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Brookings

Trade Forum

2004

Globalization,

Poverty, and

Inequality

Susan M. Collins and Carol Graham EDITORS

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Brookings

Trade Forum

2004

Globalization,

Poverty, and

Inequality

Susan M. Collins and Carol Graham EDITORS

BROOKINGS INSTITUTION PRESS

Washington, D.C.

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Copyright ? 2004 THE BROOKINGS INSTITUTION 1775 Massachusetts Avenue, N.W., Washington, D.C. 20036

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Brookings

Trade Forum

2OO4

Editorsy Summary ix

Globalization and Inequality MARTIN RAVALLION

Competing Concepts of Inequality in the Globalization Debate 1 Comments by Erik Thorbecke and Lant Pritchett 24

Discussion 32

WILLIAM EASTERLY

Channels from Globalization to Inequality:

Productivity World versus Factor World 39 Comments by John Williamson andAbhijit Banerjee 72

Discussion 77

ANGUS DEATON

Health in an Age of Globalization 83 Comments by William Jack and Gary Burtless 111

Discussion 123

Broader Indicators of Weil-Being CAROL GRAHAM

Assessing the Impact of Globalization on Poverty and Inequality: A New Lens on an Old Puzzle 131

NICHOLAS SAMBANIS

Poverty and the Organization of Political Violence:

A Review and Some Conjectures 165

Comments by Michael Kremer and Catherine Patullo 212

Discussion 220

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Impact of Globalization

PINELOPI GOLDBERG and NINA PAVCNIK

Trade, Inequality, and Poverty: What Do We Know? 223

PRANAB BARDHAN

The Impact of Globalization on the Poor 271

Comments by Ann Harrison and Branko Milanovic 285

Panel: Looking Forward

NANCY BIRDSALL

Why Global Inequality Matters 297

KENNETH ROGOFF

Some Speculation on Growth and Poverty over the

Twenty-First Century 305

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?THE BROOKINGS INSTITUTION

The Brookings Institution is an independent organization devoted to nonpartisan research, edu

cation, and publication in economics, government, foreign policy, and the social sciences

generally. Its principal purposes are to aid in the development of sound public policies and to

promote public understanding of issues of national importance. The Institution was founded

on December 8,1927, to merge the activities of the Institute for Government Research, founded

in 1916, the Institute of Economics, founded in 1922, and the Robert Brookings Graduate School

of Economics and Government, founded in 1924. The Institution maintains a position of neu

trality on issues of public policy to safeguard the intellectual freedom of the staff. Interpretations or conclusions in Brookings publications should be understood to be solely those of the authors.

Board of Trustees

John L. Thornton

Chair Strobe Talbott President

Zo? Baird Alan R. Batkin

Richard C. Blum

James W. Cicconi

Arthur B. Culvahouse Jr.

Alan M. Dachs

Kenneth W. Dam

Thomas E. Donilon

Mario Draghi Kenneth M. Duberstein

Lawrence K. Fish

Honorary Trustees

Leonard Abramson

Elizabeth E. Bailey Rex J. Bates

Louis W. Cabot

A. W. Clausen

William T. Coleman Jr.

Lloyd N. Cutler D. Ronald Daniel

Robert A. Day Bruce B. Dayton Charles W. Duncan Jr.

Walter Y.Elisha

Robert F. Erburu

Henry Louis Gates Jr.

Robert D. Haas

Lee H. Hamilton

Richard W. Fisher

Cyrus F. Freidheim Jr.

Bart Friedman

David Friend Ann M. Fudge

Jeffrey W. Greenberg Brian L. Greenspun

William A. Haseltine

Teresa Heinz (leave of

absence) Samuel Hellman

Joel Z. Hyatt

Shirley Ann Jackson

Ann Dibble Jordan Michael H. Jordan

F. Warren Hellman

Robert A. Helman

Roy M. Huffington James A. Johnson

Vernon E. Jordan Jr.

Breene M. Kerr

James T. Lynn Jessica Tuchman Mathews

David O. Maxwell

Donald F. McHenry Robert S. McNamara

Mary Patterson McPherson

Arjay Miller Mario M. Morino

Maconda Brown O'Connor

Samuel Pisar

Marie L. Knowles

Harold H. Koh William A. Owens

Frank H. Pearl

John Edward Porter

Steven Rattner

Haim Saban

Leonard D. Schaeffer

Lawrence H. Summers

David F. Swensen

Vincent J. Trosino

Laura D'Andrea Tyson Beatrice W. Welters

Stephen M. Wolf Daniel Yergin

J. Woodward Redmond

Rozanne L. Ridgway Charles W. Robinson

James D. Robinson III

Judith Rodin Warren B. Rudman

B. Francis Saul II

Ralph S. Saul

Henry B. Schacht

Michael P. Schulhof Joan E. Spero John C. Whitehead

James D. Wolfensohn

Ezra K. Zilkha

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Brookings Trade Forum is a series of annual volumes that provide authoritative and in-depth

analysis on current and emerging issues in international economics. The series aims to explore

questions on international trade and macroeconomics in an interdisciplinary fashion with

experts in the field?both practitioners and academics?and seeks to gather in one place papers that provide a thorough look at a particular topic affecting international economic policy. This

seventh issue contains edited versions of the papers, invited commentary, and general discus

sion from a conference held at the Brookings Institution, May 13-14,2004. This year's forum

focused on the relationship between globalization and poverty and inequality. The papers in

this issue, which bring a variety of perspectives to bear, aim to contribute to the debate about

this complex relationship.

The conference and journal have benefited from the support of Richard C. Blum, the Tokyo Club Foundation for Global Studies, the Tinker Foundation, and the John D. and Catherine T.

MacArthur Foundation.

Coeditors Susan M. Collins, Brookings Institution and Georgetown

University Carol Graham, Brookings Institution

Staff Jennifer Derstine, production assistant

Erin Riska, production assistant

Starr Belsky, editorial associate

Kristin Wilson, research assistant

Eric Haven, research verifier

Stephen Robblee, research verifier Nicholas Warren, research verifier

Advisers Jagdish Bhagwati, Columbia University Richard N. Cooper, Harvard University Avinash Dixit, Princeton University Geza Feketekuty, Monterey Institute of International Studies

Jeffrey A. Frankel, Harvard University Gene Grossman, Princeton University

Gary Horlick, Wilmer, Cutler & Pickering

Gary Hufbauer, Institute for International Economics

John H. Jackson, Georgetown Law School

Paul R. Krugman, Princeton University Maurice Obstfeld, University of California at Berkeley

Sylvia Ostry, University of Toronto

Kenneth Rogoff, Harvard University Laura Tyson, London Business School

Paula Stern, The Stern Group Alan Wolff, Dewey Balantine

Contributors Abhijit Banerjee, Massachusetts Institute of Technology Pranab Bardhan, University of California at Berkeley

Nancy Birdsall, Center for Global Development

Gary Burtless, Brookings Institution

Angus Deaton, Princeton University

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William Easterly, New York University Carol Graham, Brookings Institution

Pinelopi Goldberg, Yale University Ann Harrison, University of California at Berkeley

William Jack, Georgetown University Michael Kremer, Harvard University & Brookings Institution

Branko Milanovic, Carnegie Endowment for International Peace

Catherine Pattillo, International Monetary Fund

Nina Pavcnik, Dartmouth College Lant Pritchett, Harvard University

Martin Ravallion, World Bank

Kenneth Rogoff, Harvard University Nicholas Sambanis, Yale University & Center for Global

Development Erik Thorbecke, Cornell University John Williamson, Institute for International Economics

Conference Henry Aaron, Brookings Institution

participants Isher Judge Ahluwalia, International Food Policy Research Institute

Raquel Artecona, Economic Commission for Latin America and

the Caribbean

Alexandra Barrantes, Organization of American States

Roger Betancourt, University of Maryland

Barry Bosworth, Brookings Institution

Ralph C. Bryant, Brookings Institution

In?s Bustillo, Economic Commission for Latin America and

the Caribbean

Oscar Ceville, International Trade Commission

Sydney F. Collins, University of Miami

I. M. Destler, University of Maryland & Institute for International

Economics

Kathleen Dorsainvil, Winston Salem State University

Kimberly Elliott, Institute for International Economics

Kristin Forbes, Council of Economic Advisers

James W. Fox, Agency for International Development Clifford G. Gaddy, Brookings Institution

Thomas Gindling, University of Maryland Jo Marie Griesgraber, New Rules for Global Finance

Caren Grown, International Center for Research on Women

Jane T. Haltmaier, Federal Reserve Board

Adam Hersh, Economic Policy Institute

Bernard Hoekman, World Bank

Gary Horlick, Wilmer, Cutler & Pickering Karen Johnson, Federal Reserve Board

Willene A. Johnson, Federal Reserve Board

Steven Kamin, Federal Reserve Board

Charles Kenny, World Bank

Ben Klemens, Brookings Institution

Thea Lee, AFL-CIO

Selam Legesse, International Trade Commission

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Conference Philip I. Levy, Council of Economic Advisers

participants Nuno Lim?o, University of Maryland Ernesto L?pez-C?rdova, Inter-American Development Bank

Prakash Loungani, International Monetary Fund

Karen Macours, Johns Hopkins University - SAIS

Carlos Alberto Martinez, Embassy of Mexico

Ana Maria Mayda, Georgetown University Theodore Moran, Georgetown University Todd J. Moss, Center for Global Development Brent Neiman, Council of Economic Advisers

Amirah Ifeoma Opara, TransAfrica Forum

Donald O'Connell, University of Maryland

Sylvia Ostry, University of Toronto

Howard Pack, University of Pennsylvania Richard Pomfret, University of Adelaide

Guido Porto, World Bank

Dennis Quinn, Georgetown University Susan Rice, Brookings Institution

J. David Richardson, Institute for International Economics &

Syracuse University Lex Rieffel, Brookings Institution

Rita M. Rodriguez, Georgetown University Carol Ann Rogers, Georgetown University Robert Rogowsky, International Trade Commission

Jasna Safhauzer, Embassy of Bosnia and Herzegovina

Gregory Schoepfle, Department of Labor

Michaela Schrader, International Monetary Fund

William Schuerch, Department of Treasury

Rodrigo R. Soares, University of Maryland Paula Stern, The Stern Group

Phillip L. Swagel, Council of Economic Advisers

Kenneth Swinnerton, Department of Labor

Fred Tipson, Microsoft Corporation Maximo Torero, International Food Policy Research

Institute & Group for the Analysis of Development Edwin M. Truman, Institute for International Economics

Yvonne Tsikata, World Bank

Shang-Jin Wei, International Monetary Fund &

Brookings Institution

Matthew Weinzierl, Council of Economic Advisers

Martin A. Weiss, Congressional Research Service

Manli Zhang, Export Import Bank

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