Explore BrainMass

increasing income inequality in the U.S. and Egypt

Some authorities claim that globalization has led to greater income inequality in the U.S. and globally while others claim that inequality is due to improvements in technology and productivity. Using the Library and Internet sources, do the following:

Identify evidence for and against the existence of increasing income inequality in the U.S. and Egypt.
Discuss and evaluate the arguments as to its cause.


Content Cow Dairy, Inc. began as a small, family-run dairy farm in Wisconsin in the 19th century, established by a Swedish immigrant, John Swanson. Over the years, the firm has acquired more land and now runs a herd of roughly 1,000 milk-producing cows. The firm is now incorporated for reasons of liability although the Swanson family retains control. The dairy has greatly expanded its production of milk and milk products to the point that Content Cow Dairy has sufficient cash flow to weather most fluctuations in dairy prices. The national Got Milk? campaign run by the industry helped keep consumption of milk products up in the U.S. for a number of years despite popular concerns about cholesterol and saturated fats and competition from other beverages. To maintain the company's growth and decrease its reliance on the mature American market, Karl Swanson, the President and CEO of Content Cow Dairy (and the great-grandson of its founder) is seeking new markets overseas for the company's products, particularly shelf-stable milk beverages and cheeses. Egypt is at the top of the list as a prime market and a focus of Content Cow's future plans.

Currently, no one in the firm has any experience with overseas markets or how to export products. Karl has the idea that countries without the natural endowments needed for raising dairy cattle (ample water and grazing land) might be good markets for dairy products. He is also aware that his family firm is competing for foreign markets with other U.S. firms and firms from leading dairy countries such as New Zealand and Denmark. For these reasons and on the advice of his state's department of commerce, Karl has decided to seek the assistance of a trade consulting firm, Alexander and Kravis (A&K).

A&K, Inc. is an international trade consulting service that has been in operation for the past 15 years. The principals in the firm include attorneys specializing in international trade law, economists, former members of the U.S. Foreign Service, former U.S. customs officials, logistics specialists, and customs brokers. The firm advises its clients on both importing to the U.S. and exporting from the U.S. to various foreign countries.

The firm is especially knowledgeable about business conditions in Latin America, the Middle East, and North Africa although it has access to consultants for other geographic areas. The firm is able to assist its clients in identifying potential markets for its products, developing relationships with foreign distributors, navigating U.S. export and foreign import laws, understanding foreign business practices and customs, and developing a long-term strategy for expansion of the client's business overseas. It provides specialists who can prepare the necessary export and import documents and arrange for transportation and shipping of the exports. Translation services are also available. A&K has a number of large corporations as clients but has identified a niche in serving small to midsize, family-owned firms.

As A&K's account manager for Content Cow Dairy, you are tasked with explaining various aspects of the international business environment and the export process to Mr. Swanson. You will be preparing a series of briefings, memos, and reports to help him understand.

Solution Preview

The response addresses the queries posted in 1773 words with references.

//Before writing about the 'Income Inequality' in the US and Egypt, we will write about the main concerns, social and economic trends in the international business. Then, we will discuss about the impact of these trends on the income inequality. It will assist in understanding the importance of the analysis of the trends and their impact on the income inequality of US and Egyptian market.//

It is believed widely that globalization has a constructive impact on the growth of the economy. But now-a-days the effect of globalization particularly on distribution of income and on employment is questioned. It will also have its negative impact on the economy as it affects the labor share I.e. The share of income accruing to labor (IMF Working Paper).During time generally inequality is going up globally. About inequality mainly three concerns often get raised.

? First, According to one line argument, it is immoral. A few human beings have riches whereas others live in squalor (Oswald, A., 2001).

? Second, the inequality can be unwanted or undesirable as rich people obtain little enjoyment out of each additional currency of income. As poor highly valued each currency higher than that of rich ones, the transfer of money from the rich to poor would increase total social pleasure (Oswald, A., 2001).

? Third, According to some observers, society is threatened because of income inequality. Behind this, the reason is that the poor may rise up because of income inequality (Oswald, A., 2001).

In many advanced countries, income inequality has been increased over the past years. But the trend is quite different in these countries. There is comparatively a high degree of income inequality in the Unites States of America and the main concern is that it is growing further. Due to the income inequality many social and economic trends can be seen (where it is occurred):

? Changes having an effect on labor supply- for instance, female labor market participation, immigration, trends in education, government transfers, rise of part-time labor etc.

? Changes having an effect on labor demand- for instance, outsourcing, technological (skill biased) changes, increased worldwide trade.

? Changes in labor market institutions- for instance, tax-law changes, changes in minimum wages, deregulation etc.

//Above, we discussed about the social and economic trends and their impact on the income inequality of US and Egypt. Now, we will discuss about the impact of globalization on the income inequality of the two countries. It will assist in analyzing the market conditions of the US and Egyptian markets.//

In the world, Globalization affects the inequality among individuals. Within country distribution is affected by the globalization. Over the last years, the distribution of income has tended to grow more unequal in poor, middle income and rich countries. Due to import of labor intensive goods from developing countries, the wage gap in countries such as US and Egypt has been widened.

Beyond this factor, the other reasons which contribute to the income inequality are: the slow growth in the supply of the ...

Solution Summary

The response addresses the queries posted in 1708 words with references.