1. 1 Living in a Globalised World Lecture 2 Is the World Becoming More Unequal? George Irvin www.george.irvin.com/sussex

2. 2 Outline 1.Issues of Concern 2.The Main Protagonists 3.Poverty Is Falling 4.No, Poverty Is Rising 5.Whither Inequality? 6.Conclusions

3. 3 Currently richest 1% of world receives more than poorest 50%. Between 1990 and 2000: n21 countries registered a decline in the Human Development Index (HDI). n52 countries ended the decade poorer than at its beginning. nThe number of people living in extreme poverty ($1/day) was nearly halved in Asia, but grew in all other regions. nAid to developing countries fell; for Africa it was halved in real terms over the decade from $39 to $19 per capita. nIn 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. nDuring the 1990s the number of refugees and internally displaced persons grew by 50%. Some Issues of Concern

4. 4 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 Protagonists on Globalisation

5. 5 Lorenz Curve and Gini coefficient: Measuring Inequality Cumulative % national income Cumulative % of households measured from poorest Low Gini is more equal; High Gini in less equal

6. 6 Recent example: Firebaugh & Goesling (2003) review argues: n“Mounting evidence indicates … that global income inequality is lower today than it was two decades ago.” nGlobal 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. nThe fall since 1980 is primarily due to rising average incomes in China and India. nRising inequality occurs mainly from differences in average country incomes. The recent fall in income inequality is due mainly to globalisation. nContinued 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. Inequality Is Falling

7. 7 Inter-country Gini Coefs

8. 8 Per Capita Y Studies (2003)

9. 9 Wade (2003): nInclusion of China (regional disaggergation) is crucial; nFirebaugh & Goesling review does not disaggregate by world region and does not look at careful qualifications in ‘evidence’. nResults are strongly influences by whether one looks at inter- country comparisons made using OER v PPP nMost studies reviewed by F&G (showing falling inequality) have already been criticized on methodological grounds; in particular F&G ignore household-Y survey based study by Milanovic (1999). nF&G consider only inter-country differences: not growing inequality within countries (intra-country); ie, China’s ‘average’ hides growing inequality in China Inequality is Not Falling!

10. 10 n Explore IMF view of how to get ‘development’; ie, the so-called Washington Consensus view n Examine whether inequality is increasing within rich countries?; eg, EU, USA. n Examine debates in the EU: does globalisation mean the end of the ‘welfare state’? Where From Here?

11. 11 Question for Class Discussion Two Groups of 4: 1.Can Successful ‘Poverty Alleviation’ and ‘Growing Inequality’ Co-exist? Explain. 2.Can ‘Lifting People Out of Poverty’ Be Attributed to ‘Globalisation? If So/not, Explain.