This chapter highlights the main international cleavages in the reform of multilateral governance and the institutional processes that underpin globalization. This picture has had important implications in the form of widespread political mistrust and thus a lower perceived effectiveness of democratic institutions. As a result, the share of capital in total income and profits has grown steadily while conditions have become increasingly precarious for labor, which inevitably bears a disproportionate economic risk given its immobility relative to capital or goods. Globalization has redistributed income toward capital at the expense of labor, invigorated by the growing impact of technology and trade deals tilted in favor of capital and the wider financial community. Research and development–intensive industriesĪt the same time, the commodification of labor during the competition for capital has exacerbated inequality, notably in underdeveloped economies.Workers who can move to high-income countries.Workers and capital of export industries.Table 1: Winners and Losers of Globalization As a result, while the general welfare benefits have been immeasurable, distant, and diffused, the costs of globalization have been concentrated in specific communities, industries, or geographies that have suffered from dislocations. This trend has depressed wages for low- and middle-income earners in advanced economies, especially since the 2008 global financial crisis. In recent years, demand for unskilled workers in industrialized economies has steadily declined because of skill-biased technological change, the offshoring of labor-intensive jobs, and the substitution of local production with cheaper imports from emerging markets. 2 Around the world, educated and highly skilled workers have enjoyed outsize growth in income and wealth, both of which are increasingly concentrated in the top percentile of earners. A chief criticism of globalization is that in its current form, despite its overall welfare-generating nature, it has worsened inequality within and among countries. Yet, globalization has produced both winners and losers (see table 1), and their uneven distribution has started to raise concerns. In China alone, nearly 800 million people have been lifted out of extreme poverty since the 1980s. It has also helped developing nations diversify their economies and fight poverty. It has allowed industrialized countries to rely on their exports to boost their potential for growth. Globalization has been a key driver of growth and affluence around the world.
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