(Answered) Explain the effect of globalization in making rich richer and poor poorer Explain the effect of…

Explain the effect of globalization in making rich richer and poor poorer
Globalization—greater integration of trade, finance, technology, and labor markets—has redistributed opportunities, income, and wealth across and within countries. Its effects on inequality appear through several key channels:
Capital mobility and returns to capital:
Capital can flow to high-return investments globally, increasing returns to owners of capital (wealthier individuals and corporations) and boosting their incomes relative to wage earners.
Technology diffusion and skill-biased change:
Global competition and technology adoption favor skilled workers and those who can leverage new technologies, raising skill premiums and widening wage gaps between high- and low-skilled workers.
Trade and industry restructuring:
Openness shifts production toward sectors with comparative advantage; workers in declining industries (often lower-skilled) may face job loss or wage pressure, while those in expanding or high-tech sectors gain.
Labor market segmentation and downward pressure on wages:
Global competition can encourage cost-cutting, outsourcing, and informal employment, exerting downward pressure on wages and benefits for vulnerable workers.
Tax competition and weakened redistribution:
Globalization can reduce governments’ ability to tax capital and high earners, limiting public redistribution and social spending that would otherwise mitigate inequality.
Financialization and asset concentration:
Global financial markets increase opportunities for wealthy investors to grow asset-based income (dividends, interest, capital gains), concentrating wealth gains among asset owners.
Geographic and regional effects:
Globalization benefits export hubs and urban centers more than remote or rural areas, increasing regional disparities within countries.
Empirical evidence shows mixed outcomes: in some low- and middle-income countries, globalization helped reduce absolute poverty by creating jobs and lowering consumer prices; in many advanced economies, it has coincided with rising top incomes and stagnating wages for lower-skilled workers, increasing within-country inequality. Overall, globalization can make the rich richer relative to the poor unless complemented by policies that support education and skills, worker protection, progressive taxation, social safety nets, and measures to broaden access to capital and high-quality jobs.