Inequality and Its Impact

Running head: INEQUALITY AND ITS IMPACT
INEQUALITY AND ITS IMPACT
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The impact of globalisation has boomeranged on the developed and developing nations of the
world, even though in different ways. In case of the emerging economies of the world, the
impact has been severe since the richer nations have been able to catch up the ladder of
growth faster than the developing ones and it has been observed that the inequity is one of the
growing worry for the emerging economies. This paper will be analysing the measurement of
inequality in income distribution, their impact on the developed and developing nations of the
world and the polices required to be included in order to reduce income inequality.
Discussion
There is widening income disparities among the people in the developing nations which have
an overarching impact on these economies. In case of the measurement of the impact of
inequality, the Gini Coefficient index is used for the purpose of deriving the desired results
(The Economist, 2019). This is reflective of the measurement of the income distribution of
the citizens of one particular nation. In case of less disparity of income, the indicator remains
ta 0 while in case of distribution of income being held by few wealthy individuals, it becomes
1. When all the values are same, it shows 0 which refers to perfect inequality, while for 1, it
is expressed as maximal inequality (The Economist, 2019). For example, in case of
America’s Gini, the indicator is over 0.39 while in case of Asia it is 0.42. Hence it is to be
argued that Gini coefficient has fallen sharply in the last few years especially after 1980’s to a
great extent (The Economist, 2019).
Evidence of the growing inequality in the United States and Asia
There are number of inequalities existing in different parts of the world. One of them being
the share of national income, US comprising of 421 billionaires who are the beholder of

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world’s highest share of national income (The Economist, 2019). According to the report of
the Asian Development Bank, the growing gap between rich and poor are much visible in
parts of Asia which is arguably lower than parts of Latin America and Sub-Saharan Africa.
While on hand the total number of billionaires in parts of America has increased in the last
few years, share of poorer people in parts of Asia also seen a large jump from being “ poor”
to “ severely poor”( The Economist, 2019).
Factors contributing to the growing inequality in the United States and
Asia
One of the crucial aspects of the growing inequality among the developed and developing
nations of the world due to the factors like:
Determination of wages is guided by the forces in the labour market which is conditioned by
the growing competition of number of players in the free market. Determination of the
labour market by demand and supply of the market leads to the process of unequal income
generation. Some of the other factors impacting the unequal wealth generation is lack of
educational opportunities and unviability of the effective skills. The impact of education on
the economic equality has been positively impacting the developed nations. Development of
the required sills is one of the challenges of the developing nations. Another issue associated
with the development of income equality is growth of technology and their effective use. The
impact of globalisation has been negatively impacting the developing nations of the world
(The Economist, 2019). Moreover the use of technology has been changing the nature of
work which has not only impacted the job market; it has equally obliterated the middle skill
jobs. This has been one of the factors likely to impact the process of skills in the labour
market. Another crucial aspect of the income inequality between US and Asia is
“globalisation”. It is significant to note that competition between the rising economies of the