Inequality
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Inconsistent with UN Charter vision
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Worsened by aspects of globalization
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Confounds poverty reduction efforts
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Not only in developing countries
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Multidimensional and compromises
development, security and human rights
Frustrates achievement of MDGs
We cannot advance the development agenda
without addressing the challenges of inequality
within and between countries – the widening
gap between skilled and unskilled workers, the
chasm between the formal and informal
economies, the growing disparities in health,
education and opportunities for social and
political participation.
Kofi Annan, Secretary-General, UN
Inequality hinders growth
and increases poverty
Poverty
Lack of economic
power
• Low income
• Low assets
Lack of sociopolitical power
• Denial of human rights
• Discrimination
Unequal GDP distribution
Per capita GDP in
20 poorest and richest countries
Income gap widened
in recent years
• Since 1980s, inequality has risen in most
countries in all world regions
• Income inequality trends in 73 countries for which
data are available (1950s-1990s)
• Risen in 48 countries
• Relatively constant in 16 countries
• Declined in 9 countries
• Wealthiest 10% of global population increased
share of global income from 51.6% to 53.4%
(1980-92)
• Related to greater wealth concentration
Global income inequalities
(Gini coefficient values)
Shares of Global Private Consumption
Hunger and Malnutrition
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Since 2000, the average number of food
emergencies per year has been 30,
compared with 15/year in 1980s
Sustained nutrition deprivation affects 852
million people
1 billion overweight adults globally
Inequality Exacerbates Poverty
Income distribution
Productive resources
Opportunities
Markets and
information
Political
representation
Basic social
services
Poverty
Levels and Trends
% living on
< $2/day in 2001
Change in proportion and
number of poor people
between 1981 and 2001
%
millions
World
53
-8
81
East Europe + Central Asia
20
15
70
Middle East + North Africa
23
2
19
Latin America + Caribbean
25
-3
3
East Asia + Pacific
47
-23
-252
Sub-Saharan Africa
77
2
134
South Asia
77
-9
106
Unemployment
• Remains major source of inequality
• Between 1993 and 2003:
• Global number of unemployed rose
by 31% to 186 million
• Unemployment rates decreased
slightly in developed countries while
increasing in most other parts of the
world
• Spread of jobless growth
The informal economy
Those in informal economy typically
“have-nots” in society
- 60% women
- 535 million earn less than $1/day
Likely to be:
• Excluded from legal protections
• Precluded from enjoying basic rights and
benefits of formal economy
• Working in hazardous conditions
Informal employment
dominant in many regions
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Share of informal workers in
non-agricultural workforce by region:
North Africa:
48%
Latin America & Caribbean:
51%
Asia:
65%
Sub-Saharan Africa:
78%
(excl. South Africa)
Informal economy share of
Gross National Income, 2000
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•
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Developing countries:
Transition economies:
OECD Countries:
41%
38%
18%
Why Rapid Growth of Informal Economy?
• Jobless growth
• Labour market flexibility
• Reduction in public sector jobs
• De-industrialization
• Economic crises
• Greater “outsourcing”
• Household survival strategies
Health Inequalities
•
Great differences between and within
countries
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Access to healthcare
Life expectancy
Under-five mortality
Intellectual Property Rights and Patent
Monopolies
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High drug prices
Unequal access
Compromised capacity to react to crises
HIV/AIDS
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Highly unequal global and regional
impacts
Lowers growth, increases dependencies
Worsens existing inequalities between
women and men
Depletes human resources, threatening
stability, security and development
Education, 2001
Despite progress, substantial inequities exist by region
Indicator
Net Primary
Enrolment Ratio
Net Secondary
Enrolment Ratio
Girls Primary
Enrolment per 100
boys
Girls Secondary
Enrolment per 100
boys
Highest
Lowest
95.7%
62.8%
Latin America &
Caribbean
89.2%
Sub Saharan Africa
21.3%
N. America & W.
Europe
Sub Saharan Africa
99-100
76
CIS, Europe, E. Asia
Southern Asia
107
Latin America &
Caribbean
79
Southern Asia
Financial Liberalization
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Net capital flows from ‘capital poor’ to
‘capital rich’
Increased financial volatility
Undermines use of inclusive targeted
developmental credit
Slower economic growth in recent
decades
Trade Liberalization
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International terms of trade moving
against developing countries
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Primary commodities vs. manufactured
commodities
Tropical agriculture vs. temperate
agriculture
Generic products vs. those protected by
intellectual property rights
Tariffs biased against
developing countries
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Imports between developed countries
average 1%
Tariffs on textiles from developing
countries as high as 9%
Tariffs on agricultural products from
developing countries as high as 20%
Retreat of the state
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Stabilization and structural adjustment
programs
Less progressive taxation
Reduced redistributive role
Reduced role of government in many
developing countries
• Public education
• Health
• Housing
• Utilities
Government Spending Priorities
High-income countries spend 2½ times more of national wealth for
health, education and welfare than low income countries.
Inequality and Violence
• Violence often rooted in inequality
• No simple causal relationship
• Vicious cycle mutually reinforcing:
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Poverty
(Horizontal) Inequalities
Authoritarian governance
Lack of opportunities
Armed conflict
Reduced growth and development
• Links between inequalities and extreme
aspects of social disintegration
Poor Countries More Likely to Suffer
Civil War, Adversely Affects Growth
Predicted probability of onset of civil war within 5 years
Global Economic Agenda Dominated by
Issues Important to Developed Countries
Free Trade
Intellectual
Property Rights
Investment
protection
Capital Account
Liberalisation
Financial
Liberalization
…While Issues of Importance to
Developing Countries
Can’t Make it to the Agenda
Doha Round,
IPRs, etc. Not
Developmental
International
Economic
Governance
Dominated
By Rich
Washington
Consensus
Not Developmental,
Not Equitable
Capital Flight
International
Economic
Instability
Meaningful
Debt Relief
Thank you