Explain the impact of globalisation on quality of life and distribution of income in the global

economy
Globalisation is the expansion of businesses and increasing financial integration between
economies, with the ease of transportation, communication and the reduction of barriers of
trade. Globalisation has had massive influence over both economic growth and development in
developing, emerging and advanced economies. The repercussions for globalisations have
been both positive and negative and has had vast influence over the daily lives of individuals,
and has lead to the formation of intergovernmental organisations to deal with globalisation, as
well as the massive restructuring on both domestic and foreign policies within the individual
economies. The distribution of income is used to measure the spread of income equality,
demonstrated by the lorenz curve and the gini coefficient, which measures the cumulative
amount of wealth that each percentage of the population, a perfectly equal economy would have
the poorest 10% own 10% of the wealth, the poorest 50% own 50% of the wealth and so on.
Globalisation has lead to massive industry reforms, leading to the global division of labor as
industries with comparative advantages specialise to maximise output, leading to economies of
scale as resources are more efficiently allocated in the economy. The direct outcome of this
specialisation is a greater amount of goods produced, which in turn leads to a higher level of
Gross Domestic Product (GDP), which indicates an upturn in economic growth. While economic
growth often indicates a more successful economy, it does not always correlate to economic
development, however, economic growth is often considered a precursor to development.
Economic development can be measured in a plethora of ways. Most notably is the Human
Development Index, which accounts for the average life expectancy, years of schooling and per
capita income to rank countries according to their development. One of the most influential
sources which affect all the outcomes in the HDI is the development of infrastructure, which is
highly linked to economic growth. As the average wages of citizens increase, the amount of tax
revenue collected also increases dramatically, freeing up significant amounts of capital to invest,
such as schools, roads, hospitals and policing. The effect on the individual as a result of
globalisation can be seen blatantly with the rising HDI.
Critics of globalisations have condemned its massive influence over income inequality,
denouncing the governments who are unable or unwilling to change, fearing that a restructuring
could lead to a downturn in investment or GDP. To measure the inequality in comparison to
economic growth, the inequality adjusted HDI has been developed, the trend suggesting that
countries with low or regressive taxation systems have larger amounts of inequality. The USA,
which is often claimed to be the birthplace of globalisation, shifts from 5th in the HDI (0.91) to
28th on the IHDI (0.755), suggesting the large amount of tax breaks for corporations is having a
disastrous outcome on income equality, with the USAs Gini coefficient being comparable to
Chinas. The outcome of this for the individual is debt traps and poverty cycles as the ceiling to
escape these traps is set impossibly high. The inequality does not only affect the individual, as
governments must also deal with not only the ever-growing political influence of the Trans
National Corporations, but also may face upheaval and even revolutions from citizens who feel
victimised, as demonstrated by the revolutions in Egypt. Furthermore, there is an increasing

disparity between the per capita incomes of individual economies, as foreign investment due to
globalisation is often directed toward the economies with the lowest wages and tax levels, there
is more incentive for foreign investment, creating jobs in that economy, however the tax
collected by government is low and the profits flow out of the country, back to the investors who
can further reinvest.
Despite the issues which arise from inequality, the general trend demonstrates that countries
who have actively involved themselves in the global economy, becoming members of
intergovernmental groups such as the World Trade Organisation and World Bank have seen
significant increases in their economic growth and development, economies such as China have
changed from one of the poorest on the planet, mainly focusing on rural agriculture, to an
industrial superpower thanks to the demand for cheaper goods and the global division of labor,
China now shifts toward higher investment in education and infrastructure to increase the levels
of education and move from an emerging to an advanced economy. A phenomenon which has
lifted over 400 million people above the UN poverty line and would not have been possible
without globalisation.
Globalisation has had a massive influence over the general world quality of life, but despite its
negative externalities it remains as one of the spearheads towards progression in the 21st
century, greatly benefiting individuals, businesses and governments.