The link between globalization and inequality

March 23, 2017

Filed under Data Viz

This visualization is motivated by the notion that

Globalization is what's causing income inequality in America.

Simply put, there is a view that trade agreements have allowed cheaper goods to come into U.S. shores, thus killing domestic jobs in factories, manufacturing, agriculture, automation, etc. So, while the richest Americans, (or the 1%) keep on getting richer, the common worker (or the 99%) is left behind.

To investigate, I plotted the countries of the world on an axis, with globalization on the X, and equality on the Y. And as a tribute to my data hero Hans Rosling (RIP) , I allow these plots to play out over time, to see how inequality has changed with globalization.

I also used three measures of globalization.

  • Trade, or opening one's borders to the flow of goods;
  • Finance, or reducing restrictions on the flow of money;
  • Migration, or opening one's borders to people (potentially a source of productive labor for the economy).

Quick start tip
Select a globalization indicator, and press "play" to show the movement of inequality vis-a-vis globalization over time. The size of the bubbles denote the size of the economy.

Explore on your own!

  • Notice that different income groups have different responses to globalization:

    As low-income economies globalize, they become more unequal.
    In contrast, emerging economies seem to have more equal societies in line with a globalized economy.

    Perhaps, there is a hump-shaped trajectory, such that economies in the low-end of the development spectrum start to feel the pains of globalization through inequality, but as the country moves further to prosperity, the whole population begins to benefit. And, finally, in more advanced stages of development, the distributional effects of globalization taper off and stabilize. Hence,

    Advanced economies do not seem to be greatly impacted by income inequality.

  • Reference

    IMF's World Economic Outlook database. Available on; World Bank's WDI; and the Chinn-Ito Database.