How Globalization Increases Inequality: An Economic Analysis

Abstract

Globalization has generally increased inequality both between and within countries. Internationally, core developed countries benefit most from global trade, capital flows, and rule-making power, while developing countries remain disadvantaged through unequal trade, weak influence in global institutions, and greater exposure to financial risks. Domestically, globalization deepens class and gender inequality: workers in developed countries face unemployment and wage stagnation due to deindustrialization, while small farmers and women in developing countries are often exploited under the new international division of labour. Although globalization has reduced absolute poverty in some regions, its benefits have been distributed unevenly, widening the gap between rich and poor.