Explain How Globalization Has Led to Variations in the Standard of Living and Contrasts in the Level of Development in Nations.

The heightened levels of integrations between economies refer to the “globalisation” of the world economy. Globalisation of the world economy results in growth of Gross World Product, trade flows and direct investment. There has also been international convergence of economic systems as more countries adopt market capitalism and democracy. A negative effect of this is that there is an increased possibility of external shock. This globalisation is an outcome of financial liberalisation and trade barriers. Globalisation has reinforced existing inequalities in advanced, emerging and developing countries.
Transnational Corporations (TNC) are a major part of globalisation through their provision of trade and investment flows. They control major industries such as entertainment and computer. They also take part in a third of the world’s exports, a quarter of the gross world product and has approximately 70 million people employed. TNC’s often produce in countries with low government regulations as a means of exploitation to acquire lower production costs. This is achieved through lower labour standards and environmental protection laws. TNC’s however can utilise vertical specialisation where to create goods steps are performed in different countries in order to take advantage of specialisation.
The difference between economic development is known as the development gap. This results in disparities in quality of life in the three groups of countries. In emerging and developing countries, low per capita incomes reduce a standard of living, which paves way for income poverty, restricts their capacity to save, invest and supply capital to improve economic development.   The often weak capital market is another factor that creates reluctance for people to save and invest, stunting economic growth. Strong infrastructure and capital formation are vital to economic development as it allows efficient utilisation of labour and capital resources. High population growth in these...