The paper examines the relationship between rapid trade and financial globalization and the rise in income inequality observed in most countries over the past two decades. Using a panel of 51 countries over a 23-year period from 1981 to 2003, the authors find that technological progress has a greater impact on inequality than globalization. Trade globalization is associated with a reduction in inequality, while financial globalization, particularly foreign direct investment (FDI), is associated with an increase in inequality. The limited overall impact of globalization reflects two offsetting tendencies: trade globalization reduces inequality, while financial globalization increases it. The paper also discusses the channels through which globalization affects inequality, including the Stolper-Samuelson theorem and skill-biased technological change. Empirical analysis shows that trade openness and financial openness have opposite effects on inequality, with trade liberalization reducing inequality and financial openness increasing it. The paper concludes by emphasizing the importance of understanding the causes of inequality to devise effective policy measures.The paper examines the relationship between rapid trade and financial globalization and the rise in income inequality observed in most countries over the past two decades. Using a panel of 51 countries over a 23-year period from 1981 to 2003, the authors find that technological progress has a greater impact on inequality than globalization. Trade globalization is associated with a reduction in inequality, while financial globalization, particularly foreign direct investment (FDI), is associated with an increase in inequality. The limited overall impact of globalization reflects two offsetting tendencies: trade globalization reduces inequality, while financial globalization increases it. The paper also discusses the channels through which globalization affects inequality, including the Stolper-Samuelson theorem and skill-biased technological change. Empirical analysis shows that trade openness and financial openness have opposite effects on inequality, with trade liberalization reducing inequality and financial openness increasing it. The paper concludes by emphasizing the importance of understanding the causes of inequality to devise effective policy measures.