Rising Income Inequalities in the Wake of Globalization: Emerging Challenges

Abstract

Globalization, manifested by the fast growth in global trade, financial globalization and technological change, particularly ICT, is the main driving force behind rising inequalities, especially in the developing economies. Such technical changes typically raise the demand for skilled labour which is in short supply in these economies and is highly unequally distributed between different regions and social groups. Deficiency of public investment in infrastructure in India is responsible for the inability to fully benefit from the opportunities opened up by globalization, leading to growing regional and rural–urban disparities. Raising public investment in physical infrastructure, education and health care, and adequate priority to growth in agriculture, rural non-farm sector and manufacturing are essential to reduce inequalities by generating adequate employment opportunities. Inequalities have been rising even in mature democracies which had undergone radical social transformation. There is a need to redesign the existing framework of democracy so as to enable it to more adequately reflect the long-term societal aspirations for justice and fair-play.