ABSTRACT
Global inequality – that is, income gap between the high-income and the low-income countries – has generally increased at the same time as globalization has enlarged in recent decades. Proponents of globalization argue that globalization, such as freer trade and more mobile capital flows, helps both advanced economies and developing economies grow faster by providing low-cost goods at home and access to new markets abroad. On the other hand, opponents of globalization insist that globalization exacerbates the existing bias against developing countries in the global economic system, which is inherently structured to favour the advanced economies. Has globalization caused the global inequality? Is the market integration unfair to less developed countries, as anti-globalization protesters insist? Or, has globalization helped developing countries to achieve higher economic growth and reduce poverty as globalization proponents argue?
To answer these questions, this chapter reviews key theories on globalization and economic growth: liberalism, neoliberalism, Marxism, structuralism and dependency theory. This chapter also examines two development strategies adopted by developing countries: Import Substitution Industrialization (ISI) strategy and Export-Oriented Industrialization (EOI) strategy. Based on structuralism and dependency theory, Latin American countries adopted Import Substitution Industrialization (ISI) strategy, while East Asian countries chose Export-Oriented Industrialization (EOI) strategy. This chapter reviews how these two strategies led the two regions to different economic development. Finally, this chapter will discuss international and domestic efforts to alleviate global inequality.
