Pros And Consequences Of Global Poverty

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American entrepreneur and writer Adam Braun (2015) argues that “global poverty is a complex web of interlinked problems and there is no one ‘silver bullet’ that will solve global inequality.” Though the roots and consequences of this issue have long been the subject of academic research, its growing character has found no remedy from a large basket of interventions offered by the majority of economists, who do agree that a complex of measures should be proposed. (written by Nadya and Nastya) One of the approaches for both developed and developing countries is the progressive taxation system. For instance, economist Tony Addison (2014) suggests “a top rate of 65 percent rate on the top 1 percent of incomes”. The major reason why it might…show more content…
Thus, as economies of developed countries provide unlimited demand for goods, countries with a low level of per capita income may show economic growth. This happens due to considerable differences in manufacturing costs. It is, for example, a common practice of offshoring in the Asian countries, like Vietnam or Taiwan. This assumption is supported by the Heckscher-Ohlin model, which states that underdeveloped countries have the comparative advantage in producing labor-abundant goods. For instance, economist Milanovic (2002) argues that “As income level rises, that is around the income level of Chile, Colombia or the Czech Republic, the situation changes and it is the relative income of the poor and the middle class that rises when compared with the rich.” Moreover, trade creates a better economic environment with such characteristics as diverse PPF and a more stable economy. This results in the further growth of foreign direct investments in developing countries and, as a consequence, increase of a country’s GDP combined with the decrease of GIDI. In other words, global trade enables developing countries to specialize in certain sectors of the world economy and to invest more of their resulting profits into the social sphere, thus battling inequality. However, global trade can be a driving force for the further development of so-called "Traps of the…show more content…
The issue is controversial as basic economic models show that wage floors increase unemployment. However, a large portion of research suggests that higher living wages raise the standard of living and at the same time do not adversely affect employment. This might be achieved through mechanisms such as workers moving to more productive industries and lower job quit rates. Nowadays there are political movements for higher living wages in many advanced and emerging economies. Increasing the living wage is beneficial not only for recipients but also for the country’s economy as a whole. People spend more money on goods and services that they couldn’t afford before, thus increasing demand and economic activity. Getting pass the understanding of the notion, at this point it is best to refer to a well-known professor Sir George Bain (2013), who highlighted that companies should look beyond calculation methodologies and “think about inclusive mechanisms that ensure that a living wage is a product of a process of negotiation which is able to respond to externalities over time». (written by Maria, edited by

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