In the past 20 years’ income inequality has become a major issue in particular within the United States (US) where a significant income gap has occurred. This is exemplified by the US Gini index (GI), a measure of income inequality, which has risen from 43 in 1990 to around 47 in 2010 and is continuing to trend upward (David Moss, 2011). This has now become a problem that both develop and developing nations face. The main causes being globalization and technology. In developed countries globalization has increased cheap foreign imports with technology making importing extremely cost efficient. There’s also the outsourcing or the replacement of low skill jobs with newer technology. These two processes have contributed to higher profits for executives while low skill workers are losing their jobs by the thousands. In developing countries globalization has led to low skill workers having to compete in cheap labor markets dropping their wages even further. Technology in these developing countries has also increased income inequality with their lower class unable even be literate enough to learn newer technology. Therefore, inequality damages economies and workforces on a world scale
The second topic in the inequality debate is about inequality between nations. This argument discusses whether globalization is responsible for widening the average income gap between rich and poor nations. When inspecting the average incomes of rich and poor nations, the widening income gap does not occur everywhere. Overall, the debate of inequality between nations results show that developing nations working towards globalization and can possibly grow faster than developed nations. Nations that fail to make their way into the global market may become worse off.
Paper Presented at the 46th Nigerian Economic Society (NES) Annual Conference, Lagos. 23rd – 25th August
The world is evolving, moving toward a better lifestyle and a more comfortable way of living and conducting business, yet two thirds of the world’s population is striving to get the basic needs, living in extremely poor life conditions and suffering from several complicated issues and challenges that hinder the economic development in their countries. On the other hand, people in the other part of the world enjoy a high quality of living standards where the income per capita is high. The entire world is accordingly divided into two groups, rich and poor countries, where the richest nations with the highest income per capita are known as the “developed world” and these include the United States, Canada, most of the countries of Western Europe,
Using named examples, examine the extent to which the development gap occurs within countries as well as globally.
Foreign investment capital, both in cash and in kind (e.g. by way of machinery and equipment, technical expertise and services), play vital role in the development of Nigeria (Agosin, 2000). Nigeria has an extreme shortage of long-term debt capital, as well as equity funds. Other financial instruments that could support private sector development, such as leasing, are underdeveloped (CBN, 1992). In a continent where finance is a major constraint on development, the private sector in Nigeria, in particular, the small and medium enterprises (SMEs) suffer many disadvantages including but not restricted to high interest rates, loan terms of rarely more than one year, absence of equity capital, and stringent collateral requirements. These problems are further exacerbated by land-titling problems. Nigeria’s desperate situation stands out even
The cause of poverty in Nigeria is a result of multiple factors that overlap and run deep within the history and culture of Nigeria, which makes it difficult for the cycle of poverty to stop, yet, by understanding some of the main causes of poverty in Nigeria, anthropologist can suggest ways in which poverty can be decreased. Analysts have reviewed the country in an attempt to figure out why Nigeria is getting poorer, and many have come to some basic
Financial improvement is actualizing new innovations, move from farming based to industry-based economy, and general change in living models. The current improvement circumstance of Africa is dumbfounding. Despite the fact that it is the wealthiest mainland as far as common assets, Africa remains the poorest and the slightest created district of the world., Africa is the last worldwide outskirts that will take after the current developing forces. The economy of Africa of China, India and South America Consists of the exchange, business, farming, and human assets of the continent.the report, simply distributed, says this development has been determined basically by enhanced monetary administration on the mainland and the private part.
One, must also look to the effects of interdependence on inequality between nations. When looking at inequality among nations, Melinda Hills, examines the internationalization of markets, tax competition, and volatility of markets. Capital and Labour are assets becoming more fluid in the interdependent world. This leads to the race to the bottom as shown above, and the effects negatively impact industrialized countries the most. As shown in the article, industrialized countries will lose jobs through companies outsourcing to cheaper areas to produce. This leads in a shift in industrialized economies, workers in the industrial sector now earn lower wages working in service sector, and high-skilled workers obtain a rise in income. This leads
Asymmetric Outcomes: Nayyar (2006) suggests that globalisation has resulted in the exclusion and inequality of countries in terms of the levels of international trade, investment and finance. Not all countries have benefited from the process and there has been a widening gap between the rich and poor for instance countries in Sub-Saharan Africa are not in the picture. Theorist Eric Maskin agrees with this conclusion and suggests that while average income has been rising as a result of more trade and global production, inequality has also increased (World Bank, 2007), by contrast there are arguments that suggest that increased openness to trade and investment has reduced overall global inequality (sph.umich.edu, 2000). (Dollar & Kraay, 2002) suggests that the current wave of globalization, which started around 1980, has actually promoted economic equality and reduced poverty.
The economic condition of Nigeria has been damaged due to conflict among several competing ethnic, tribal and religious group has limited political stability and led to political strife. As per United Nations, Nigeria has low human development because of the high number of illiteracy among adult population and also due to low life expectancy rate.
The generation of self-employment in non-farm activities requires investment in working capital. However, at low levels of income, the accumulation of such capital may be difficult. Under such circumstances, loans, by increasing family income, can help the poor to accumulate their own capital and invest in employment-generating activities (Hossain, 1988). Commercial banks and other formal institutions fail to cater for the credit needs of smallholders, however, mainly due to their lending terms and conditions. It is generally the rules and regulations of the formal financial institutions that have created the myth that the poor are not bankable, and since they can’t afford the required collateral, they are considered uncreditworthy (Adera, 1995). Hence despite efforts to overcome the widespread lack of financial services, especially among smallholders in developing countries, and the expansion of credit in the rural areas of these countries, the majority still have only limited access to bank services to support their private initiatives (Braverman and Guasch, 1986). In the recent past, there has been an increased tendency to fund credit programmes in the developing countries aimed at small-scale enterprises. In Kenya, despite emphasis on increasing the availability of credit to small and microenterprises (SMEs), access to credit by such enterprises remains one of the major constraints they face. A 1995 survey of small and
The foundation of Moyo’s thesis is that foreign aid flooding Africa for the last half century has not worked and has actually harmed Africa’s growth more than it has helped. Moyo’s references that many countries that have substantially less aid than many of the African countries yet aid have
During 2003-2007, Nigeria attempted to implement an Economic Empowerment Development Strategy (NEEDS). The purpose of NEEDS is to raise the country’s standard of living through a variety of reforms, including macroeconomic stability, deregulation,
Another major characteristic of microfinance is that they have numerous loans to informally-organised businesses which are often in small amounts over a short-term period with turnover of the aggregate loan portfolio maturing several times during the year. These are unsecure loans with simple repayment structure and documentation, but interest rates are generally higher than those in the formal sector (Anderson, 2002).