Global inequality

Two important books on global inequality appeared in the last year, one by Francois Bourguignon, The Globalization of Inequality, and the other by Branko Milanovic, Global Inequality: A New Approach for the Age of Globalization. Here is my extended review of both, with a discussion of what they have to say and whether we should believe them: Review essay on Bourguignon and Milanovic.

Some key points from my review:

  • As conventionally measured, global inequality (the inequality among all people of the world, no matter where they live) has been falling during the current period of “globalization.” However, that claim depends a lot on how you measure inequality; I point to some defensible measures that suggest a very different picture.
  • Two forces are working in opposite directions on global inequality: declining inequality between countries versus often (but not always) rising inequality within countries. Over the last 20 years or more, the between country force has dominated standard measures of global inequality.
  • Both books attribute both forces to globalization, but there are a number of reasons to doubt that this is the whole story or even a major part. A lot of other things have been happening with bearing on inequality. Technology, interacting with inequalities in human development, and domestic policies in schooling, health care and social protection have mattered, and continue to do so.
  • Milanovic’s now famous “elephant graph” is plausible, though I have some specific concerns about its measurement. More importantly though, I have doubts about how he (and the popular media) has interpreted it.
  • Standard concepts of “global inequality” are not well suited to the way people think about inequality, including the role of the nation state, and are even somewhat disconnected from the ongoing debates on globalization.
  • We need to up-pack the concept of “inequality” to get anywhere with the policy implications. And when we do, reducing poverty (in various dimensions, including lack of economic opportunities) clearly emerges as the more important concern.

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