Abstract:

Globalization is a topic which is more or less discussed worldwide as it affects probably everybody, no matter if the people want it or not. This paper describes the basics of globalization (mainly defined as mobility of various aspects like people, capital, goods and information) as well as some effects on the nations. Growing profits based on growing trade are one side of the medal, a growing inequality of income distribution the other one. And this second one affects the normal people much more than growing profits of companies. Globalization forces winners and losers, a fact which cannot be denied and is proved in statistics. Globalization is mainly done within the triad North America-Europe-Asia (Far East). Countries deal mainly with countries which are nearby. Labor productivity has a crucial impact on winners and losers. A free trade has a significant impact on world prices, many of them will get probably reduced by increased competition on the world market. The achieved effects of globalization are shown also in the distribution of incomes. An inequality is rising up income distribution even within countries and even more between countries. This is also investigated by the OECD in their report: “Divided we stand – why inequality keeps rising”. This seems to be a matter of fact and has to be understood as given or working worldwide. The result out of that is by the research of Krugman (2002) that winners are the very, very rich. This contradicts the often used statement that globalization makes nations richer. Some nations it does as well as multinational corporations but there are no real proves that all people, especially with low wages, benefit from that. Globalization is often technology based and people with low skills in developed countries will belong to early losers.