Global North and Global South

How does globalization influence the widening gap between the Global North and the Global South?

Abstract

This study seeks to evaluate the hypothetical belief that globalization has dramatically enhanced the gap between the global North and the global South. Notably, different scholars have taken different views as far as globalization relates to inequality between the global North and the global South. This Papers findings will therefore inform on the accurate contributions of globalization towards the global north-south inequality.

According to some scholars, there is overwhelming evidence to relate globalization to the widening gap between the global North and South compared to Africa and western Europes per capita parity. However, some studies have also claimed that merging national economies to create a global economy has significantly contributed to reducing poverty and inequality across the globe.

In the literature, Zhou et al. (2011) argue that, after studying the effects of globalization on 60 countries inequality distribution, globalization can minimize or increase the global North and global Souths income inequality. Also, Bergh and Nilsson (2011) concluded that reforms geared towards economic freedom appear to heighten inequality between the Global North and global South. However, in their findings, they also argue that legal, political, and monetary globalization does not influence the global north-south gap.

The methodology of this study uses globalization indices such as the Kearney index and the principal component index. Also, to look at the cross-country inequality trends, this study will use inequality data from the most current World Bank Povcal database, supplemented with the Luxembourg Income Study (LIS) data that gives high-quality coverage of developed economies (Global North). Consequently, the study will adopt the Gini coefficient, which will help the researcher observe the inequality gap among the sampled countries within the last two decades. Subsequently, each countrys Gini coefficient will be regressed on principal component (PC) indices and Kearney indices for all the 50 sampled countries.

Introduction.

Global North is loosely translated as more economically developed countries, while Global South refers to less economically developed countries (Reuveny & Thompson 2007). The North primarily refers to the western (First) world countries, while the South is mainly the third world countries (Sofie,2013). However, irrespective of significant development gains worldwide, there is tangible evidence indicating a widening gap between the worlds richest and poorest countries. For instance, in 1820, West Europes per capita income was three times higher than Africas; otherwise, by 2000, it was thirteen times bigger (Kolb,2018).

Moreover, globalization has political, social, and cultural origins; however, much concentration is directed to economic globalization and the consequences. Some scholars have defined economic globalization as the integration of national economies to international economy through trade, technological transfer, capital flows within short terms, foreign investments and international transfer of workers. (Bhagwati, 2004) To the economists, their primary concern is globalizations impacts on developing countries societies and economies. (Silbey, 2017) According to Bhagwati 2004, the merging of national economies into one global economy alleviates poverty, enhances economic growth, reduces the global North and global south inequality gap, and helps solve pollution and democracy issues worldwide in China and India. (Ogunyomi et al. 2013)

Nevertheless, the view has faced opposition from some quarters claiming that globalization has resulted in economic insecurity instead and has hugely contributed to the growing inequality between the global North and Global south. Marjit et al. 2004; Bergh & Nilsson 2011) both have argued that globalization has not only contributed to the enhancement of a wider gap between the global North and global South but has also resulted in increased inequality between the rich and the poor...

…coherent comparison of each models dependent and explanatory variables. (Dreher et al. 2008) Hypothetically, the coefficients of the KOF index should positively relate to the Gini coefficient in the above four models. (Borjas & Ramey 1994) According to the study hypothesis, increased globalization would reduce inequality within the sample countries. (Zhou et al. 2011)

Furthermore, the study anticipates an inverse relationship between inequality and education index within the sampled countries. (Atif et al. 2012) Also, education is used in the study as a control variable; however, its estimates will provide some inherent results. (Dreher et al. 2008) Furthermore, the study hypothesis is to find a direct link between globalization and income inequality, leading to an increased gap between the rich and emerging countries. (Bhagwati, 2004)

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