Globalization

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With the inflow of capital, jobs, and new technologies into developing countries globalphiles believes that global inequality and poverty will decline steadily.

It can be argued that globalization hinders a government’s ability to utilize fiscal policies at their own discretion. What many of these globalphiles fail to recognize is that statistics may be deceiving or insufficient to justify their arguments. The increase in taxation and government expenditures do not necessarily indicate that governments are utilizing fiscal policies as they believe would be the most beneficial to the society. The two key policies being compromised a government’s ability to tax, and to spend money on what they see fit. In some cases increased globalization has made it less beneficial for governments to invest in social programs. This becomes evident when global investors do not invest in economies concentrating large amounts of expenditure on social services that do not necessarily increase profitability, such as welfare and pensions. Increased mobility of people and corporations has also increased the need for governments to spend money on socially and economically attractive ventures. Governments invest in projects to attract interest or to maintain support instead of where it would be most beneficial, because of the threat that its people and corporations might leave the country. Globalization has made taxation more difficult for governments because it provides firms and people more mobility, expands business over the Internet, and makes it tougher to tax corporations. “Modern tax systems were developed after the second world war when cross-border movements in goods, capital, and labour were relatively small. Now, firms and people are more mobile-and can exploit tax differences between countries.” Governments no longer tax people and corporations as freely because they do not want to give them reason to move production,...