world inequality and globalization by bob sutcliffe presented by meg spearman april 13, 2007 puaf...

World Inequality and Globalization

by Bob Sutcliffe

World Inequality and Globalization

by Bob Sutcliffe

Presented by Meg SpearmanApril 13, 2007

PUAF 699I Professor Milanovic

Presented by Meg SpearmanApril 13, 2007

PUAF 699I Professor Milanovic

OutlineOutline1. Introduction2. Three Approaches3. Data Alternatives4. Inter-Country Distribution5. Global Distribution6. Another Method: ‘True Distribution’7. Using a Different Statistic: Ratio of Extremes8. Adding Another Indicator: Life Expectancy9. Adding Even More Indicators: The HDI10. Summing Up the Evidence11. Inequality and Globalization12. A Globalization Index?13. Questions/Comments

1. Introduction2. Three Approaches3. Data Alternatives4. Inter-Country Distribution5. Global Distribution6. Another Method: ‘True Distribution’7. Using a Different Statistic: Ratio of Extremes8. Adding Another Indicator: Life Expectancy9. Adding Even More Indicators: The HDI10. Summing Up the Evidence11. Inequality and Globalization12. A Globalization Index?13. Questions/Comments

2. Approaches & 3. Data Types

2. Approaches & 3. Data Types

• Three Approaches1.Distribution of

income alone2.Measure world

distribution of a more complex indicator than income

3.Examine ratios between income groups

• Three Approaches1.Distribution of

income alone2.Measure world

distribution of a more complex indicator than income

3.Examine ratios between income groups

• Data Alternatives1.How to compare incomes

(exchange rate v. PPP)2.Weighted or un-weighted

figures3.Inter-country or global4.Poverty or Distribution

• Data Alternatives1.How to compare incomes

(exchange rate v. PPP)2.Weighted or un-weighted

figures3.Inter-country or global4.Poverty or Distribution

4. Inter-Country Distribution4. Inter-Country Distribution

• Convergence and Divergence of Country Averages

• Population-Weighted Convergence and Divergence

• Converging and Diverging Blocs

• Convergence and Divergence of Country Averages

• Population-Weighted Convergence and Divergence

• Converging and Diverging Blocs

QuickTime™ and aTIFF (LZW) decompressor

are needed to see this picture.Only exceptionto the pattern.

Slow convergence Rapid divergence


are needed to see this picture.





Strong convergence Stationary…

Slow divergence Slight convergence(population weighted)



Two Limitations of Inter-Country Comparisons

-Within country distribution unaccounted

-Assumes national income is equivalent to welfare

5. Global Distribution5. Global Distribution



GINI COEFFICIENT 1820 1960 Inter-country .16 .535

Global .5 .635 Source: Bourguignon & Morrison, 2002 (Based on Maddison, 1995)

Historical

Recent

Up to 1980, within-country contribution toward Up to 1980, within-country contribution toward inequality falls and inter-country contribution rises.inequality falls and inter-country contribution rises.

After 1980, within-country contribution toward After 1980, within-country contribution toward inequality rises and inter-country contribution falls.inequality rises and inter-country contribution falls.

6. ‘True Distribution’ via Household Surveys (Milanovic)

6. ‘True Distribution’ via Household Surveys (Milanovic)

• Eliminates the problems of national income estimates BUT: It doesn’t account for amounts received from social spending on ‘free’ services that contribute to welfare.

• Calculations for 1988 (.63) & 1993 (.66) very close to nat income Gini calculations– The world has a level of inequality scarcely

encountered in national economies.– The calculation that differs (1993) implies

there is a rise between ‘88-’93. This is attributed to increasing urban-rural inequality.

• Eliminates the problems of national income estimates BUT: It doesn’t account for amounts received from social spending on ‘free’ services that contribute to welfare.

• Calculations for 1988 (.63) & 1993 (.66) very close to nat income Gini calculations– The world has a level of inequality scarcely

encountered in national economies.– The calculation that differs (1993) implies

there is a rise between ‘88-’93. This is attributed to increasing urban-rural inequality.

7. Ratios of Extremes7. Ratios of Extremes





WDI is not strictly comparable to 2 sets above because they lack earlier distribution estimates, but they are the most recent and complete picture (92.5% world’s population, WB, 125 countries).

Most Striking: ratio of richest to poorest 1% rises in both datasets.

8. Adding Life Expectancy8. Adding Life Expectancy



Problems: Quality does not necessarily rise with quantity.

Since 1990, life exp. in 42 countries steady or fell due to AIDS.



There is a tendency for greater loss of healthy life years in countries with lower life expectancy. Thus, the distribution of healthy life expectancy is more unequal than the distribution of life expectancies as a whole.



9.The HDI

9.The HDI



Three indicators:

1. Log income/head

2. Life expectancy

3. Education

- Divergence nearly

“impossible”

- Index of welfare is

not an index of

growth

Countries worse-off in 1975 had the greatest % increase by 2001

• Inequality has increased more or declined less:– Use unweighted national

GDPph– Compare national values using

exchange rates (but not since ‘95)

– When using PPP, use Maddison instead of PWT 6.1 or WDI

– Use data directly derived from household studies rather than ‘processed GDP ph figures’

– Compare ratios of extremes rather than (or at least as well as) integral measures

• Inequality has increased more or declined less:– Use unweighted national

GDPph– Compare national values using

exchange rates (but not since ‘95)

– When using PPP, use Maddison instead of PWT 6.1 or WDI

– Use data directly derived from household studies rather than ‘processed GDP ph figures’

– Compare ratios of extremes rather than (or at least as well as) integral measures

• Inequality has declined more or increased less:– Use population-weighted

national GDPph– Compare national values using

PPP estimates (but not since 1995)

– When using PPP data, use WDI or PWT 6.1 instead of Maddison

– Use GDPph figures ‘processed’ by distribution figures

– If comparing ratio extremes, look at the less extreme (50/50, 20/20)

– Add another variable, especially life expectancy

• Inequality has declined more or increased less:– Use population-weighted

national GDPph– Compare national values using

PPP estimates (but not since 1995)

– When using PPP data, use WDI or PWT 6.1 instead of Maddison

– Use GDPph figures ‘processed’ by distribution figures

– If comparing ratio extremes, look at the less extreme (50/50, 20/20)

– Add another variable, especially life expectancy

10. Summing up the Evidence10. Summing up the Evidence

11. Inequality and Globalization11. Inequality and Globalization• Since 1950, there has been a large increase in

movement of goods, services and capital, though not so much people (i.e. labor).

• BUT if the answer of what globalization is cannot be summed up with a single variable (just as there cannot be just one variable to define inequality).

• Kevin O’Rourke points to the individual endowments of countries, which means individual cases are more instructive.

• Disaggregation is needed to consider either incomes or inequalities.

• Shape of global inequality still unclear (i.e. uni-modal - one big capitalistic world, OR bi-modal - imperialism is still alive!)

• Since 1950, there has been a large increase in movement of goods, services and capital, though not so much people (i.e. labor).

• BUT if the answer of what globalization is cannot be summed up with a single variable (just as there cannot be just one variable to define inequality).

• Kevin O’Rourke points to the individual endowments of countries, which means individual cases are more instructive.

• Disaggregation is needed to consider either incomes or inequalities.

• Shape of global inequality still unclear (i.e. uni-modal - one big capitalistic world, OR bi-modal - imperialism is still alive!)

12. A Globalization Index?12. A Globalization Index?

• A.T. Kearney “Measuring Globalization: Who’s up? Who’s down?” (2003) (62 countries, by the Carnegie Endowment for International Peace)

• A.T. Kearney “Measuring Globalization: Who’s up? Who’s down?” (2003) (62 countries, by the Carnegie Endowment for International Peace)

- Argues that causes of globalization are confused with its effects

- Nevertheless, technological and personal integration continue even if a country’s overall economic integration is minimal

- Argues that causes of globalization are confused with its effects

- Nevertheless, technological and personal integration continue even if a country’s overall economic integration is minimal



Ireland!





Green: Globalization Index

Yellow: Manufacturing labor cost/worker (1995-1999)



Questions/CommentsQuestions/Comments

• “The jury’s still out” on a single over-arching pattern between globalization and welfare or income

• How do we define globalization? Is it a cause or an effect?

• Should it be tied to existing or new definitions of welfare, security, income, political stability… etc?

• “The jury’s still out” on a single over-arching pattern between globalization and welfare or income

• How do we define globalization? Is it a cause or an effect?

• Should it be tied to existing or new definitions of welfare, security, income, political stability… etc?

world inequality and globalization by bob sutcliffe presented by meg spearman april 13, 2007 puaf...

Documents

distribution slide

distribution of income

true distribution

distribution data alternatives

welfare slide

questionscomments slide

measure world distribution

world inequality