Contact Information:

Media Contact

Julia Mironova


Kredyty mieszkaniowe Kredyty mieszkaniowe

Sprawdź aktualny ranking najlepszych kredytów mieszkaniowych w Polsce - atrakcyjne kredytowanie nieruchomości. - Press Release Distribution
RSS - Press News Release
Add Press Release

Globalization is not saving developing countries from inequality

( The processes of globalization should have contributed to reduced inequality in the world. In reality, however, the situation looks differently, with income inequality in the populations of developing economies growing. To correct this, the level of education of low-skilled workers must be increased, said Eric Maskin, Chief Research Fellow at the HSE International Laboratory of Decision Choice and Analysis and Nobel Laureate in Economics for 2007.

In the last 20 years, the world has experienced unprecedented growth in global markets. Trading borders between countries have become more open. Supporters of globalization predicted large gains for developing economies, and in many ways, these predictions have come true. For example, China and India have seen a serious increase in GDP per capita precisely as a result of the growth of global markets. However, not everything has been so rosy. It was expected that globalization would also reduce the gap between the 'haves' and the 'have nots' in poor countries, which manifests itself in significant income inequality or, more precisely, in wages. In actual fact, however, this inequality has only increased. China and India are again vivid examples of this, writes Eric Maskin in his article 'Why Haven't Global Markets Reduced Inequality in Emerging Economies?', which has been published in The World Bank Economic Review.

Together with Michael Kremer, a colleague who is an economist and professor at Harvard University, Maskin developed an alternative theory that demonstrates why the difference in incomes is increasing in poor countries in proportion to the growth in globalization. They believe that the reason lies in a large gap in the level of education of highly skilled workers and low-skilled workers.

The theory of comparative advantage does not pan out According to the well-known theory of comparative advantage, trade between two countries brings benefits to both countries, even if one of them has an absolute advantage in the production of specific goods. Maskin notes that this theory, developed over two centuries ago, until recently was confirmed by the experience of all previous waves of globalization. If a poor country has more low-skilled labour, then it is more favourable, for example, to grow and export rice than to produce computer software, because the relevant specialists in that country are priced like gold. If a poor country still produces computer software, the difference in wages between programmers and agricultural workers is very high, and the production of software itself is not effective due to the lack of specialists. However, both countries need both rice and software. When trade barriers are removed, the poor country can concentrate on producing rice, which increases the demand for low-skilled workers and, consequently, reduces the demand for highly skilled workers. This is precisely the way in which globalization reduces inequality in poor countries. In contemporary conditions, this theory does not pan out. One of its premises is that the greater the difference in the level of skills in the labour force between two countries, the more these countries will trade with one another. However, Maskin notes that the globalization that is currently underway has led to a very small scale of trade between rich industrialized countries (e.g., the U.S.) and the poorest countries (e.g., Malawi). The predicted reduction in inequality has not taken place.

Education reduces inequality Maskin and Kremer have developed an alternative theory that actually shows what happens with income inequality during the process of globalization. First, they note that the current globalization differs from all previous eras of internationalization of the production process. For example, computers are now often designed in the United States, programmed in Europe and assembled in China. At the same time, a Chinese worker can be hired by a company located on another continent. The labour market has become truly global, says Maskin. However, in this new global market specific processes are taking place. To demonstrate them, Maskin identifies four levels of professional development - A and B for rich countries, and C and D - for poor countries. In the model developed by Kramer and Maskin, the level of wages depends on how specialists with different qualifications cooperate with one another to obtain the production result. The production process involves two challenges: administrative and performance. The result is achieved through a manager's cooperation with a subordinate, and the quality depends on these professionals' level of qualification. Successful cooperation therefore contributes to greater productivity and influences the level of wages for specialists. However, in this case, the issue concerns the period before globalization when A specialists cooperate with B specialists in rich countries and, respectively, C specialists cooperate with D specialists in poor countries. After globalization, the following happens: D specialists from poor countries lack the qualifications to cooperate with A and B specialists in rich countries. Moreover, if C workers from poor countries see their wages increase due to cooperation with B workers from rich countries, D workers either do not feel the growth or their wages decrease. The overall effect is that the internationalization of production will increase the wage gap between the two categories of professionals in poor countries and, consequently, increase the level of inequality. According to Maskin, the solution is to raise the level of education of low-skilled workers. However, he notes that workers themselves do not have the resources for this, and that it is not beneficial for companies to pay for their education. In this situation, a significant role can be played by governments, international agencies, NGOs and private foundations, says Maskin. He notes that the theory he has developed is in no way a call for the process of globalization to be stopped, as it has borne and continues to bear fruit in the form of GDP growth. However, Maskin argues that the most effective way to combat inequality is to give low-skilled workers the opportunity to enjoy the fruits of globalization as well. 'Kremer and Maskin have offered a surprisingly beautiful model, an alternative Ricardian theory of comparative advantage', said Fuad Aleskerov, Tenured Professor and Head of the HSE International Laboratory of Decision Choice and Analysis. 'It helps explain why globalization has led to inequality in income. And like any powerful theory, I am certain that it will lead to a surge of empirical work in this area'. Aleskerov recommends that first-year undergraduate students read this short text. 'It brilliantly explains how mathematical models can describe the fundamental processes of the economy'.


See also: Demand for 'white collar professionals' has transformed the labour market (in Russian) Uncertain employment is transforming society (in Russian) The working class more vulnerable to poverty Higher education halves the risk of poverty Social stratification is reproduced in education


Building the electron superhighway

Building the electron superhighway
TV screens that roll up. Roofing tiles that double as solar panels. Sun-powered cell phone chargers woven into the fabric of backpacks. A new generation of organic semiconductors may allow these kinds of flexible electronics to be manufactured at low cost, says University of Vermont physicist and materials scientist Madalina Furis. But the basic science of how to get electrons to move quickly and easily in these organic materials remains murky. To help, Furis and a team of UVM materials scientists have invented a new way to create what they are calling "an electron ...

Learning is not a spectator sport

Free - or very inexpensive - online courses have become quite a trend in education. Massive Open Online Course (MOOC) providers currently offer thousands of courses and have enticed millions of students to enroll. The emphasis in MOOCs is often on lecture videos that students watch and learn from. However, a study published in the Proceedings of the Second (2015) ACM Conference on Learning @ Scale shows that this central approach of MOOCs - having students watch to learn - is ineffective. Instead, the emphasis on interactive activities as advocated by Carnegie Mellon ...

Queen's researcher finds evidence of emotional 'load sharing' in close relationships

KINGSTON - New research out of Queen's University has found evidence of emotional load sharing between partners in a close relationship. The study, co-authored by PhD candidate Jessica Lougheed, found that a strong relationship with a loved one can help ease stress when placed in difficult situations. "We wanted to test a new evolutionary theory in psychology called Social Baseline Theory which suggests that humans adapted to be close to other humans," says Ms. Lougheed. "The idea is that individuals function at a relative deficit when they are farther away from people ...

Upslope migration of tropical plants due to climate change

Upslope migration of tropical plants due to climate change
This news release is available in Spanish. The plants on the highest mountain in Ecuador have migrated more than 500 meters to higher altitudes during the last two centuries. This is determined in a new study, in which Aarhus University researchers compared Humboldt's data from 1802 with current conditions. Although most of the world's species diversity is found in tropical areas, there are very few studies that have examined whether tropical mountain species are affected by climate change to the same extent as temperate species. A new study has now determined ...

Molecule made by muscle shown for first time to build bone

A recently identified molecule produced by skeletal muscle in response to exercise, has been shown to increase bone mass, according to a collaborative study between researchers at the Mount Sinai Bone Program, Icahn School of Medicine at Mount Sinai, the Department of Experimental and Clinical Medicine at University of Ancona in Italy, and the Department of Basic Medical Science, Neuroscience and Sense Organs at the University of Bari in Italy, and published online today in the Proceedings of the National Academy of Sciences (PNAS). Although exercise is a well known ...

Penn Vet team identifies a form of congenital night blindness in dogs

Penn Vet team identifies a form of congenital night blindness in dogs
People with congenital stationary night blindness, or CSNB, have normal vision during the day but find it difficult or impossible to distinguish objects in low light. This rare condition is present from birth and can seriously impact quality of life, especially in locations and conditions where artificial illumination is not available. Working in collaboration with Japanese scientists, researchers at the University of Pennsylvania have for the first time found a form of CSNB in dogs. Their discovery and subsequent hunt for the genetic mutation responsible may one day ...

Loss of cellular energy leads to neuronal dysfunction in neurodegenerative disease model

A new study from the Gladstone Institutes shows for the first time that impairments in mitochondria--the brain's cellular power plants--can deplete cellular energy levels and cause neuronal dysfunction in a model of neurodegenerative disease. A link between mitochondria, energy failure, and neurodegeneration has long been hypothesized. However, no previous studies were able to comprehensively investigate the connection because sufficiently sensitive tests, or assays, were not available to measure ATP (the energy unit of the cell that is generated by mitochondria) in individual ...

GW participates in landmark study; blood pressure management can reduce heart disease death

WASHINGTON (Sept. 14, 2015) -- According to initial results of a multi-site landmark study, led by Dominic Raj, M.D., at the George Washington University (GW) site, cardiovascular disease morbidity is significantly reduced through intensive management of high blood pressure. By targeting a blood pressure of 120 millimeters of mercury (mm Hg), lower than current guidelines, researchers found that adults 50 years and older also significantly reduced their rates of cardiovascular disease and cardiovascular events, such as heart attack and heart failure, as well as stroke, ...

Birds reveal the evolutionary importance of love

Humans are extremely choosy when it comes to mating, only settling down and having kids after a long screening process involving nervous flirtations, set-ups by friends, online matchmaking sites, awkward dates, humiliating rejections, hasty retreats and the occasional lucky strike. In the end, we "fall in love" and "live happily ever after." But evolution is an unforgiving force - isn't this choosiness rather a costly waste of time and energy when we should just be "going forth and multiplying?" What, if anything, is the evolutionary point of it all? A new study may have ...

New method to treat antibiotic resistant MRSA: Bacteriophages

New method to treat antibiotic resistant MRSA: Bacteriophages
MRSA is bad news. If you've never heard of it, here's what you need to know: It's pronounced MER-suh, it's a nasty bacterial infection and it can cause serious disease and death. Senior molecular biology major Jacob Hatch knows MRSA as the infection that took his dad's leg. Hatch was thousands of miles away on an LDS (Mormon) mission when Methicillin-Resistant Staphylococcus aureus decalcified the bones in his dad's foot and lower leg, leading to an emergency amputation just below the knee. "It was really hard to hear the news--you never expect to hear someone in ...


How your brain decides blame and punishment -- and how it can be changed

Uniquely human brain region enables punishment decisions

Pinpointing punishment

Chapman University publishes research on attractiveness and mating

E-cigarettes: Special issue from Nicotine & Tobacco Research

Placental problems in early pregnancy associated with 5-fold increased risk of OB & fetal disorders

UT study: Invasive brood parasites a threat to native bird species

Criminals acquire guns through social connections

Restoring ocean health

Report: Cancer remains leading cause of death in US Hispanics

Twin study suggests genetic factors contribute to insomnia in adults

To be fragrant or not: Why do some male hairstreak butterflies lack scent organs?

International team discovers natural defense against HIV

Bolivian biodiversity observatory takes its first steps

Choice of college major influences lifetime earnings more than simply getting a degree

Dominant strain of drug-resistant MRSA decreases in hospitals, but persists in community

Synthetic biology needs robust safety mechanisms before real world application

US defense agencies increase investment in federal synthetic biology research

Robots help to map England's only deep-water Marine Conservation Zone

Mayo researchers identify protein -- may predict who will respond to PD-1 immunotherapy for melanoma

How much water do US fracking operations really use?

New approach to mammograms could improve reliability

The influence of citizen science grows despite some resistance

Unlocking secrets of how fossils form

What happens on the molecular level when smog gets into the lungs?

Using ultrasound to clean medical instruments

Platinum and iron oxide working together get the job done

Tiny silica particles could be used to repair damaged teeth, research shows

A quantum lab for everyone

No way? Charity's logo may influence perception of food in package

[] Globalization is not saving developing countries from inequality is a service of DragonFly Company. All Rights Reserved.
Issuers of news releases are solely responsible for the accuracy of their content.