Global Inequality Global Inequality

A lecture by Dr Christopher A lecture by Dr Christopher KollmeyerKollmeyer

Lecture OutlineLecture Outline

Lecture Addresses Three Questions:1. What’s the extent of global inequality

today? (answer: massive)

2. What’s the trend in global inequality? • Within countries (answer: becoming more

unequal)• Between countries (answer: debatable)

3. What are the dominant explanations?• Modernization (neoliberal) theory• Dependency (world-systems) theory

The Champagne Glass of Inequality: The Champagne Glass of Inequality: Share of Global Income by QuintilesShare of Global Income by Quintiles

Bottom 60 percentile have less than 6% of the world’s income.

World’s Top-Ten World’s Top-Ten Billionaires, 2007Billionaires, 2007

Name Wealth in

Billions

Country

Source of Wealth

William Gates III £28 United States Microsoft Founder

Warren Buffett £26 United States Investments

Carlos Slim Helu £24 Mexico Telephones

Ingvar Kamprad £17 Sweden IKEA

Lakshmi Mittal £16 India Steel Co.

Sheldon Adelson £13 United States Casinos

Bernard Arnault £13 France Luxury Goods

Amancio Ortega £12 Spain Apparel

Li Ka-shing £12 Hong Kong Diversified Industries

David Thomson & family £11 Canada Media

Note: Scotland’s GDP equals about £80 billion per year.

Global PovertyGlobal PovertyThe World Bank estimates that 1.3 billion people live on less than 50p

per day ($1)

Living standard of the Living standard of the global poorglobal poor

Life Expectancy and Life Expectancy and IncomeIncome

Between-Country Between-Country Inequality: Inequality:

The Global Distribution of The Global Distribution of Income and PopulationIncome and Population

020406080

100

HighIncome(n=51)

MiddleIncome(n=104)

LowIncome(n=63)

% of World's Pop% of World's Income

15

166

6025

78

Wealthiest: Western European countries, British Off-Shoots, and Japan

Poorest: Sub-Saharan African and South Asian countries

Geography of Global InequalityGeography of Global Inequality

The North-South DivideThe North-South Divide

This picture of the Earth at night shows the wealthy Global North, illuminating its communities at night, and the much poorer Global South, which can’t afford to do so.

0

5

10

15

20

25

30

35

SouthAfrica

Brazil USA Russia UK Sweden Japan

Within-Country Inequality: Income Within-Country Inequality: Income share of richest 20share of richest 20thth percentile to percentile to

poorest 20poorest 20thth percentile percentile.

Question 2:What are the recent trends

in global income inequality?

Within countries: Becoming more unequal in most countries

Between countries: Becoming more unequal, except for China and other countries in East Asia, which are catch up with the West.

Example of Within-Country Income Inequality: The United

States, 1913-2002

Source:Thomas Piketty and Emmuanuel Saez. 2003. “Income Inequality in the United States, 1913 2002.” Quarterly Journal of Economics.

Inequality rising in most Inequality rising in most Anglo-Celtic countries, but Anglo-Celtic countries, but remaining steady in most remaining steady in most

Continental European countriesContinental European countries

Emmanuel Saez. 2004. Income and Wealth Concentration in a Historical and International Perspective. National Bureau of Economic Research, USA.

Changes in Between-Changes in Between-Country Income Inequality, Country Income Inequality,

1950-20001950-2000

Source: Sutcliffe, B. 2004 “World Inequality and Globalization.” Oxford Review of Economic Policy, Vol 20, No. 1

Begin of decline

Begin of China’s economic rise

Absolute vs Relative Absolute vs Relative InequalityInequality

A Hypothetical ExampleA Hypothetical Example

1970 2000Country A £1,000 £2,000Country B £15,000 £30,000Absolute Income Gap £14,000

£28,000Relative Inequality 15:1 15:1

0

200

400

600

800

1000

1200

1400

1600

1981 1984 1987 1990 1993 1996 1999 2001 2004

To

tal

po

pu

lati

on

(m

)

Sub-Saharan Africa

South Asia

Middle East and NorthAfrica

Latin America andCaribbean

Eastern Europe andCentral Asia

East Asia

Source: World Bank 2007

Note: Measured in constant 1993 US$ adjusted for PPP. Equals approx: 73p in today’s GBP

East Asia

South Asia

S-S Africa

Global Poverty Declines: Global Poverty Declines: World population living off less World population living off less

than US$1 per day by region. 1981-than US$1 per day by region. 1981-20042004