RESEARCH METHODOLOGY

TOPIC: IMPACT OF GLOBALISATION ON INCOME INEQUALITY IN INDIA

Class: SY-C
Batch: 2022-25

NAME ROLL NO.

AAKASH RUKARI 2201
ABHISHEK KATKAM 2206
YASH KATKAR 2239
AARAV SARLIA 2202
DIARY ENTRY

S.No. Date Task Performed Duration

1. 25th July, 2023 Deciding on a topic for the project 30 min

2. 14th August, 2023 Finding literature and doing the review 3hrs

3. 15th August, 2023 Doing final touch up and compilation 1hr

INTRODUCTION
The phenomenon of globalisation has changed the socioeconomic landscape of countries all over the world
in the current era of interconnected economies and rapid technology developments. India is one fastest
growing economy in the world and a prominent player in the global market. It has seen tremendous changes
in its economy and society as a result of globalisation.
Income inequality is the unequal distribution of wealth and income across people and families. It has long
been the focus of heated discussion and concern on both a national and worldwide scale. Questions have
been raised about the potential effects of globalisation processes on the distribution of income and wealth
across various sections of society as a result of India's quick integration into the global economy
through liberalisation, foreign direct investment, technological development, and increased cross-border
flows of capital and labour.

RESEARCH OBJECTIVES
 Analysing the impact of globalisation on income inequality in India and other developing countries.
 Identifying the factors related to globalisation that effect income inequality.
 Analysing the impact of various aspects of globalisation on income distribution and inequality.
LITERATURE REVIEW

Title Sample Period Impact of Globalisation on Income Inequality

Upadhyay, R. India 1978-2010 No significant change in income share held by lower

K. (2015) 10% and 20% of population. Increase in the income
share held by the upper 10% to 20% of population.

Sethi, P., India 1980-2014 All three KOF indices of globalization alongside the
Bhattacharjee, overall index are positively associated with income
S., Chakrabarti, inequality, with economic globalization being the
D., & Tiwari, most significant contributor to income inequality.
C. (2021)

Behera, D. K., India 1976-2012 Economic globalization reduces income inequality,

& while social and political globalization increases
Pozhamkandath income inequality in India.
Karthiayani, V.
(2022)

Mallick, H., India, China 1980-2013 Economic globalization widens the income
Mahalik, M. K., inequality in India but the same factor reduces the
& Padhan, H. income inequality in China.
(2020)

Mohanty, S. 115 countries 1993-2012 All globalisation indicators except trade openness
(2017) increase inequality. Globalisation has increased
income inequality in low-income countries like
India.

Atif, S. M., 68 developing 1990-2010 Globalisation increased in India by 66% but income
Srivastav, M., countries inequality also increased by 5%. So, there is an
Sauytbekova, increase but not a significant increase.
M., &
Arachchige, U.
K. (2012)

Topalova, P. India 1980-2001 Poverty reduction was lower in rural areas that were
(2007) heavily impacted by lower tariffs during trade
liberalization, but there was no significant effect on
inequality. There is a significant difference in GDP
per capita and growth rates across different Indian
states.

Gruen, D., India 1978-2000 The relationship between globalisation and income
O’Brien, T., & inequality is complex. The directed impact of
Lawson, J. globalisation on income inequality is debatable and
(2013) requires a more nuanced understanding beyond
trade.

Kundu, A. India 1991-2014 There has been a rise in inequality post

(2015) globalisation. This has been because the
metropolitan cities have a direct link with the global
market.
Saitluanga, B. North-east India, 1981-2011 Globalisation has increased inequality in India. Due
L. (2013) India to lack of a core city, geographical disadvantages,
small market size and weak infrastructure, the
North-east region has been able to attract FDI and
get the full benefits of globalisation.

Mahesh, M. 72 developing 2000-2010 There is a significant and positive relationship

(2011) countries between globalisation and income inequality. There
is a positive relationship between import intensity
and inequality. There is an insignificant but negative
relationship between export intensity and inequality.

Li, D., Wang, 19 Asian countries 2004-2017 Sectoral diversification of exports increases
X., Xu, Y., & inequality. Increase in diversification of exports
Ren, Y. (2022) increases inequality in high-income Asian countries
but has low impact on low-income Asian countries

Meschi, E. F., 70 developing 1980-1999 The paper talks about that when developing
& Vivarelli, M. countries countries trade with rich countries, it might make the
(2007). gap between rich and poor people bigger.

Acharyya, R., All Asian countries 1980-2000 This paper talks about places around the world,
& Marjit, S. except the East except for some East Asian countries, when other
(2000). Asian Countries countries trade with and invest in them, it often
makes the pay difference between skilled and
unskilled workers bigger.

Ekmekçioglu, Different regions 2007-2011 The article talks about how things moving between
E. (2012). of the world countries (like stuff to buy and money) can affect
including India how much money people make.

Dabla-Norris, China, India 1990-2000 This paper looks at why some people make more
M. E., Kochhar, money than others around the world and what can be
M. K., done about it. It finds that when poor and middle-
Suphaphiphat, class people earn more, the economy grows better,
M. N., Ricka, but when the very rich get richer, it doesn't help the
M. F., & economy much.
Tsounta, M. E.
(2015).
Tsai, P. L., 60 countries 2011 The study suggests that only well-developed
Huang, C. H., including India countries can benefit from globalization in terms of
& Yang, C. Y. making income more equal.
(2012).
Lindert, P. H., Europe,China,India 1991-2000 Income differences around the world have grown
& Williamson, significantly over the past two centuries. Most of
J. G. (2003). this increase was due to differences between
countries, not within countries. The paper explains
how changing income gaps between countries affect
global inequality.

Harjes, T. EU 2007 Income distributions also suggest that inequality has

(2007). increased in most industrialized countries, this
development was very uneven and much less
pronounced in euro-area countries, suggesting that
broad phenomena such as trade liberalization and
 technological change may not be major drivers of
inequality.

Milanovic, B. Overall World 2002-2016 The author finds some evidence that at very low
(2002) Economy average income levels, it is the rich who benefit
from openness. As income levels rise to those of
countries such as Chile, Colombia, or Czech
Republic, for example, the situation changes, and it
is the relative income of the poor and the middle
class that rises compared with the rich. It seems that
openness makes income distribution worse before
making it better - or differently in that the effect of
openness on a country's income distribution depends
on the country's initial income level.

Asteriou, D. 27 EU Countries 1995-2009 The results suggest that trade openness exerts an
(2014) equalizing effect, while financial globalization
through FDI, capital account openness and stock
market capitalization has been the driving force
of inequality in the EU-27 since 1995. The highest
contribution to inequality stems from FDI. Although
the trade impact remained robust, disparities were
observed in the financial globalization effects within
a certain group or among country groups. The
recent financial crisis led to a significant rise in
inequality only in the EU-periphery and the New
Member states. The impact from the other control
variables was either minor or insignificant.

Ucal, M., Haug, Turkey 1970-2008 The negative impact of FDI on the Gini coefficient,
A. A., & Bilgin, decreasing income inequality, is statistically
M. H. (2016) significant in the short- and long-run, though with a
quantitatively small impact in both cases. In the
short run, GDP growth increases inequality initially,
an effect that is reversed in the next
period. However, in the long run these variables
have no statistically significant effects on the Gini
coefficient.

Lindert, P. H., USA, EU 1820-1992 The likely impact of globalization on world

& Williamson, inequality has been very different from what these
J. G. (2003) simple correlations suggest. Globalization probably
mitigated the steep rise in income gaps between
nations. The nations that gained the most from
globalization are those poor ones that changed their
policies to exploit it, whereas the ones that gained
the least did not.

Sani Ibrahim, Nigeria 1750s The results first show that financial inclusion exerts
S., Ozdeser, H., a strong positive influence on household welfare.
& Cavusoglu, However, the decomposition analysis shows that
B. (2019) middle- and high-income households gain more
from financial inclusion in comparison to the
targeted low-income households. Second, informal
livelihood strategies, such as environmental
resource extraction, crops, and livestock production,
revealed reduced welfare disparities across income
distributions.
 Bergh, A., & 80 Countries 1970-2005 Social globalization and deregulation is also linked
Nilsson, T. to inequality. Reforms towards economic freedom
(2010) seem to increase inequality mainly in rich countries,
and social globalization is more important in less
developed countries. Monetary reforms, legal
reforms and political globalization do not increase
inequality.

RESEARCH GAP
 Different People: How globalization affects income inequality for different groups like women,
different ethnicities, and age groups might not be looked at closely.
 Data Challenges: The studies might not talk about difficulties with data that could affect their
findings.
 Beyond Money: Other factors like politics, culture, and society might not be fully considered in how
globalization affects income inequality.
 Helping Everyone: It's not clear if globalization can lead to both more money for the economy and
fairness for everyone.
 Over Time: Changes in how globalization affects income differences over time might not be
completely studied.
 Political Factors: The studies might not thoroughly examine how political factors, such as policies or
political power, interact with globalization's influence on income inequality.
 The role of global value chains and how they affect income distribution within and between
countries might not be fully analyzed.
 Vulnerable Groups: The studies could potentially overlook how globalization impacts vulnerable
populations like low-skilled workers or marginalized communities.
 Social Mobility: The studies might not delve into how globalization influences social mobility, i.e.,
the ability for people to move up or down the income ladder.
 Education Matters: The role of education in how globalization affects income inequality might not be
explained well.
 Different Places: The studies might not look at how globalization affects income inequality in
different parts of the world.
 The exact ways globalization affects income inequality might not be fully understood.

CONCLUSION
Overall, there are many arguments suggesting different ways in which globalisation techniques such as
liberalisation, foreign direct investment, technological development, etc., have impacted on a country’s
economy. Some research papers suggest the effect has been negligible due to the country’s dynamics such as
culture, legal setup, political and economic reforms. However, some research papers suggest the effect is
tremendous specially in developing countries. The gap has widened as argued by many researchers, with the
fruit of globalisation being shared unequally, making the rich richer and the poor poorer who gets exploited
by the global market. Whereas, it is also suggested that since globalisation helps increase the normal income
level of the country, the poor ultimately benefits and if a check is done by the countries’ leaders and
organisations such as World Trade Organisation, globalisation may help improve the income inequality in
many nations. The same needs to be studies further.
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