How does the market system explain global patterns of wealth and poverty?
The capitalist market system is undoubtedly the trend now as our world is continually swept by the wave of globalization. In this system, capital goods are owned and/or operated by private individuals, firms or corporations, primarily for the purpose of gaining profit. By the system’s definition itself, there is inherent economic inequality, and so by nature, the system does foster a world where the gap between the rich and the poor are unabridged.
In a larger scale where developing nations play the part of the ‘exploited working class,’ other reasons include “adverse effects” from these nations being “unequal partners” in trade agreements, as well as declining terms of trade (Laurent, n. d. ). Within the boundaries of these nations, patterns of wealth and poverty may also be explained by the tax system, and how the local laws regulate markets and trade.
b. Why are geographical factors of location, environment and accessibility important in understanding global poverty? The geographical factors of location, environment and accessibility are important in understanding global poverty because these are the factors that determine the kind and amount of resources or capital goods that a country has.
By the current knowledge that we have of location and environment, arid or desert regions are known to harbor oil deposits, mountainous regions are known to have mineral deposits, while tropical regions are known for rich vegetation. A high demand for a country’s resources or capital goods places that country in a beneficial trading position, and vice versa. This may explain while oil producing countries are richer as oil is needed to fuel major processes around the globe. As for accessibility, it mainly pertains to policies and laws.
A country with an open economy and a stable political climate like Singapore is richer than Burma because its openness and stability provides easier terms for transacting with the rest of the world. REFERENCE: Laurent, Chris. (n. d. ). Patterns of Wealth and Poverty. Retrieved November 25, 2008 from http://72. 14. 235. 132/search? q=cache:26K3SFfCL5oJ:www. essay. org/school/english/patterns. doc+market+systems+and+patterns+of+wealth+and+poverty&hl=tl&ct=clnk&cd=1&gl=ph&client=firefox-aSample Essay of RushEssay.com