy, such as low capital gains taxes and regressive tax systems, have further contributed to economic inequality.