Economic Polarization Research Paper Starter

Economic Polarization

(Research Starters)

This article discusses globalization, global poverty, the resulting global systems of stratification, and their relationship to economic polarization. The article defines globalization, global stratification, economic polarization and some factors that may cause it such as neocolonialism, using sociological perspectives including the Modernization, Dependency, and International Division of Labor theories. It goes on to discuss global distribution of wealth, and provides some examples of how economic polarization affects people in several different countries from Mexico to China.

Keywords Absolute Poverty; Caste System; Class System; Colonialism; Dependency Theory; Economic Polarization; Globalization; Global Poverty; High-income Countries; International Division of Labor Theory; Internationalization; Low-income Countries; Middle-income Countries; Modernization Theory; Multinational Corporation; Neocolonialism; Relative Poverty; Slavery; Developing World; World Systems Theory

Economic Polarization


It is safe to say that most of the world's people are poor. Consider that the wealthiest 20 percent of the world's population receives 75 percent of the world's income, while 40 percent account for only 5 percent of that income (UN Human Development Report 2007/2008). Much of the world's population lives in the poorest regions of the poorest countries, such as in the rural areas of China and the rural and urban areas of India and Africa (Milanovic, 2002).

What is Globalization?

Globalization often refers to the expanding, strengthening, and swift interconnectedness in all aspects of global life from culture to finances to spirituality. For example, consumers in the U.S. can receive customer service from company representatives in India. The Dalai Lama can deliver his spiritual message from a place of exile in India, to followers throughout the world, as well as to his detractors in China. In other words, through enhanced technology such as satellites, the internet, and cell phones, globalization connects one region of the world to developments in another. Americans can follow up-to-the-minute results of political upheaval in Pakistan, while drug addicts in Belfast receive their temporary euphoria from poppies grown in Burmas (Held, McGrew, Goldblatt, & Perraton, 1999).

Global stratification is similar to social stratification, a top-down arrangement of social groups, with their position determined by the amount of control these groups have over resources such as food, clothing, shelter, education, and health care. Global stratification then, is a similar pattern of hierarchical inequality, which spans not only the groups in one country such as the U.S., but all countries throughout the world. Global stratification measures a country's social system and the level of that system's openness. There are three basic social systems in use throughout the world, the class system, slavery, and the caste system. Each of these systems, according to the Kuznets hypothesis, is subject to erosion as technology and industrialization become central to a country's economy (Kuznet, 1955).

Class System

The class system is the most open, allowing people in one class, through social mobility, to have the opportunity to move to a higher class, or even with downward mobility, to a lower class. The class a person occupies determines his or her life chances, or ability to receive more and better resources from the system. Within the class system, the Kuznets hypothesis would argue that inequality among classes would begin to diminish with increased industrialization, but then would begin to level off and even begin to increase during a post-industrial phase. This could be caused by the plethora of service related employment, which takes the place of manufacturing jobs, and which often pays much less.


Two closed systems of stratification are slavery and the caste system. Especially the caste system, but also slavery, should begin to erode with the advent of industrialization. India is an example of a country where the caste system is slowly dissolving as education and employment become more universal. Slavery involves the ownership of some people by other people. Slaves are considered property and so they have little or no control over their own lives and often over the lives of their offspring. Historically, there have been only five slave societies: ancient Greece, the Roman Empire, the U.S., the Caribbean, and Brazil (Engerman, 1995).

Caste System

Another closed system is the caste system whereby people's social status is decided at birth, usually because of their parents' status. For example, in India, some people are placed in a caste based on the type of work they do. But the caste system in South Africa, which is also slowly being dismantled with the advent of industrialization, is based on race.

Classifying Economies

The gap between the richest and poorest countries in the world has grown since the middle of the twentieth century, with the wealthiest countries often having 80 times the income of the poorest countries (U.N. Development Programme, 2003). The old method of classifying countries and their economic development into first, second, and third worlds has been replaced. It is no longer possible to lump together third world countries that have a much more diverse range of economic development, not only between one another, but also internally. A more modern classification of the world's 192 nations focuses on per-capita income development and divides them into high-income, middle-income, and low-income categories (Kendall, 2006).

Economic Polarization

The practice of creating products and services that are amenable to different languages and cultures around the world is called internationalization; sometimes referred to as localization enablement. This enablement can include translating labels, help pages, and online menus or manuals into various languages; international character sets for word processing programs; and use of global meanings and symbols (

Yet this internationalization, which seems to allow greater communication and trade of ideas, goods, and services worldwide, has led to a growing economic marginalization of many developing countries as trade and investment flows within high income countries, to the exclusion of much of the rest of the globe, leading to an economic polarization of the wealthiest countries on one side of the continuum and the poorest countries on the other end (Held, McGrew, Goldblatt, & Perraton, 1999).

These large countries at both ends of the spectrum have been called "twin peaks" (Quah, 1997). On the low end are those people, 2.4 billion in number, who earn less than $1000 per year, such as those in poor areas of India, China, and Indonesia. These billions of people only command 9% of the world's income, although they are some 42% of the world's population. The other smaller peak, representing only about 500 million people, has an income over $11,500 per person per year. The United States, Japan, Germany, France, and the United Kingdom comprise those countries that monopolize 45% of the world's income, while only accounting for 13% of its population. "An American having the average income of the bottom US decile is better-off than 2/3 of world population" (Milanovic, 2002, p. 50). Herein lies the bulk of the world's income inequality and the twin peak image graphically describing the economic polarization that increases exponentially along the continuum between these two groups of countries, with mid-range countries such as Brazil, Mexico, and Russia, adding a bit more to world income inequality.

Since the 1980s, some world regions, such as the already-wealthy Western European countries, America, and Australia, have raised their average income per person, while others, such as Sub-Saharan Africa and Eastern Europe, have declined in income. The Arab States, East Asia, and Latin America as a whole, achieved modest gains, but these are negligible compared to the wealthiest countries, especially because of relatively small population numbers (United Nations Development Programme, 2002). Some researchers argue that the tendency for poor countries to grow faster than wealthy ones should allow their income levels to converge, or to move closer together (Milanovic, 2002).

Yet, consider the rapidly growing economies of India and China, when compared in a hierarchical grouping, with the U.S. and Europe. The bottom of slightly less than one-third of global wealth distribution is dominated by India, with the middle one third held by China. The top one third is comprises North America and Europe. People living in low-income countries have difficulty accumulating wealth. The figures are dramatic: the top 10 percent of the population owns 85% of global household wealth, more than 8.5 times that of the global average, where the bottom half of the hierarchy owns only 1 per cent of global wealth. Only an income of $2161 would place an adult in the top half of the world's wealth distribution, but to be in the top 10% of that, an income of $61,000 per year is necessary, and to be included in the top 1 per cent...

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