Uploaded by Xinyue Zhao

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Xinyue Zhao
Professor Mahajan
EEP 151
15 September 2019
To Flat the Globe or To Tear It Apart
Whether globalization is propelling countries worldwide to converge has always been
in the spotlight of public debate, as it is discussed multidimensionally in an essay by Martin
Ravallion. The essay questions the thesis of two books written by Francois Bourguignon
and Branko Milanovic, and inspects their limitations of measurements. This paper reviews
his essay, and comments on his critical analysis, based on my understanding of the topic.
Ravallion first sums up the trend of global inequality presented in the two books—a
pattern of falling inequality between countries alongside rising average inequality within
countries. Then he questions the argument: globalization has been a major driving force of
inequality between or within countries. Initially, Economic integration that shifted low
skilled jobs to low-wage countries, is believed by the two economists to drive up withincountry inequality and down between-country inequality, while Ravallion points out that
the collapse of the former Soviet Union, the stagnation in Japan, technical innovations, and
many more factors that cannot be attributed to globalization, contributed to changes in the
global inequality landscape. When it comes to trade openness, Ravallion argues that it is
more often promoted by domestic policy reforms rather than globalization, moreover, it
may reduce or increase inequality due to different net trading positions in relevant markets.
As for economic policy, Ravallion believes that its role is understated, since strong political
will can lead to significant inroads against high inequality despite the global trend, and Its
influence varies with pre-reform differences in inequality levels as well.
Besides, the essay questioned the data and measures used in the books. It points out
that selective compliance and different choices of index can lead to inaccuracy of evidence.
The measurement methods are also considered unconvincing due to the lack of measuring
absolute and horizontal inequality. What I most agree, is that income should not be the only
measurement for inequality. HDI may be a more revealing index in my opinion, since it
reflects inequality in welfare, and reduces inaccuracy such as purchasing power differences.
I agree with Ravallion that in the two books, the explanation for the dominant role of
globalization is unconvincing, but I question some of his augments as well. He thinks that
if globalization is a driving force, then a slowing of global trade will slow the trend of
inequality. He disproves the result by predicting that other economic forces could assure
continuing global convergence. This proof seems imperfect to me, not only because he uses
forecasts as a proof, but because the mechanism of globalization influencing on global
inequality is not well understood. The effect of globalization may be accumulative to time,
or it generates lasting effect once the base of economic interactivity is established. Another
problem is the matter of objective and subjective measurements. Ravallion supports using
absolute inequality index rather than relative because people tend to “think about inequality
in absolute terms”. In my opinion, a measure’s practical influence is more important than
subjective feeling. For example, I do agree that giving more weight to inequality within
countries is reasonable, since it is more concerned with social stability and democracy.
Finally, I believe that we care about global inequality not simply out of empathy for
the less fortunate, but a curiosity to find out how globalization will reconstruct our nations,
tearing them apart while merging them all.