The Impact of Economic Globalization on National Economies and Social Structures

Abstract

An examination of the significant impact of economic globalization on labor markets, income inequality and fiscal policy in both developed and developing countries is presented in this paper. With regard to the labor market, developing countries that shifted from manufacturing to services, such as South Africa, lost many jobs for low-skilled workers. Similarly, in developed regions, while globalization has fostered the growth of high-tech and service industries, it has led to stagnant wages for low-skilled workers. Income inequality has risen: high-skilled workers in the United States have enjoyed wage growth and better employment prospects, while low-skilled workers have suffered. For developing countries in South-East Asia, high-income groups there benefited far more from globalization than low-income groups. Fiscal policy has also suffered. In the European Union, uncoordinated tax policies have posed a challenge to economic cohesion, while in Sri Lanka, political instability has hampered the success of export-oriented strategies. The study concludes that a stable political environment and fair distribution policies are crucial for developing countries, while developed countries should enhance education and implement fair tax policies to reduce inequality. Future research should explore the broader socio-economic impacts of globalization and develop a comprehensive policy framework to deal with its complexities.