What is global stratification, and how does it contribute to economic inequality?

Use these questions and answers to check how well you’ve achieved the learning objectives set out at the beginning of this chapter.
LO1 What is global stratification, and how does it contribute to economic inequality?
Global stratification refers to the unequal distribution of wealth, power, and prestige on a global basis, which results in people having vastly different lifestyles and life chances both within and among the nations of the world. Today, the income gap between the richest and the poorest segments of the world population continues to widen, and within some nations the poorest one-fifth of the population has an income that is only a slight fraction of the overall average per capita income for that country.
LO2 What is the levels of development approach for studying global inequality?
One of the primary problems encountered by social scientists studying global stratification and social and economic inequality is what terminology should be used to refer to the distribution of resources in various nations. Most definitions of inequality are based on comparisons of levels of income or economic development, whereby countries are identified in terms of the “three worlds” or upon their levels of economic development. Terminology based on levels of development includes concepts such as developed nations, developing nations, less-developed nations, and underdevelopment.
LO3 How does the World Bank classify nations into four economic categories, and why do organizations such as this have problems measuring wealth and poverty on a global basis?
The World Bank classifies nations into four economic categories and establishes the upper and lower limits for the gross national income (GNI) in each category. Low-income economies had a GNI per capita of less than $1,045 in 2015, lower-middle-income economies had a GNI per capita between $1,046 and $4,125, upper-middle-income economies had a GNI per capita between $4,126 and $12,735, and high-income economies had a GNI per capita of $12,736 or more (World Bank, 2015). Defining poverty is more than just personal and household income; it also involves social judgments made by researchers. Absolute poverty is a condition in which people do not have the means to secure the most basic necessities of life. It is measured by comparing personal or household income or expenses with the cost of buying a given quantity of goods and services. Relative poverty exists when people may be able to afford basic necessities but are still unable to maintain an average standard of living. This is measured by comparing one person’s income with the incomes of others.
LO4 What is the relationship between global poverty and key human development issues such as life expectancy, health, education, and literacy?
Income disparities are not the only factor that defines poverty and its effect on people. The United Nations’ Human Development Index measures the level of development in a country through indicators such as life expectancy, infant mortality rate, proportion of underweight children under age five, and adult literacy rate for low-income, middle-income, and high-income countries. People who live in countries in the highest-human-development categories are, on average, better educated, will live longer, and will earn more. The adult literacy rate in the low-income countries is significantly lower than that of high-income countries, and for women the rate is even lower.
LO5 What is modernization theory, and what are the four stages of economic development identified by Walt Rostow?
Modernization theory is a perspective that links global inequality to different levels of economic development and suggests that low-income economies can move to middle- and high-income economies by achieving self-sustained economic growth. Walt Rostow suggested that all countries go through four stages of economic development, with identical content, regardless of when these nations started the process of industrialization. The stages of economic development are as follows: the traditional stage, in which very little social change takes place and people do not think much about changing their current circumstances. The second stage is the take-off stage—a period of economic growth accompanied by a growing belief in individualism, competition, and achievement. In the third stage the country moves toward technological maturity. In the fourth and final stage the country reaches the phase of high mass consumption and a correspondingly high standard of living.
LO6 What is dependency theory, and why is this theory often applied to newly industrializing countries?
Dependency theory states that global poverty can at least partially be attributed to the fact that the low-income countries have been exploited by the high-income countries. Whereas modernization theory focuses on how societies can reduce inequality through industrialization and economic development, dependency theorists see the greed of the rich countries as a source of increasing impoverishment of the poorer nations and their people.
LO7 What is world systems theory, and what are the three major types of nations set forth in this theory?
According to world systems theory, the capitalist world economy is a global system divided into a hierarchy of three major types of nations: Core nations are dominant capitalist centers characterized by high levels of industrialization and urbanization, semiperipheral nations are more developed than peripheral nations but less developed than core nations, and peripheral nations are those countries that are dependent on core nations for capital, have little or no industrialization (other than what may be brought in by core nations), and have uneven patterns of urbanization.
LO8 What is the new international division of labor theory, and how might it be useful in the twenty-first century?
The new international division of labor theory is based on the assumption that commodity production is split into fragments that can be assigned to whichever part of the world can provide the most profitable combination of capital and labor. This division of labor has changed the pattern of geographic specialization between countries, whereby high-income countries have become dependent on low-income countries for labor. The low-income countries provide transnational corporations with a situation in which they can pay lower wages and taxes and face fewer regulations regarding workplace conditions and environmental protection.