Global Inequality and Economic Globalisation

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The relationship between economic globalisation and inequality represents one of the most consequential and contested questions in contemporary development economics, carrying significant implications for both national policy and international governance. Advocates of trade liberalisation and capital market integration have long argued that globalisation generates aggregate wealth gains that, over time, reduce poverty and raise living standards across participating economies, citing the dramatic reductions in extreme poverty observed in East and Southeast Asia over recent decades as compelling evidence. Critics, however, contend that these aggregate gains have been distributed highly unevenly, disproportionately benefiting capital owners, highly skilled workers, and those in globally connected urban centres while leaving behind less educated workers in deindustrialised regions who face wage stagnation and employment insecurity as manufacturing migrates to lower-cost production sites. Economists such as Branko Milanovic have introduced more nuanced frameworks distinguishing between international inequality, measured across nations, and within-country inequality, which has risen markedly in many advanced economies since the 1980s. This distinction helps explain why globalisation can simultaneously reduce the gap between rich and poor nations in aggregate terms while intensifying social stratification within individual societies, creating political tensions that have fuelled the growth of economic nationalism and protectionist sentiment in Europe and North America alike.