Poli 260 - Week 13 (Lecture)

Poli 260 - Week 13 (Lecture) - Poli 260 Week 13 Notes How...

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Poli 260 Week 13 Notes How is the majority of folks, who are poor and in developing countries, dealing with their world? Political society: ‘democracy from below’. Insights from Appadurai (slum-dwellers in Mumbai) and Maathai (women’s activism in Kenya) Bottom Line (from last time) - On aggregate (therefore on average), standard of living improves with globalization o More consumer goods o More efficient investment/use of resources - Why isn’t everything awesome? (3 basic problems): o Problem 1: disparities/inequality (particularly between rural and urban areas in DCs) o Problem 2: greater volatility/interconnection o Problem 3: limited state power (in the context of globalization) Problem 1: Disparities/inequality - Increasing gap between very rich people and middle/working class o Distribution of income – median income has shrunk – average family in the last decade is worst off - Low skill vs. high skill: o Low-skill workers exposed to global competition at a wage level that is substantially lower o This is not just between workers in North America and China, but workers in China (rising wages) are exposed to competition in Vietnam this applies to all nations - Rural vs. urban: o Rural producers also face global competition o Rural folks face commodity price volatility o Lead to increasing migration to urban areas o Increasing inequalities between rural and urban areas (most prominent in India and China) What are the causes of inequality in the West? - Some more numbers: o 1975 in US: folks at 90 th percentile earned 3 times as much as folks at 10 th percentile o 2005 in US: folks at 90 th percentile earned 5 times as much as folks at 10 th percentile Earn a lot more now than they used to relative to people below them - Why is this happening? o Trade: exposure to lower priced goods coming from elsewhere o Mechanization: processes speeded up done by computers and machines (replacing workers); there SHOULD be a number of people building machines even though machines replace workers there isn’t a decrease of labor work but a transfer from low skilled jobs to high skilled jobs (people should be moving up and learning new skills) – Frieden pg. 465 o But MOST OF ALL is premium to education: trade and mechanization hurts those with lower skills Rewards are accruing to people with high levels of education (earning more) Caveat: this is not all because of globalization - Deindustrialization/lack of jobs for low-skilled workers in West began prior to 1980’s o Lower level of growth in the West has been born disproportionately by poor and low-skilled workers o Result in increase in inequality - BUT globalization has accelerated the process - Key: comparative advantage o Low-skill workers in high-wage economies are exposed to the greater levels of competitions from workers elsewhere (effect of globalization) High trade, foreign direct investment (capital is mobile, can move factories to other areas) o Technology requires higher skills/education than many workers have: effect of education premium
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This note was uploaded on 12/07/2011 for the course POLI 260 taught by Professor Sens,allen during the Winter '09 term at The University of British Columbia.

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Poli 260 - Week 13 (Lecture) - Poli 260 Week 13 Notes How...

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