In recent years, American dramas like 'Sex and the City' and 'Friends' were popular with many people in Korea. Nowadays, there is also a craze for popular Korean cultures in many Asian countries. And according to recent a newspaper reports, Korea I ...
In recent years, American dramas like 'Sex and the City' and 'Friends' were popular with many people in Korea. Nowadays, there is also a craze for popular Korean cultures in many Asian countries. And according to recent a newspaper reports, Korea Institute for Industrial Economics and Trade says that household income in Korea increased by only 1.7% from 2006 to 2010, whereas profits of companies in Korea increased by 18.6% for same periods. These cultural phenomena and economic phenomena are different things. But, today's phenomena of globalization pass through those different things. In this respect, globalization is the most crucial global mechanism ruling our everyday life. And our society is confronted with the deepening social polarization and the weakening of growth engines. Also these problems are closely connected with globalization. In this sense, the studying on effects of globalization upon the poverty and the income inequality will become meaningful discussion.
Therefore, this paper aims to analyze how globalization has effect on world poverty and income inequality, with focusing on the case of China. For this purpose, it is examined for this paper statistical data which is published in State Statistical Bureau(SSB) in China, data published in various international organizations like as World Bank, OECD, and IMF, and many reference books written various scholars and researchers. And in order to review the change of poverty and income distribution in China, it is used head count, Gini coefficient, quintile shares, and decile shares in this study.
For this study, I will review recognitions of scholars about effects on poverty and income inequality of globalization firstly, and study on how world poverty and income inequality is affected by globalizaion in sequence. And then, I examine the change of poverty and income inequality in China.
The scholars who recognize globalization in liberalist viewpoints contended that global poverty and income distribution have both declined over the past decades by effects on globalization. According to data published international organization like World Bank and OECD, global absolute poverty has been fallen generally. Chen and Ravallion(2007) and Sala-i-Martin contend that global head count largely has the trends to reduce. And Sala-i-Martin says that the world Gini coefficient in 1970 was 0.653(peaking in 1979 at 0.662), since then, the world Gini coefficient in 2000 reached 0.637 with having a downward trend.
But, a lot of globalists who have a critical view on this liberalist understanding on globalization argue that they distorted actual trends in global poverty and income inequality. These critical globalists contend that the primary force of today's global inequality is neoliberal globalization, economic globalization is principle source in shaping pattern of unequal distribution of income, and the extreme poor who live on incomes below 1 US dollar a day - this is World Bank's threshold - have been increased. Besides, most of comparative study to measure global poverty and inequality adopt purchasing power parity(PPP) exchange rate. By the way, according to Wade(2004), the adjustment by PPP exchange rate generally raises the income of poor countries. So this make the income distribution between poor country and rich country less unequal. Therefore, the influence of globalization on world poverty and income inequality can not be assessed unilinearly. What is more important on change of poverty and inequality of individual state are economic policies and political choices of each state than the structure of global economic order.
The change of head count and income inequality has been shown differently by economic policies and political choices, in China. Prior to the mid-1980s, the purpose of economic reform in china was focused on agriculture and rural economy. The poverty ratio in China has fallen sharply during these periods. But since the mid-1980s, the purpose of growth policy in China was focused on the greater integration with the global economy. In these periods, the decline rate of poverty had slowed, and conditions of income distribution had deteriorated, in China. Gini coefficient of the beginning of economic reform was only 0.31, however in 2004, Gini coefficient rised 0.45 in China, a similar level of USA. The Economist described that China is the second poorest country following South Africa today. Bulk of income inequality in China is considered to derive from the growing gap of economic growth of urban-rural and interregional. The increase in overall inequality in China is largely explained by the widening gap between rural living standards and urban living standards. This rising of inequality in China is exacerbated by hukou restrictions on rural-urban migration. And inter-provincial inequality, that is, the gap between the province having many benefits by 'open door policy' and the province having almost not benefits by it, also aggravate the situation of inequality in China. So, in recent years, Chinese government recognize problems mentioned above, and take various measures in order to resolve those problems.