Topic > Adam Smith and David Ricardo's theory of globalization...

It therefore becomes vital that government can redistribute the wealth generated by liberalization, so that society as a whole can thrive on it. Importance of Policy It is essential to understand that the most important feature of Kuznets's “turning point” is the increase in social welfare and “pro-poor” policies actively pursued by governments, which are societies' natural response to the growing wealth gap. We can find examples of the latter case in Mexico's large-scale social protection programs Progresa and Oportunidades.15 More generally, four policies have proven to be the most effective in reducing income inequality. Higher spending on education (not just in the higher sector) a percentage of GDP, together with greater access to education for low-income families and higher tax revenues are two of the internal policies related to greater equality, while on the external it is believed that foreign direct investments and the depreciation of the currency indirectly influence reducing inequalities by increasing the competitiveness of the country, as found by Cornia