Asuncion, James F.

  
E2C—The Contemporary World 
 
 
Globalization Creates Division to the World. 
 
Looking at the current wave of globalization, Nobel Laureate Eric Maskin 
of Harvard University arrives at a different conclusion. Maskin theorizes that 
while average income has been rising as a result of more trade and global 
production, so has inequality within countries.  
 
Inequality resulting from globalization today is often viewed as existing 
in two varieties, one ‘less worse’ than the other. 
 
In the ‘less-worse’ version, inequality is tolerated as a necessary 
side-effect of increased economic growth within a country. Through 
globalization, goes the argument, the wages of a segment of the workforce 
increase, but the same doesn’t happen for other segments, so the gap in 
between increases. 
 
In the ‘worse’ version, the wages of a segment of the workforce (usually 
low-skilled and low-wage workers) drop as a result of less demand for their 
skills, while the wages of higher-skilled workers increase. 
 
 
Poverty is Globalized. 
 
The proximate cause of poverty is low productivity. Poor people are poor 
because their labor produces too little to adequately feed and house them, let 
alone provide adequately for other needs such as health care and education. 
 
Low productivity, in turn, has diverse and multiple causes. It may be the 
result of lack of credit, lack of access to new and better technologies, or lack of 
skills, knowledge or job opportunities. It may be the consequence of small 
market size—or exploitative elites, in cahoots with the government, who block 
any improvement in economic conditions that would threaten their power. 
 
Globalization promises to give everyone access to markets, capital and 
technology, and to foster good governance. In other words, globalization has 
the potential to remove all of the deficiencies that create and sustain poverty. 
As such, globalization ought to be a powerful engine for economic catch-up in 
the lagging regions of the world. 
 
And yet, the past two centuries of globalization have witnessed massive 
economic divergence on a global scale. How is that possible? 
 
This question has preoccupied economists and policy makers for a long 
time. The answers they have produced coalesce around two opposing 
narratives. 
 
One says the problem is “too little globalization,” while the other blames 
“too much globalization.” The debate on globalization and development 
ultimately always comes back to the conundrum framed by these competing 
narratives: if we want to increase our economic growth in order to lift people 
out of poverty, should we throw ourselves open to the world economy or 
protect ourselves from it? 
 
Unfortunately, neither narrative offers much help in explaining why 
some countries have done better than others, and therefore neither is a very 
good guide for policy. 
 
The truth lies in an uncomfortable place: the middle. It’s a point best 
illustrated by the country that has contributed the most—given its overall 
size—to the reduction of poverty globally: China. China, in turn, learned from 
Japan’s example, as did other successful Asian countries. 
 
 
Economic Subdivisions of Country. 
 
People often use the term “Third World” as shorthand for poor or 
developing nations. By contrast, wealthier countries such as the United States 
and the nations of Western Europe are described as being part of the “First 
World.” Where did these distinctions come from, and why do we rarely hear 
about the “Second World?” 
 
The “three worlds” model of geopolitics first arose in the mid-20th 
century as a way of mapping the various players in the Cold War. The origins of 
the concept are complex, but historians usually credit it to the French 
demographer Alfred Sauvy, who coined the term “Third World” in a 1952 
article entitled “Three Worlds, One Planet.” In this original context, the First 
World included the United States and its capitalist allies in places such as 
Western Europe, Japan and Australia. The Second World consisted of the 
communist Soviet Union and its Eastern European satellites. The Third World, 
meanwhile, encompassed all the other countries that were not actively aligned 
with either side in the Cold War. These were often impoverished former 
European colonies, and included nearly all the nations of Africa, the Middle 
East, Latin America and Asia. 
 
Today, the powerful economies of the West are still sometimes described 
as “First World,” but the term “Second World” has become largely obsolete 
following the collapse of the Soviet Union. “Third World” remains the most 
common of the original designations, but its meaning has changed from 
“non-aligned” and become more of a blanket term for the developing world. 
Since it’s partially a relic of the Cold War, many modern academics consider 
the “Third World” label to be outdated. Terms such as “developing countries” 
and “low and lower-middle-income countries” are now often used in its place. 
 
 
 
 
Works Cited 
Maskin, E. G​ lobalization Is Increasing Inequality. ​2014. Worldbank.org 
Rodrik, D. ​Global Poverty Amid Global Plenty: Getting Globalization Right. F ​ rom 
Issue: Social Inclusion, 2012 
Andrews, E. W ​ hy are countries classified as First, Second or Third World?, ​2016. 
History.com