Inequality, Growth, and Poverty in an Era of Liberalization and Globalization

Inequality, Growth, and Poverty in an Era of Liberalization and Globalization

Inequality, Growth, and Poverty in an Era of Liberalization and Globalization

Inequality, Growth, and Poverty in an Era of Liberalization and Globalization

Synopsis

Based on an extensive review of relevant literature and an econometric analysis of inequality indexes, this volume provides the first systematic analysis of the changes in within-country income inequality over the last twenty years. In particular, it shows that inequality worsened in seventy per cent of the 73 developed, developing, and transitional countries analysed, and evaluates possible causes for this widespread rise in income inequality. The book goes on to offer the first empirical assessment of the relation between policies towards liberalization and globalization and income inequality.

Excerpt

After three decades of relative neglect, the issues of income inequality, its changes over time and its impact on poverty alleviation, and growth are again at the centre of the attention of scholars, policy-makers, and the public at large. The lively debate in refereed journals and books, as well as the growing discussions in the public policy arena and among new political movements focusing specifically on these issues, confirms the renewed interest in distributional questions.

One of the factors responsible for this revival of interest is the marked and undisputed rise in income inequality observed in the vast majority of the most populous and richest countries including the United States, China, Brazil, Russia, and more recently and less pronouncedly, India. Similar increases in inequality have also been evident in many other small and medium-sized developing, developed, and, especially, transitional economies. At the same time, countries with explicit distributional objectives, such as France and Malaysia, have been able to avoid adverse changes in income concentration, signalling that public policy can avoid or limit a shift towards higher inequality.

A second factor is the growing debate on the distribution across countries of the benefits of globalization and of the policies that drive it. While the issue of global inequality is not dealt with in this volume, the growing interest surrounding the subject has drawn attention also to the issue of rising inequality within countries, the central topic of this study. Further stimulus has been provided by the ongoing debate concerning the distributive impact of the Washington Consensus policy reforms that have dominated the scene during the last 20 years. Packages aimed at liberalizing foreign trade and capital movements have been introduced throughout Latin America, Eastern Europe, Asia, and Africa, and were in most cases preceded by the privatization of state enterprises and domestic deregulation. While these changes mark a dramatic switch in development policy away from traditional policy regimes, their impact on inequality, poverty, and human well-being are still being assessed.

The recent empirical analyses of inequality, particularly those dealing with the industrialized countries, tend to focus on changes in the wage premium by skill, which are usually explained in terms of growing flows of imports and immigrants from labour-abundant countries, or of the skill bias introduced by technical progress in the field of telecommunications and information. Other potentially relevant factors, such as high-land concentration, educational inequality, spatial inequality, or policy changes inspired by the Washington Consensus, are much less emphasized or ignored altogether. Likewise, analyses of changes in factoral distribution are conspicuously absent from the debate, in spite of the fall of the wage share and the rise of capital incomes frequently observed in recent years.

This collection of studies, assembled by my predecessor as Director of UNU/WIDER, attempts to bridge this gap by providing a systematic analysis of the main

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