The Paradox of Globalization: Unraveling the Short and Long-Term Impacts on Income Inequality in Indonesia
DOI:
https://doi.org/10.56532/mjbem.v3i1.25Keywords:
Globalization, Income Inequality, Financial Development, IndonesiaAbstract
This study investigates the impact of globalization and financial growth on income inequality in Indonesia using empirical data from 1995 to 2020. The analysis reveals that globalization and financial development, while initially appearing advantageous, can exacerbate income inequality over time. In Model I, the overall measure of globalization contributes to income inequality in both the short and long run. Initially, globalization may reduce income inequality, but its long-term effects are detrimental. Financial development and inflation in Indonesia also have a significant and positive impact on income inequality in this model. Model II shows that economic, political, and social globalization have statistically significant impacts on income inequality in both the short and long term. Economic and political globalization can help mitigate income inequality over time, but in the short term, income inequality in Indonesia worsens. Social globalization, on the other hand, consistently has a positive influence on income disparity in both the short and long term. The study highlights the need for proactive government measures to maintain the stability of economic, political, and social globalization. Policymakers should implement progressive policies that address the adverse effects of globalization on income distribution to ensure a more equitable society.
References
Adler, P. (2021). No Globalization Without Representation. In PENN. University of Pennsylvania Press.
Ajide, F. M., Osinubi, T. T., & Dada, J. T. (2021). Economic globalization, entrepreneurship, and inclusive growth in Africa. Journal of Economic Integration, 36(4), 689–717. https://doi.org/10.11130/jei.2021.36.4.689
Anindyajati, G. (2022). The Right to Health: COVID-19 Pandemic and the Opportunity to Transform Mental Health Inequalities in Indonesia. Frontiers in Public Health, 10. https://doi.org/10.3389/fpubh.2022.844656
Berumen, S. A. (2015). Globalization and Inequalities in Developed Economies: Kuznets Was Not Right. Neumann Business Review, 1(2), 23–36. https://doi.org/10.22451/3002.nbr2015.vol1.1.8003
Borisenko, O., Sukharev, D., Fomina, M., & Kondakova, N. (2018). Problems of economic globalization of China as a factor of cultural security. MATEC Web of Conferences, 212. https://doi.org/10.1051/matecconf/201821208026
Bourguignon, F. (2015). The Globalization of Inequality. Princeton University Press.
Broadbent, K. P. (n.d.). Politics, Economic and Social. Wiley on Behalf of the Royal Institute of International Affairs, 57(1), 135–136.
Chun, N., & Khor, N. (2010). Minimum wages and changing wage inequality in Indonesia. ADB Economics Working Paper Series, 196(196), 1–35. https://doi.org/10.2139/ssrn.1632245
Dreher, A. (2006). Does globalization affect growth? Evidence from a new index of globalization. Applied Economics, 38(10), 1091–1110. https://doi.org/10.1080/00036840500392078
Easterly, W., & Fischer, S. (2001). Inflation and The Poor. Journal of Money, Credit and Banking, 33(2), 160–178.
Gaies, B., Nakhli, M. S., & Sahut, J. M. (2022). What are the effects of economic globalization on CO2 emissions in MENA countries? Economic Modelling, 116(November). https://doi.org/10.1016/j.econmod.2022.106022
Gurbuz, E. C. (2022). Is Economic Globalization Destructive to Air Quality ? Empirical Evidence from China. Journal of Asian Finance, Economics and Business Vol, 9(10), 0015–0027. https://doi.org/10.13106/jafeb.2022.vol9.no10.0015
Gygli, S., Haelg, F., Potrafke, N., & Sturm, J. E. (2019). The KOF Globalisation Index – revisited. Review of International Organizations, 14(3), 543–574. https://doi.org/10.1007/s11558-019-09344-2
Huang, X., Wang, S., & Li, X. (2022). The Inequities in the United States During the COVID-19 Pandemic. In The Geographies of COVID-19, Global Perspectives on Health Geography (Issue November, pp. 85–96). https://doi.org/10.1007/978-3-031-11775-6_8
Ihsani, S. F., & Rohman, M. F. (2022). Distribusi Pendapatan dan Kemiskinan di Indonesia: Kasus Kebijakan Sentralisasi, Desentralisasi, dan Pandemi Covid-19. Jurnal Ekonomi-Qu, 12(1), 1. https://doi.org/10.35448/jequ.v12i1.16292
Lau, C. K., Pal, S., Mahalik, M. K., & Gozgor, G. (2022). Economic globalization convergence in high and low globalized developing economies: Implications for the post Covid-19 era. Economic Analysis and Policy, 76(October), 1027–1039. https://doi.org/10.1016/j.eap.2022.10.013
Lee, J. W. (2015). Technological change, skill demand, and wage inequality: Evidence from Indonesia. World Development, 67, 238–250. https://doi.org/10.1016/j.worlddev.2014.10.020
Lockwood, B. (2004). How robust is the Kearney/foreign policy globalisation index? World Economy, 27(4), 507–523. https://doi.org/10.1111/j.0378-5920.2004.00611.x
Martens, P., & Zywietz, D. (2006). Rethinking globalization: A modified globalization index. Journal of International Development, 18(3), 331–350. https://doi.org/10.1002/jid.1223
Milanovic, B. (2003). The two faces of globalization: Against globalization as we know it. World Development, 31(4), 667–683. https://doi.org/10.1016/S0305-750X(03)00002-0
Mills, M. (2009). Globalization and inequality. European Sociological Review, 25(1), 1–8. https://doi.org/10.1093/esr/jcn046
Miranti, R. (2010). Poverty in Indonesia 1984-2002: The impact of growth and changes in inequality. Bulletin of Indonesian Economic Studies, 46(1), 79–97. https://doi.org/10.1080/00074911003642252
Nooh, M. N. (2023). A Review of the Literature on the Relationships between Cultural Intelligence and Cross-cultural Adjustment in International Business. Malaysian Journal of Business, Economics and Management, 2(1), 18–26. https://doi.org/10.56532/mjbem.v2i1.14
Permadi, Y. A. (2018). Growth, Inequality, and Poverty: An Analysis of Pro-Poor Growth in Indonesia. Jurnal Ekonomi Kuantitatif Terapan, 216–233. https://doi.org/10.24843/jekt.2018.v11.i02.p08
Rangkuty, D. M., Efendi, B., & Nasution, L. N. (2021). Study of Indonesia’s international macroeconomic indicators before and during the covid-19 pandemic. Jurnal Riset Pendidikan Ekonomi, 6(1), 1–11. https://doi.org/10.21067/jrpe.v6i1.5352
Sehrawat, M., & Giri, A. K. (2015). Financial development and income inequality in India: An application of ARDL approach. International Journal of Social Economics, 42(1), 64–81. https://doi.org/10.1108/IJSE-09-2013-0208
Sethi, P., Bhattacharjee, S., Chakrabarti, D., & Tiwari, C. (2021). The impact of globalization and financial development on India’s income inequality. Journal of Policy Modeling, 43(3), 639–656. https://doi.org/10.1016/j.jpolmod.2021.01.002
Syera, A. B., Dewi, A. U., & Dadan, S. (2018). Enhancing Sustainable Development Goals through the Provision of Decent Work to Minimize Inequality: A Comparative Study of Bangladesh and Indonesia. E3S Web of Conferences, 73, 9–12. https://doi.org/10.1051/e3sconf/20187311011
Vértesy, L. (2021). Stability Challenges of Economic Globalization. Global Security and Asymmetricity of the World Economy in the Conditions of Unstable Development of Economic Systems, September, 19–23.
Warsito, G. M. (2020). Health inequality in wealth disparity: A narrative review of Indonesia’s health coverage protection against poverty. ASM Science Journal, 13, 183–187.
Downloads
Published
Issue
Section
License
Copyright (c) 2024 Mega Amelia Putri, Syafruddin Karimi
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.