Living in a Globalised World Lecture 2

1
Living in a Globalised WorldLecture 2

• Is the World Becoming More Unequal?
• George Irvin
• www.george.irvin.com/sussex

2
Outline

• Issues of Concern
• The Main Protagonists
• Poverty Is Falling
• No, Poverty Is Rising
• Whither Inequality?
• Conclusions

3
Some Issues of Concern

• Currently richest 1 of world receives more than
  poorest 50.
• Between 1990 and 2000
• 21 countries registered a decline in the Human
  Development Index (HDI).
• 52 countries ended the decade poorer than at its
  beginning.
• The number of people living in extreme poverty
  (1/day) was nearly halved in Asia, but grew in
  all other regions.
• Aid to developing countries fell for Africa it
  was halved in real terms over the decade from 39
  to 19 per capita.
• In the meantime, donor countries continued
  subsidies to their farmers at a rate of 1
  billion a day, more than six times their total
  aid to poor countries.
• During the 1990s the number of refugees and
  internally displaced persons grew by 50.

4
Protagonists on Globalisation

• World Income Distribution improving
• Institutions World Bank, IMF, DfiD
• Authors Dollar and Kraay (2001), Jagdish
  Baghwati (2003), Sala-i-Matin (2001), Martin Wolf
  (2003), Firebaugh and Goesling (2003) etc
• Getting Worse
• Institutions UNDP, various NGOs
• Authors Milanovic (1999), Wade (2003),
  Sutcliffe (2003), Human Development Report (2002)
  etc

5
Measuring Inequality

• Lorenz Curve and Gini coefficient

Cumulative national income
Low Gini is more equal High Gini in less equal
Cumulative of households measured from poorest
6
Inequality Is Falling

• Recent example Firebaugh Goesling (2003)
  review argues
• Mounting evidence indicates that global income
  inequality is lower today than it was two decades
  ago.
• Global income distribution (including both the
  income distribution between and within countries)
  has become more equal since about 1980. Prior to
  that inequality rose for nearly two centuries.
• The fall since 1980 is primarily due to rising
  average incomes in China and India.
• Rising inequality occurs mainly from differences
  in average country incomes.
• The recent fall in income inequality is due
  mainly to globalisation.
• Continued industrialization of the global south
  will prolong falling inter-country inequality for
  several decades. So, those concerned about
  inequality should argue for more globalisation,
  not less.

7
Inter-country Gini Coefs
8
Per Capita Y Studies (2003)
9
Inequality is Not Falling!

• Wade (2003)
• Inclusion of China (regional disaggergation) is
  crucial
• Firebaugh Goesling review does not disaggregate
  by world region and does not look at careful
  qualifications in evidence.
• Results are strongly influences by whether one
  looks at inter-country comparisons made using OER
  v PPP
• Most studies reviewed by FG (showing falling
  inequality) have already been criticized on
  methodological grounds in particular FG ignore
  household-Y survey based study by Milanovic
  (1999).
• FG consider only inter-country differences not
  growing inequality within countries
  (intra-country) ie, Chinas average hides
  growing inequality in China

10
Where From Here?

• Explore IMF view of how to get development ie,
  the so-called Washington Consensus view
• Examine whether inequality is increasing within
  rich countries? eg, EU, USA.
• Examine debates in the EU does globalisation
  mean the end of the welfare state?

11
Question for Class Discussion

• Two Groups of 4
• Can Successful Poverty Alleviation and Growing
  Inequality Co-exist? Explain.
• Can Lifting People Out of Poverty Be Attributed
  to Globalisation? If So/not, Explain.