3.2.1 Unequal flows and inequality

Question 1

Gini coefficient

Answer 1

Commonly used measure of income inequality that condenses the entire income distribution for a country into a single number between 0 and 1.
The higher the number, the greater the degree of income inequality.

Question 2

Lorenz curves

Answer 2

The Gini coefficient can be converted into a graph (the Lorenz Curve).

Perfect equality is a straight line. (Sometimes known as the egalitarian line).

Question 3

Complete inequality

Answer 3

The group with the highest incomes earn the whole of the share of income earned; one group has all the money.

Question 4

Complete equality

Answer 4

There is an equal distribution of income for all groups in society.

Question 5

Regional inequalities in salaries

Answer 5

• London Average Salary: £44,184
• NW Average Salary: £35,367

Question 6

Inequalities in salaries between gender

Answer 6

• Women consistently earn less than men, on average.
• At some points, the average male salary is £10,000 more than females.

Question 7

Inequalities in salaries between age

Answer 7

• People between 30-63 earn significantly more, on average.

Question 8

Regional differences in disposable income

Answer 8

• London Disposable Income: £19,038
• NW Disposable Income: £13,386
• NE Disposable Income: £12,543

Question 9

Why is disposable income a good way to determine the difference between areas?

Answer 9

It takes into account the cost of living.

Question 10

Highest paid profession (UK per week)

Answer 10

Aircraft pilot - £1,700.00

Question 11

Lowest paid profession (UK per week)

Answer 11

Bar staff – £250.00

Question 12

Example of unequal power

Answer 12

Russia-Ukraine war

Question 13

Sanctions against Russia

Answer 13

Russian military intervention in Ukraine, which began in late February 2014, prompted a number of governments to impose sanctions against individuals and businesses. – Mainly from the US, EU and other Western Nations.

Russia retaliated with sanctions, including a ban on food imports from the EU, US, Canada, Australia and Norway.

Question 14

Give an example of how poor countries feel marginalised by globalisation

Answer 14

• e.g. Economic crash 2007/2008 was caused by the financial sector in HICs, but increased poverty for millions of people in LICs, collapsed international trade hurting developing countries. Whilst large HICs recovered quickly, poorer LICs struggled.
• e.g. When orders of flowers stopped coming in from HICs, Kenya farmers struggled.

Question 15

How has globalisation made countries economically interdependent?

Answer 15

Counties rely on each other for economic growth. For example, oil is produced by one group of countries and consumed by another group of counties. Consumers rely on producers to sell them oil, while producers rely on the money the consumers give them when they buy the oil.

Question 16

What does it mean when countries are interdependent?

Answer 16

They rely on each other.

Question 17

How has globalisation made countries politically interdependent?

Answer 17

Countries are dependent on each other to solve issues that cannot be addressed by just one country – e.g. in the 2015-2016 European Migrant crisis, the counties of Europe had to work together to support refugees from the conflict in Syria.

Question 18

How has globalisation made countries socially interdependent?

Answer 18

There are now greater connections between people living in different countries creates social interdependence between the countries. For example, in 2015 there were 244 million migrants worldwide – migrants build new relationships and become interdependent with people from other countries.

Question 19

How has globalisation made countries environmentally interdependent?

Answer 19

Every country in the world is dependent on the rest of the world to look after the environment. E.g. In 1986 a reactor at the Chernobyl nuclear plant in Ukraine exploded. Radiation from the explosion led to an increase in some cancers and birth defects in Ukraine, Russia and Belarus, and possibly further afield.

Question 20

Unequal flows of people

Answer 20

• People tend to move from LICs to NEEs, or NEEs to HICs (not usually from LICs straight to HICs).
• People also leave counties to escape war, famine or persecution. These refugees often try to get to the nearest safe country.
• The people who move for economic reasons are not usually the poorest in society – money is needed to pay for a visa, transport and living expenses in the destination country. Counties may also only allow people with certain skills to enter the country, so migrants are often reasonably well educated.
• It is easier for people from developed counties to migrate than people from less developed counties – in 2017, UK citizens could travel to 173 countries, while Afghan citizens could only travel to 24.
• Flows of people bring benefits - e.g. immigrants can create economic growth, as they do jobs that a country’s citizens can’t do (e.g. skilled jobs like engineering) or don’t want to do (e.g. dangerous jobs like logging or mining).
• Many migrants send money back to their families or home communities (remittances). Remittance payments can significantly increase the amount of capital flowing into less developed countries. This can create economic growth in the home country because local people can afford to spend more, boosting local industries.

Question 21

What can flows of money include?

Answer 21

Remittances, foreign aid (money given to a less developed country to increase development or help in a crisis), foreign direct investment (FDI) and income from trade.

Question 22

How can the unequal flows of people create problems?

Answer 22

• Inequalities – Less developed countries suffer from ‘brain drain’ – skilled people leave and take their knowledge with them. This reinforces existing inequalities between countries.
• Conflict – Low-skilled migrants are often happier to work for less money than low-skilled locals. By employing them, companies may depress wages for the local population. This can cause conflict between the local and migrant populations.
• Injustice – Migrant workers are sometimes made to work in dangerous conditions for little money. For example, in Qatar, several thousand migrants have died building facilities for the 2022 FIFA World Cup.

Question 23

Unequal flows of money

Answer 23

Flows of money are unequal — money often flows from developed countries to less developed countries. E.g. governments and companies from developed countries may invest in infrastructure or the extraction of minerals in less developed countries. Less developed countries rarely have the capital required to invest in other countries.

Flows of money can bring benefits to countries — e.g. FDI allows foreign companies and countries to take advantage of cheap raw materials and low labour costs, while the host country can benefit from foreign capital and expertise. Foreign aid can be used to improve living standards or to rebuild local infrastructure after a disaster.

Question 24

How can the unequal flows of money create problems?

Answer 24

• Inequalities – Foreign aid can create dependency, which gives governments little incentive to improve their own countries. FDI can force out local businesses, because foreign companies with superior capital and technology can make products more efficiently.
• Conflict – Foreign aid can find its way to armed groups and help to fund conflict. FDI can cause conflict between foreign companies and local people — e.g. FDI in agriculture can lead to peasant farmers being evicted to create larger plantations.
• Injustice – Companies may pressure governments of less developed countries to pass laws that make it cheaper to invest there — e.g. by cutting environmental regulation or weakening laws on working conditions.

Question 25

What is neo-liberalism?

Answer 25

The (conservative) idea that the economy would work better without state intervention. It includes removing barriers to trade, privatising state-owned companies and cut government spending.

These ideas started to be implemented in developed countries in the 1980s.

Question 26

How has neoliberalism created inequalities, conflict and injustice?

Answer 26

• Inequalities – Neoliberalism started in developed counties and has spread globally. It tends to concentrate wealth in the hands of a few, large wealthy businesses based in developed counties.
• Conflict – If private companies and free trade in a less developed country’s government, developed countries may believe that their intervention is justified. This could lead to conflict.
• Injustice – Governments and transnational corporations (TNCs) may argue that free trade and privatisation are the best way to help a country develop, and that this justifies poor working conditions and environmental degradation in the less developed country.

Question 27

How has globalisation led to unequal flows of technology?

Answer 27

Concentration of technology in particular places can lead to rapid innovation that can help people all over the world – e.g. technology companies in Silicon Valley, US have developed innovations in communications and healthcare.

Question 28

How has the unequal flow of technology lead to conflict and injustice?

Answer 28

• Inequalities – Developed counties can afford the latest technology, whereas less developed counties can’t. Countries that have access to the latest technology can make products more cheaply and have better access to information and services, due to better communications infrastructure.
• Conflict and injustice – Repressive governments of less developed counties have used weapons technology sold to them by developed countries to stop protests from their own people.

Question 29

How has globalisation made some countries more powerful than others?

Answer 29

Developed or emerging countries with a lot of money and technology are able to drive global systems to their own advantage. These counties have a lot of control over the global economy and political events.

Many less developed counties lack money and technology. These counties have limited power – rather than controlling the global economic and political events, they are only able to respond to events.

Question 30

Example: Unequal power and climate change

Answer 30

Many of the biggest contributors to climate change are also the richest countries. These countries are often reluctant to agree to propose to limit climate change as they believe it may harm their economy (e.g. through loss of jobs in the fossil fuel industry).

In contrast, some of the countries that are **most affected **by climate change are also the poorest. For example, countries like Bangladesh and Tuvalu are likely to be impacted by rising sea levels but find it difficult to influnece other countries to reduce greenhouse gas emissions because they lack power.

Question 31

How do global institutions reinforce unequal power relations?

Answer 31

The IMF and the World Bank govern the global financial system:

• The IMF and the World Bank are both based in the USA and are led by the USA and other developed countries. Less developed countries (who are most likely to require a loan) therefore have less influence over the decisions of the organisations.
• The IMF and World Bank’s** loans are conditional** – the less developed country has to make changes (such as cutting regulation to make foreign trade and investment easier) in order to receive the loan.
• Developed counties and companies can profit from these conditions, but they can prevent less developed countries from building their own industries.

Question 32

Role of the World Bank

Answer 32

The World Bank provides loans to less developed counties to invest in areas like health, education and infrastructure. The money for the loans comes party from subscriptions form its member countries – all members pay in, but only those who need it can take money out. This means funds are redistributed form developed countries to less developed counties. However, less developed counties are expected to pay back the loans.

Question 33

Role of the IMF

Answer 33

The IMF monitors the global economy and advises governments on how they could improve their economic situation. It also gives loans to counties with economic problems.